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Daily Insurance Industry News
Monday 20th of May 2019
July 18, 2008

Zurich announces double acquisition in Brazil

by David Masters

Story link: Zurich announces double acquisition in Brazil

Zurich announces double acquisition in Brazil

The Brazilian unit of Zurich Financial Services has announced the acquisition of two Brazil-based insurance companies from Banco Mercantil do Brasil.

In a deal worth up to £120 million, Switzerland-based Zurich will acquire an 87.35% stake in Companhia de Seguros Minas Brasil and a 100% stake in Minas Brasil Vida e Previdência.

Zurich will pay £89 million up front for the two businesses, an extra £15 million to Banco Mercantil for a bancassurance agreement, and a possible further £15 million dependent on performance.

Bancassurance allows an insurance company to sell insurance products through the branches of local banks.

Together, the acquisitions and bancassurance agreement will make Zurich one of the leading general insurers in Brazil.

It continues a string of acquisitions by the insurance giant – CEO James Schiro has already announced five acquisitions this year – and furthers Zurich’s strategy of strengthening business in emerging markets.

Only last week – one day after withdrawing from the bidding race for the Royal Bank of Scotland’s insurance business – Zurich announced that it would be strengthening its bancassurance business in Spain by paying £700 million for a 50% stake in general insurance, life insurance and pensions operations of Banco Sabadell, the fourth largest bank in Spain.

Despite the expansion strategy, Zurich has been looking to reduce costs, and has already announced job cuts in the US and the UK that allow the company to make cost savings whilst maintaining profitability.

The Brazilian acquisitions are expected to be completed by the fourth quarter of 2008.

 

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