Austral Re and Terra Brasis Re announced today that they have signed an investment agreement to merge their activities. This union will result in the second-largest Brazilian reinsurer in terms of reinsurance premiums underwritten (R$ 672 million in combined gross premiums underwritten in 2018) and the fourth-largest Brazilian reinsurer in terms of shareholders´ equity (R$ 387 million combined net equity in 2018).
The controlling interest in the operation will be held by Vinci Partners, along with partners from the Brasil Plural group and the International Finance Corporation (IFC), the investment arm of the World Bank, which already have stakes in the two companies.
The reinsurer has offices in Brasil, Colombia & Guernsey
The competitive positioning of the new reinsurer will be strengthened by the complementary nature of the business portfolios and the expansion of the geographic coverage in Brazil and abroad, with offices in Rio de Janeiro, São Paulo, Colombia and Guernsey. It will also have authorization to operate in various other Lain American countries.
Bruno Freire (pictured above) will be the CEO of the new company and Rodrigo Botti will be the CFO. The reinsurer will maintain its strategic focus on serving the insurance industry in all the business lines, with innovative solutions, excellent attendance, responsible risk management and the highest standards of corporate governance.
“The merger provides an extraordinary opportunity for long-term value creation. We expect the combined businesses to capture significant operating, administrative and economic- financial synergies. This is a partner which has a broad knowledge of the sector and will bring about an invigorated capacity for growth and international expansion of business,” says Freire.
“It is a unique opportunity to speed up the expansion strategies with a new strength and dimension. We are excited about the opportunity to gain scale, the product portfolio and the commitment of our teams,” said Rodrigo Botti.
Vinci Partners indicated that the merger will not interfere in any way in the shareholder composition of Austral Seguradora, which is controlled by Vinci Partners.
The conclusion of the deal is conditional on the approval of Brazil´s official anti-trust agency, known as the CADE, and the Private Insurance Supervisory Regulator (SUSEP).