Palomar Holdings, Inc. has announced a definitive agreement to acquire Advanced AgProtection (AAP), a Texas-based managing general agent (MGA) specializing in crop insurance. This acquisition builds upon Palomar’s initial strategic investment in AAP in 2023, which marked the beginning of a formal partnership between the two companies. The transaction is expected to close in the second quarter of 2025, subject to customary closing conditions.
As part of the acquisition, AAP’s experienced team will integrate with Palomar, bringing their expertise and established industry relationships to the company. Operating as an MGA, AAP provides underwriting and distribution services for crop insurance products, further strengthening Palomar’s capabilities in this sector.
Growth of Crop Insurance in the U.S.
Palomar’s expansion into the crop insurance market aligns with the sector’s increasing demand and growth. In 2024, farmers and ranchers collectively invested over $6 billion to secure approximately 2.4 million crop insurance policies. These policies provided $159 billion in protection against losses caused by adverse weather conditions and market fluctuations. The coverage extended across more than 543 million acres, accounting for 90% of eligible farmland nationwide.
Indemnity payments for 2024 are still being finalized by the U.S. Department of Agriculture, but they have already surpassed $12.8 billion. A notable example of the program’s efficiency was the prompt issuance of over $800 million in indemnities within two weeks following hurricanes Milton and Helene.
The global agricultural insurance market is poised for substantial growth, with projections indicating an increase from $50.05 billion in 2024 to $71.18 billion by 2032. Additionally, the Congressional Budget Office forecasts that premium subsidies for crop insurance will remain a significant federal expenditure, with costs reaching nearly $12 billion in 2023.
Despite these promising growth trends, challenges persist. Declining commodity prices or adverse yield conditions could exert pressure on underwriting results for U.S. multiperil crop insurance (MPCI) providers. However, with AAP’s expertise and Palomar’s strategic expansion, the company is well-positioned to navigate this evolving landscape and capitalize on opportunities in the crop insurance market.
