Agricore Extends Weather Risk Insurance

WINNIPEG - May 12/06 - SNS -- Agricore United extended its current integrated risk financing program which will expire October 31, 2006.

The new program will cover many of its traditionally insured risks and provide protection against significant declines in grain volume as a result of drought or other related weather events. The three year program will take effect November 1, 2006.

The new multi-year program will include a total of $75 million of grain handling volume coverage over three years. "Because the new program integrates the grain volume protection with traditional insurance coverage, we pay the cost of insuring the portfolio rather than insuring each risk area on a stand alone basis - thus reducing cost," said David Carefoot, Chief Financial Officer.

The new integrated program will replace cash flows of the company if weather causes shipments to decline below a specified level. For example, for the crop year ending July 31, 2007, the coverage would take effect if industry shipments fell below about 27 million metric tons (MT), with a downside limit of about 19 million MT -- a level experienced in 2003, following one of the three worst droughts in the last 90 years.

Developed with Willis Canada, the new program will be underwritten by a member of the Swiss Re Group, a long-term risk partner of Agricore United. The new program is similar to one initially developed in 1999 for one of Agricore United's predecessor companies, and which, at the time, was a first in providing grain handling volume insurance within a policy that included coverage for a major business risk as well as traditional property and casualty risks.