Principal Financial Group said that The Principal and Brazil-based Banco do Brasil have signed a definitive agreement to extend their pension and long-term asset accumulation joint venture in Brazil.
Principal Financial Group said that The Principal and Brazil-based Banco do Brasil have signed a definitive agreement to extend their pension and long-term asset accumulation joint venture in Brazil.
Under the agreement, the companies joint venture, BrasilPrev Seguros e Previdencia (BrasilPrev), will have the exclusive right to manufacture and distribute products within the Banco do Brasil network for 23 years.
The definitive agreement includes the same key elements outlined in the memorandum of understanding related to BrasilPrev, which was signed by both companies and announced in October 2009.
Under the terms, the joint venture will be co-managed, with the Principal owning 50.01% of BrasilPrev common stock and Banco do Brasil owning 49.99% and the Principal’s economic interest (share of profits) will be 25.005% and Banco do Brasil’s share, 74.995%. The Principal’s previous share of profits was 46.01%.
Norman Sorensen, president and CEO of Principal International, said: “There is significant value in securing a long-term, exclusive distribution arrangement with Banco do Brasil commenting on the exchange of economic interest for the long-term extension. Not only is Banco do Brasil the market leader, but they also continue to expand their network which translates into even greater opportunities for BrasilPrev going forward.
“In the past five years, BrasilPrev has achieved compounded annual growth rates of operating earnings of 25% and 30% in assets under management, reflecting BrasilPrev’s ability to meet the country’s increasing need for world-class pension products. Looking ahead, we expect continued growth at an ever faster pace, as Brazil’s middle class continues to expand.”