HDI International has acquired the retail business of Brazilian firm Sompo Seguros.
According to the firm, this will enable it to gain scale in motor while diversifying into non-motor property and casualty as well as life protection business. HDI said it will also strengthen its market position in Brazil, reaching rank 7 in the P&C and rank 4 in the motor insurance market.
Nicolas Masjuan, head of LATAM at HDI International, said: “[This] 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 & Property. Furthermore, we are able to achieve significant synergies by combining Sompo´s retail business with our existing business in Brazil.”
The initial purchase price payment is subject to certain closing account and other adjustments and expected to amount to approximately BRL 1,050 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.
Sompo Seguros 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 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. Following a transitional period, the business will be continued under HDI’s brand.
HDI International has a presence in Brazil through HDI Seguros with a focus on the motor insurance market. The Talanx Industrial Lines division also operates in Brazil through HDI Global Seguros. The combined entities of Talanx would bring the group close to a TOP5 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. The closing of this transaction is expected in the middle of 2023.
HDI International is a subsidiary firm of Talanx. Dr. Wilm Langenbach, board member of the former, said: “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.”