Deere & Co., the world’s largest maker of agricultural equipment, hired Citigroup Inc. to look at strategic options for its crop insurance unit as it sells assets to focus on core businesses such as manufacturing.
No formal decision has been made and no agreements have been reached on the unit that insures farmers against losses on their crops, the Moline, Ill.-based company said today in a statement.
“Deere & Co. continually evaluates the relative strengths and strategic fit of all its businesses in light of industry and market conditions,” Ken Golden, a company spokesman, said. “While crop insurance provides a unique and important touch point with our agricultural customers, we have determined that the federal crop insurance program itself is not core to John Deere.”
U.S. crop insurance, which has been led by companies like Wells Fargo & Co. and Ace Ltd., drew competitors including Deere and Australia’s QBE Insurance Group Ltd. as farm production surged. Droughts and price declines have made the business less profitable in recent years. Third Point Reinsurance Ltd., which counts hedge fund manager Dan Loeb as a founding shareholder, said in May that it was retreating from crop coverage.
Deere, which entered the insurance business in 2005, in the last year has sold assets that are not part of its core manufacturing operations. In May, the tractors and harvesters maker sold its irrigation operations to private equity firm FIMI Opportunity Funds in Israel. In December, it sold its majority interest in a landscapes business to private equity investment firm Clayton, Dubilier & Rice LLC.
–With assistance from Dan Kraut in New York.