Germany’s Talanx Group is set to become the third-largest P&C insurer in Latin America after acquiring a number of Liberty Mutual’s businesses in Brazil, Chile, Colombia, and Ecuador, through its subsidiary HDI International.
The purchase price is expected to be around €1.38 billion at the closing date of the transaction, which is subject to customary purchase price adjustment mechanisms.
Following the transaction, HDI is expected to increase its gross written premiums (IFRS 4) in Latin America by around €1.7 billion, helping it reach pro forma rank 2 in Brazil, rank 1 in Chile, and rank 7 in Colombia.
Additionally, the division’s overall portfolio will be significantly better diversified as a result of the increase in Latin American business to approximately 45%.
The transaction includes Liberty Specialty Markets direct insurance business in Brazil, Chile and Colombia. The transaction however, does not include Liberty Specialty Markets facultative reinsurance, Liberty Mutual Reinsurance treaty reinsurance and Liberty Mutual Surety businesses which will continue to operate in Brazil, Chile and Colombia.
Torsten Leue, Chairman of the Board of Management of Talanx AG, said: “With the acquisition of these Liberty Mutual operations we are continuing our success story in Latin America.
“The acquisition fits seamlessly into our strategy of achieving market-leading positions in our core markets through organic and inorganic growth. Alongside Europe, Latin America is one of our core regions in the retail business. We are therefore pleased to be among the top 3 in Latin America with this acquisition.
“The acquisition will improve our Group net income and our return on equity already in the first year after the expected closing in 2024. The acquisition will further strengthen our primary insurance business and our diversification across business lines.”
Dr Wilm Langenbach, Member of the Board of Management of Talanx AG with responsibility for the Retail International division and Chief Executive Officer of HDI International AG, added: “The acquisition is an important milestone in the implementation of our strategy to reach a top 5 position in our core markets across the property/casualty business by 2025, to further diversify our portfolio and to strengthen our technical excellence.
“In addition, the acquisitions will allow us to achieve significant opportunities with our existing business in Brazil, Chile, and Colombia. I am very pleased that our future Liberty colleagues will strengthen us with their outstanding expertise and experience in Latin America.”
Tim Sweeney, President and Chief Executive Officer of Liberty Mutual Insurance, commented: “In a world that is rapidly changing, sharpened operational focus across our channels, products and markets is becoming increasingly important for long-term success and will ensure we deliver exceptional value to our customers, brokers, agents, partners, employees, and the communities we serve.
“We thank our Latin American teams of over 4,600 employees for their tremendous commitment and dedication to our business over many years. We’re confident in their future with Talanx, which shares similar core values.”
Furthermore, Rothschild & Co acted as financial advisor and Hogan Lovells acted as legal advisor to Talanx AG and HDI International AG in the transaction, while J.P. Morgan Securities LLC acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice to Liberty Mutual in the transaction.
