Spanish insurer MAPFRE has formally updated its strategic alliance with Banco do Brasil, which originally gave rise to BB MAPFRE in 2010, now one of the largest insurance groups in Brazil.
Under the terms of the updated agreement, MAPFRE will increase its control of BB MAPFRE’s Non-Life business from 50% to 100%, as well as increasing its control of the Life business developed via the agency channel from 25% to 100%.
The exclusive bank channel distribution agreement is to be maintained, and BB MAPFRE will continue to sell Life and agriculture insurance via the bank channel, as well as Mortage Life insurance.
MAPFRE said the new arrangement will facilitate the redefinition of the businesses developed by BB MAPFRE, and will promote a more simple and efficient governance structure in those businesses that are jointly managed, thereby reducing internal costs and improving productivity and profitability.
The combined transactions of the agreement have a floor price of 2,406 million reales (US $634 million), which is subject to adjustment depending on whether automobile insurance distribution targets in the BB bank channel are met, as well as on the dividends paid out to shareholders until the transaction closes.
Antonio Huertas, Chairman and Chief Executive Officer (CEO) of MAPFRE, said: “This new configuration of the agreement will allow us to renew our alliance with Banco do Brasil, enlarge MAPFRE’s business in the country, maintain exclusivity for our products in the Banco do Brasil channel, and organize our local businesses in a much simpler and more efficient manner.”
He added: “This agreement is clear proof of our complete confidence in Brazil’s economic development, and our commitment to both the country and our future with our partner”.
