Acceptance Insurance Companies Inc.
A Council Bluffs, Iowa insurance holding company whose crop-insurance subsidiary American Growers collapsed in 2002. AICI filed Chapter 11 in January 2005; its Eighth Circuit fight with Granite Re ended with AICI owing the $15M premium, and its U.S. takings suit failed at the Supreme Court.
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- Location
- Council Bluffs, Iowa, United States
- Country
- United States
- Full name
- Acceptance Insurance Companies Inc. (AICI)
- Corporate form
- Delaware corporation; insurance holding company with its principal place of business in Iowa
- Parent company
- Acceptance Insurance Companies Inc. — the holding company profiled here (parent of the entity in the source article)
- Key subsidiaries
- American Growers Insurance Company (crop insurance), Acceptance Insurance Company (property and casualty), American Agrisurance Inc. (managing general agent)
- NYSE listing
- Shares suspended from trading by the New York Stock Exchange in late 2002 (Insurance Journal, December 2002)
- Corporate identifiers
- Delaware corporation; Commission File Number 1-7461; EIN 31-0742926 (Form 8-K, March 2005)
- Bankruptcy
- Chapter 11 petition filed January 7, 2005, in the U.S. Bankruptcy Court for the District of Nebraska (case 05-80059); subsidiaries Acceptance Insurance Services Inc. and American Agrisurance Inc. filed Chapter 7 petitions the same day
- Condition at filing
- ~$32.9M in assets vs. ~$138.2M in liabilities at February 28, 2005 (negative shareholder equity of ~$105.3M; February 2005 monthly operating report)
- Fate
- Bankrupt; American Growers placed in statutory liquidation by the Nebraska Department of Insurance in 2005
Acceptance Insurance Companies Inc.
Acceptance Insurance Companies Inc. (AICI) was a Delaware-incorporated insurance holding company headquartered in Council Bluffs, Iowa, whose crop-insurance subsidiary, American Growers Insurance Company, became the largest participant in the federal crop insurance program before collapsing in 2002 under drought losses and bloated operating costs. AICI filed for Chapter 11 bankruptcy in January 2005. Its reinsurance fight with Granite Reinsurance ended in 2009 with the Eighth Circuit ordering AICI to pay the full $15 million premium, and its Fifth Amendment claim against the United States over a blocked sale of its crop book ended when the Supreme Court denied certiorari in 2010.
A specialty insurer goes big on crop insurance
AICI was, in the GAO’s words, “a publicly owned holding company that sold specialty property and casualty insurance.” In 1993 it acquired American Growers Insurance Company, then a federal crop insurance writer. As a wholly owned subsidiary, American Growers sold and serviced federal crop policies and shared its parent’s management, while another AICI subsidiary, American Agrisurance Inc., served as the marketing arm (GAO-04-517).
The growth strategy worked until it didn’t. In 2001 AICI’s subsidiaries agreed to buy the crop insurance assets of IGF Insurance from Goran Capital, financing the deal with a stop-loss reinsurance contract from Granite Reinsurance that ran from July 1, 2000 through June 30, 2005 — Granite Re would cover losses between 140% and 150% of net retained premium income, up to $40 million, for a fixed $15 million premium. Then prolonged Midwestern drought erased the underwriting gains American Growers had budgeted on. The subsidiary had been spending about $130 for every $100 the Risk Management Agency reimbursed for selling and servicing policies, paying agent commissions roughly 12% above the industry average — and a mispriced new product, Crop Revenue Coverage Plus, compounded the bleeding (GAO-04-517; 8th Cir. opinion).
The Rain and Hail sale and the seizure
In November 2002, with American Growers’ surplus below state minimums, AICI signed a non-binding letter of intent to sell its crop insurance book — roughly 360,000 policies — to Rain and Hail LLC for $21.5 million. The USDA’s Risk Management Agency rejected the sale under its regulatory authority as reinsurer. On November 22, 2002, the Nebraska Department of Insurance placed American Growers under supervision as in “hazardous financial condition”; the company later went into court-ordered rehabilitation (December 20, 2002) and statutory liquidation (February 28, 2005). The RMA ultimately spent about $40.5 million funding the company’s operations to pay farmers’ claims and transfer policies (GAO-04-517).
AICI’s own account, in its Supreme Court certiorari petition, says RMA concluded the sale “would be detrimental to the public interest” because it would “adversely affect the interests of farmers and taxpayers.” AICI then sued the United States, claiming the blocked sale was a Fifth Amendment taking of its property. The Court of Federal Claims dismissed the case and the Federal Circuit affirmed, holding that by voluntarily entering a federally reinsured line of business subject to RMA sale approval, the company had no cognizable property right in selling the book to a buyer of its choosing. The Supreme Court denied certiorari in 2010 (559 U.S. 1106, No. 09-771; DOJ Brief in Opposition).
The Granite Re fight
Granite Re claimed AICI owed the $9 million in premium deposits it had never paid (plus interest, $10.875 million total in its proof of claim). AICI countered that the contract lacked consideration and demanded back the $6 million it had paid. After a 2007 trial, the bankruptcy court let Granite Re keep the $6 million but denied the remaining premiums; the Bankruptcy Appellate Panel reversed, awarding the full $9 million in unpaid deposits. In May 2009 the Eighth Circuit affirmed: the reinsurance contract was enforceable, AICI’s subsidiary was bound by it, and the company owed the full $15 million — a fixed premium that did not depend on whether it wrote any insurance at all.
FAQ
Was Acceptance Insurance Companies Inc. related to AIG? No. A text search of AICI’s Q2 2004 10-Q for “AIG” returns zero matches; AICI was an independent, publicly traded holding company.
Why did American Growers fail? The GAO attributed the 2002 failure to a series of company decisions that drained surplus — losses from the mispriced Crop Revenue Coverage Plus product, above-average agent commissions, the 2001 IGF asset purchase — leaving the company vulnerable when drought erased anticipated underwriting gains.
What happened to AICI’s NYSE listing? Insurance Journal reported in December 2002 that the New York Stock Exchange suspended Acceptance’s shares for failing to meet listing standards; they last closed at 55 cents and continued to trade over-the-counter.
Did the government pay anything for blocking the sale? No. AICI’s takings claim was dismissed, and the Supreme Court denied review, so no compensation was ever awarded.
What did the Granite Re dispute cost AICI? The courts held AICI owed Granite Re the full $15 million premium under the reinsurance contract — the $6 million already paid plus $9 million in unpaid deposits.
What this profile does not claim
- The profile does not assert details of AICI’s pre-1993 corporate history or the alleged 1974 re-domestication of American Growers, which could not be verified in available sources.
- It does not state AICI’s legal-cost totals, which were unverified at drafting time.
- AICI’s version of the RMA rejection (“public interest” rationale, the agents’-lawsuits explanation) is presented as the company’s account in its certiorari petition, not as an established fact.
- The profile covers only the facts through the 2010 Supreme Court denial; it does not claim to describe the bankruptcy estate’s final disposition.
Timeline
- 1993
- Acceptance Insurance Companies Inc. — then a publicly owned holding company selling specialty property and casualty insurance — acquires American Growers Insurance Company, a federal crop insurance writer.
- 2001
- AICI's subsidiaries agree to purchase IGF Insurance's crop insurance assets from Goran Capital (May 23, 2001); a stop-loss reinsurance contract with Granite Reinsurance Company is signed June 6, 2001, carrying a $15 million premium commitment.
- 2002
- After crop losses from prolonged drought and heavy operating expenses, A.M. Best downgrades American Growers from B++ to C- and Acceptance Insurance Company from B+ to C-; the NYSE suspends AICI's shares, which last traded at 55 cents.
- 2002
- RMA rejects AICI's proposed sale of American Growers' crop insurance book (~360,000 policies for $21.5 million) to Rain and Hail LLC; on November 22, 2002, the Nebraska Department of Insurance places American Growers under supervision.
- 2004
- AICI's Form 10-Q for Q2 2004 (filed August 16, 2004, signed by John E. Martin, President and CEO, and Gary N. Thompson, CFO and Treasurer) discloses exactly four legal proceedings — a Nebraska securities class action (summary judgment for defendants March 31, 2004, appealed), the Court of Federal Claims takings case (filed December 9, 2003, seeking not less than $21.5 million), a Granite Re breach suit in the Southern District of Indiana (filed April 15, 2004, $9 million sought), and a Texas suit by former USAG executive P. Thompson Buchanan (claiming not less than $13 million). The filing never mentions AIG.
- 2005
- AICI files a Chapter 11 petition in the U.S. Bankruptcy Court for the District of Nebraska (January 7, 2005, case 05-80059); subsidiaries Acceptance Insurance Services Inc. and American Agrisurance Inc. file Chapter 7 petitions the same day. The company discloses it will file monthly operating reports in lieu of Exchange Act periodic reports. Its February 2005 operating report shows ~$32.9M in assets against ~$138.2M in liabilities.
- 2005
- American Growers is placed in statutory liquidation by the Nebraska Department of Insurance (February 28, 2005).
- 2007
- Bankruptcy court trial of the Granite Re dispute (February 27–28, 2007): the court holds the reinsurance contract was enforceable and lets Granite Re keep the $6 million deposit premium, but denies the $9 million in further premium deposits; Granite Re appeals.
- 2008
- The Bankruptcy Appellate Panel for the Eighth Circuit reverses the premium ruling, holding Granite Re is entitled to the $9 million in unpaid premium deposits (March 12, 2008).
- 2009
- The U.S. Court of Appeals for the Eighth Circuit affirms the BAP, holding the AICI entities owe Granite Re the full $15 million premium (filed May 18, 2009).
- 2010
- The Supreme Court denies certiorari in Acceptance Insurance Companies, Inc. v. United States, the company's Fifth Amendment takings case over RMA's rejection of the Rain and Hail sale (559 U.S. 1106 (2010), No. 09-771).
What we could not verify
These claims came up in research and could not be confirmed. They are recorded here rather than published as fact or quietly dropped. If you hold a source that settles one, please tell us.
- The corporate early history (a 1974 re-domestication claim for American Growers and its Iowa origins) could not be verified against an available tier1/2 source; the profile follows the Eighth Circuit's description of American Growers as a Nebraska corporation.
Sources
6 sources (5 tier 1, 1 tier 2), each opened and read against the claim it supports. Every source is independent of the subject; no first-party material is cited. See the source policy.
Every fact in this profile comes from the six sources above, each read in full (the two SEC filings via a read-only browser pass, since SEC EDGAR blocks scripted fetches). Claims from the research brief that could not be verified were corrected or cut: the brief's downgrade wording was wrong (actual: B++ to C- and B+ to C-), the December 2002 RMA-custody date had no source, and the brief's "13 lawsuits" / "AIG subsidiary" / multi-billion-dollar premium claims were directly contradicted by the 10-Q (four proceedings; zero mentions of AIG; ~$273K premiums earned in Q2 2004).
- Supports: Chapter 11/Chapter 7 petition details and case number, corporate identifiers, February 2005 operating-report financials, John E. Martin signature Open original source
- Supports: Four disclosed legal proceedings, premiums-earned/losses figures, refutation of "AIG subsidiary" claim, officer signers Open original source
- Supports: Corporate structure, IGF/APA and reinsurance-contract terms, Chapter 11 petition date, Granite Re litigation history and outcome, American Growers supervision/liquidation dates Open original source
- Supports: Rain and Hail sale terms (~360,000 policies, $21.5M), RMA rejection, NDOI seizure and liquidation, litigation timeline, certiorari denial Open original source
- Supports: 1993 acquisition of American Growers, American Growers history (1946 Old Homestead Hail, 1989 name), American Agrisurance as marketing arm, 2002 failure causes, RMA costs ($40.5M) Open original source
- Supports: A.M. Best downgrades (American Growers B++ to C-, Acceptance Insurance Company B+ to C-), NYSE suspension, share price, causes cited (drought losses, deferred-tax write-down) Open original source
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