QBE Insurance Group Ltd. announced today that it is acquiring NAU Country Insurance Co., a U. S. crop insurer in a deal worth $A604 million. The Insurer said that it is taking this step to increase its income and broaden its business. NAU is a multi peril crop insurer in the US. QBE also said that it has shown interest in Holland based insurance unit of ING.

Frank O'Halloran, chief executive of QBE, said today that the deal was a part of company's long term strategy of buying specialist businesses to enhance diversification and distribution. He further said that NAU is a very well managed and profitable crop insurance provider in the US with excellent systems.

According to QBE, the deal is expected to be profitable for the company. QBE is expecting deep savings from this acquisition as it will renegotiate the reinsurance costs and will get the opportunity to cross sell the agricultural insurance products of QBE to NAU clients.

QBE further said that the price relative to book value suggested that the underwriting and management business of NAU is of high quality. QBE said that the price represents about 2.6 times the current book value. The company also said that it expected earnings per share growth of 3% to 4% in the first year of acquisition.

In the year ended December 2009, NAU, which has headquarters in Minnesota, reportedly wrote $976 million ($A1 billion) of gross earned premium. NAU reported net earned premium of $354 million in the year 2009, while it reported net income of $92.5 million last year.