Travelers to Acquire Interest in Brazilian Surety Specialist J. Malucelli

The Travelers Companies announced that it has entered into a joint venture agreement under which it will invest in J. Malucelli Participações em Seguros e Resseguros S.A., “the market leader in the surety insurance business in Brazil with a market share in excess of 30 percent.”

Travelers said its “investment in newly issued shares will significantly increase J. Malucelli’s capital level, positioning it for substantial growth in Brazil. Travelers will make an initial investment of approximately $370 million for 43 percent of the common stock of J. Malucelli, with an option to increase its interest to up to 49.9 percent within 18 months.”

Chairman and CEO Jay Fishman described the move as a “very significant opportunity for Travelers to leverage its leading U.S. surety franchise to enter the Brazilian market and to do so with a local market leader.

“We expect this transaction will be modestly accretive to Travelers’ earnings in the first year, and it positions us in one of the fastest growing insurance markets in the world,” he concluded.

Alan Schnitzer, Vice Chairman and head of Travelers’ Financial, Professional & International Insurance business segment, added: “We believe that the combination of Travelers’ broad insurance expertise with J. Malucelli’s established distribution network and extensive customer base provides us with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market. We have known the leadership of J. Malucelli for a number of years, and we believe that their outstanding reputation in Brazil is well deserved.”

The transaction is subject to Brazilian regulatory approvals and other customary closing conditions and is expected to close in the first half of 2011.

Source: Travelers