Monsanto is best known for its seeds and pesticides, but the St. Louis-based agribusiness also is active in data collection and analysis.
Its team captain in that agricultural data game is The Climate Corporation, bought by Monsanto back in 2013 for $932 million. In addition to providing farmers with hyper-local weather data and live soil-quality feedback, Climate Corporation also used to be one of the select companies federally authorized to sell crop insurance.
Yet, last month, the Monsanto subsidiary announced it would sell its crop insurance business to AmTrust North America.
“[The Climate Corporation’s crop insurance business]’s market knowledge, industry expertise and relationsihps provide an excellent platform for AmTrust to continue to expand in an insurance market niche that offers diversity of risks while also growing our service and fee revenue,” said AmTrust Financial Services Inc.’s president and CEO, Barry Zyskind, in a statement.
Managed by the U.S. Department of Agriculture’s Risk Management Agency, federally subsidized crop insurance compensates enrolled farmers for losses due to poor weather or unfavorable market prices – sometimes both – depending on the policy.
The U.S. government also gives money to the companies that sell policies. The payments are meant to cover administration expenses, but the Government Accountability Office has in the past recommended cutting those payments to reduce the crop insurance program’s steep costs.
In 2014 alone, the federal government paid about $6.19 billion in premium subsidies, according to federal data.
AmTrust North America is a subsidiary of New York-based multinational insurance company AmTrust Financial Services Inc.
According to the business statement, Climate Corporation attributed the sale of its crop insurance to a renewed focus on the digital agriculture portion of its operation.
Its insurance carrier, OneBeacon Insurance Group, promised there would be a smooth transition for clients from Climate Corporation to AmTrust.
“We have terminated our relationship with the Climate Corporation and have withdrawn our Plan of Operations with the U.S. Department of Agriculture’s Risk Management Agency for the 2016 crop year,” OneBeacon President and CEO Mike Miller said in the same statement.
The sale came after reports from grain analysts that crop insurance prices for U.S. corn, soybeans and spring wheat would drop 10 percent or more in 2015.
“After bumper harvests in 2014, the corn floor price was slashed 18 percent and soybeans was cut 12 percent,” Reuters reported.
Insurance Business America reported that, additionally, OneBeacon experienced a drop of nearly 3.53 percent in the past year.