HDI International AG, a subsidiary of Talanx Group, is acquiring the retail business of Sompo Seguros S.A. in Brazil.
This acquisition enables HDI Seguros S.A. in Brazil to gain scale in motor and to diversify into non-motor property/casualty and life protection businesses. HDI will also strengthen its market position in Brazil, reaching number seven in the P/C market and number four in the motor insurance market.
The initial purchase price payment is subject to certain closing account and other adjustments and is expected to amount to approximately 1.1 billion Brazilian real ($228.2 million). It may be adjusted up or down based on certain performance-based criteria post-closing. From the financial year 2023 onwards, the transaction is expected to be earnings accretive.
The transaction is expected to close in the middle of 2023.
Under the terms of the deal, Sompo Seguros S.A. agreed to spin off its consumer business into a new insurance subsidiary and sell the shares of the new company to HDI Seguros S.A.
“In a consolidating market, scale and diversification become more and more important. This acquisition enables us to continue our success story in Brazil which is the largest insurance market in Latin America with significant profitable growth potential in the mid- and long-term,” commented Dr. Wilm Langenbach, board member of Talanx AG, responsible for the international retail business and CEO of HDI International AG.
HDI Seguros S.A. in Brazil will grow by around 1.8 billion Brazilian real ($373.5 million) to approximately 5.5 billion Brazilian real ($1.1 billion) in gross written premiums.
“The acquisition in our core market Brazil strengthens our market position in some key regions in Brazil, especially in São Paulo, the country’s largest city, and diversifies our portfolio into life protection as well as gaining scale in residential and property,” said Nicolas Masjuan, head of LatAm at HDI International AG. “Furthermore, we are able to achieve significant synergies by combining Sompo´s retail business with our existing business in Brazil.”
Sompo Seguros S.A. is part of the Sompo Holdings Group, founded in 1943. The company operates in retail insurance and industrial lines. As part of a strategic reorientation on the industrial lines segment in Brazil, Sompo Seguros S.A. will spin off the retail business into a new company and transfer the new company to HDI.
The retail business currently comprises 22 branch offices located throughout Brazil, with a relevant concentration in São Paulo. The former retail business of Sompo Seguros ranks among the country’s top 10 motor insurers.
Following a transitional period, the business will be continued under HDI’s brand.
“This strategic change supports Sompo International’s goals of expanding in new and existing geographies, delivering a consistent market approach across all lines of business and strengthening the strategic alignment across Sompo International geographies globally,” said Sompo International in a statement.
HDI International AG already has a presence in Brazil through HDI Seguros S.A. with a focus on the motor insurance market. With its workforce of more than 1,300 employees, the company generated a premium volume in 2021 of around BRL 3.7 billion ($767.8 million).
The Talanx Industrial Lines division also operates in Brazil through HDI Global Seguros S.A. The combined entities of Talanx would bring the group close to a top five position in the Brazilian P/C market.
Talanx intends to finance the transaction from existing liquid funds. This transaction is subject to the approval of the responsible supervisory authorities.
Source: HDI and Sompo International
Topics Mergers & Acquisitions
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