By Jorge Porter?/?Business News Americas
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Zurich-based insurer ACE (NYSE: ACE) is not planning any more acquisitions in Latin America after buying two insurers in Mexico and one in Ecuador in the last year for a combined US$1.21bn, regional president Jorge Luis Cazar told BNamericas.
"When it comes to developing businesses to take advantage of the growing economies and emerging middle class populations in Latin America, we are builders of businesses first and then complement our operations with acquisitions where it makes sense," he said.
Last week, ACE signed a definitive agreement to acquire Mexico's sixth largest P&C insurer ABA Seguros from Ally Financial for approximately US$865mn in cash.
The purchase adds to last month's buy of Mexico's second largest surety lines company Fianzas Monterrey from New York Life Insurance Company for US$285mn.
And late last year, it acquired Ecuador's fourth largest P&C insurer, R?o Guayas Compa??a de Seguros y Reaseguros, from Banco de Guayaquil for US$55mn.
"Although we have announced three acquisitions in the region in the past year, we achieved most of our growth in Latin America over the past decade by growing our businesses organically. We have no specific acquisition plans at this time," Cazar said.
The purchases are in line with the company's goal of doubling premium volume in Latin America over the next five years. It ended last year with US$1.4bn in gross written premiums in the region, or 8% of the group's global premiums.
Latin America was the fastest growing region for ACE in 2Q12, with net written premiums rising 23% as the P&C, accident and health and personal lines segments grew at double digit rates in local currency.
ACE will unveil its 3Q12 earnings on Tuesday (Oct 23). According to S&P Capital IQ, ACE is expected to post net income of US$1.82 per share, an 18% decline compared to what the company earned in 3Q11.
ENHANCED CAPABILITIES
Mexico is ACE's second largest market in Latin America after Brazil, which accounts for 40% of the insurer's premiums in Latin America.
Through its recently announced acquisitions, ACE sees great opportunities to expand its business in Mexico, with a more diverse range of capabilities to serve various customer segments.
"We are extremely well positioned to take advantage of the many growth opportunities we believe will occur from the strong economic outlook and favorable demographic trends in Mexico over the long term," Cazar said.
Fianzas Monterrey will complement ACE's existing commercial insurance business, while ABA Seguros will enable the insurer to reach new individual consumers, complementing its existing personal accident and life insurance businesses, he said.
The transaction of ABA Seguros will be funded with internal funds and will have a minimal impact on ACE's balance sheet, financial leverage and liquidity measures, according to S&P.
The agency maintained ACE's rating at A following the acquisition announcement.
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