Island-based Validus Holdings has splashed out $127.5 million to buy up a US specialist crop insurer.

The firm and American Archer Daniels Midland Company have struck a deal for Validus to take over its Crop Risk Services arm, based in Illinois.

CRS wrote $548 million in gross premiums last year and has more 1,100 agents in 36 US states.

Ed Noonan, Validus chairman and chief executive officer, said: “CRS is a high-quality crop insurance provider that has achieved excellent growth in recent years.

“Validus will benefit from CRS’s commitment to provide superior customer service to agents and farmers via their leading technology capabilities.

“The addition of CRS complements Validus’ existing agriculture book and participation in this market is a logical step as Validus continues to expand our presence in US primary specialty lines.

“We are excited by the long-term partnership with ADM as this transaction further provides the unique opportunity of a marketing services agreement with one of the largest agricultural processors in the world.”

Joe Taets, president of ADM’s agricultural services business unit added: “We’re pleased to have reached an agreement that includes a marketing services agreement that will allow ADM and Validus to work together to continue to offer customers a full array of crop insurance products as well as ADM’s grain marketing services.

“We are pleased to have found a buyer in Validus that is committed to running — and growing — the business, and we look forward to continuing to work with Validus and the CRS sales team and their customers across the country.”

Validus, which will fund the acquisition with cash on hand, said its new arm would operate as part of the Western World Insurance Group after the closure of the deal, expected in the second quarter of this year.