The Board of Directors of Farm Bureau Mutual Insurance Company, Inc. today announced the merger of the Manhattan-based property-casualty insurance company with its Nebraska counterpart into Farm Bureau Mutual Insurance Company, headquartered in West Des Moines, Iowa.
These three mutual companies have signed a memorandum of understanding to merge operations and are working toward finalizing a definitive agreement. This merger is contingent upon regulatory approval and is expected to close during the first quarter of 2003.
"The Farm Bureau mutual insurance companies were created by agriculture producers more than 60 years ago to fill a need," said Steve Baccus, Kansas Farm Bureau president, who will serve as Chairman of the Board of Directors of the newly created company, to be called Farm Bureau Mutual Insurance Company. "Sixty years later, that need still exists. With this new company, we are now assured that it will be met."
The new company plans to preserve a presence in the current home offices in Manhattan, Kansas and Lincoln, Nebraska. These offices will transition to regional offices of Farm Bureau Mutual with sales support, underwriting, claims and other functions performed there. Additionally, the Manhattan Regional Office will become the center for the underwriting and administration of Farm Bureau Mutualís commercial property-casualty operations, while Farm Bureau Mutualís call center will be located in the Lincoln Regional Office.
Independent of each other, Michael Wilds and John Tatum, the top executives of the Kansas and Nebraska Farm Bureau Mutual Insurance Companies, respectively, approached their Iowa counterpart, FBL Financial Group, Inc. Chief Executive Officer Bill Oddy to discuss the possibility of merging the three operations.
"By joining our companies together, we lock in a consistent commitment to our traditional rural base, while at the same time creating new flexibility and strength to reach an increasing urban population," said Michael Wilds, Executive Vice President and Chief Executive Officer of Farm Bureau Mutual Insurance Company, Inc. of Kansas. "In addition, there will be no overlapping marketing territory as a result of this transaction, almost unheard of in the business merger world."
Kansas Farm Bureau policyholders will benefit from improved rate stability, as the merged companies achieve greater geographic diversification by moving from a one-state to an eight-state environment. While the Kansas and Nebraska mutual companies operate only within their state borders, the Iowa-based concern operates primarily in Iowa, Minnesota, South Dakota, Utah, Arizona and New Mexico.
The mission of this new company is to become the property-casualty insurance company of choice within its eight-state marketing territory. Outstanding customer service, which has been the cornerstone of all three companies, will continue to be the cornerstone of the newly formed company. By offering state of the art products, outstanding customer service at every level, competitive pricing and professional agents, Farm Bureau Mutual will become the property-casualty insurance company of choice.
FBL to Add 615 Employees. The 615 employees of the Farm Bureau property-casualty affiliates in Kansas and Nebraska will become employees of FBL Financial Group, pursuant to a management agreement. As is the practice with its current employees, FBL will be reimbursed for the cost of providing services to Farm Bureau Mutual.
Financial Impact. This combined operation is expected to have direct written premium of over $650 million. The number of Farm Bureau Mutual insurance policies in force will be in excess of 1.3 million. The expanded company will also gain greater economies of scale resulting from a shared product portfolio, streamlined processes and operating systems and an integrated approach to management.
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