Zurich Eyes Latin America; Buys Majority Stakes in Brazilian Insurers
Zurich Financial Services Group reported that its Brazilian subsidiary Zurich Participações e Representações Ltda., has agreed to acquire 87.35 percent of shares in Companhia de Seguros Minas Brasil, a BOVESPA-listed company, from Banco Mercantil do Brasil S.A. and two private investors.
In addition, Zurich Participações has agreed to acquire 100 percent of Minas Brasil Seguradora Vida e Previdência S.A. from Banco Mercantil. As part of this transaction, Zurich Brasil Seguros S.A. (Zurich Brasil), a subsidiary of Zurich Participações, will enter into a long-term exclusive bancassurance agreement with Banco Mercantil for the distribution of life and general insurance products of Zurich Brasil and the acquired companies.
The purchase price for both companies, which is subject to post-closing adjustments, amounts to BRL 286.9 (approx. USD 179) million. In addition, a BRL 49.7 (approx. USD 31) million consideration is to be paid for the bancassurance agreement plus an earn-out component of up to BRL 49.7 (approx. USD 31) million, depending on the future performance under the distribution agreement.
The bancassurance agreement will be for a period of 20 years, renewable for additional 10 years, at the discretion of the parties.
In 2007, premiums written through MB amounted to BRL 339.2 (approx. USD 175) million, which are mostly general insurance personal lines, in particular motor, and to BRL 43.5 (approx. USD 22) million for MBVP.
Zurich said this acquisition reflects its strategy to further expand its
footprint in Latin American growth markets. With the acquisition of MB and MBVP, Zurich Brasil is gaining access to a
distribution network of 4,000 independent brokers through
50 branches. In addition, Banco Mercantil, ranked number 10 within the group of non state-owned banks in Brazil, has been distributing the insurance products of MB and MBVP. It serves over 520,000 private individual and 39,000 commercial customers with a distribution network of 167 branches and 30 service centers across the country.
The transaction is subject to the approval of the relevant regulatory
authorities and is expected to close by the fourth quarter of 2008.
Source: Zurich