Brazilian reinsurance company Austral Re has acquired the run-off reinsurance operations of Markel Resseguradora do Brasil, and its parent company Markel Participações (Markel Brasil), with the value of the deal not currently being disclosed.
This marks Austral’s second acquisition within the last two years, as the reinsurer expands through the South American Market.
The negotiations between Austral and Markel started in 2019 and resumed last year due to the group’s decision to review its performance in Latin America.
The contract was signed in February and the acquisition was approved by the Superintendency of Private Insurance last week.
With the approval of the regulatory body, Austral Re will integrate Markel’s operation in Brazil, incorporating the reinsurer’s processes and staff into its team.
According to the financial statements released by Markel Brazil for the fiscal year ended December 31, 2020, the company reported a net worth of approximately R$76 million and total assets of almost R$180 million.
Markel Brasil operations are 100% ceded to Markel UK via a quota share agreement.
The acquisition will be paid with a five-year bank loan, which translates into a pro-forma consolidated leverage of 9.8% debt to tangible capital at the end of 2020 for the group after the acquisition.
The resulting pro-forma interest coverage ratio is 6.3x at the end of 2020.
