The Travelers Companies has entered into a joint venture agreement with Brazil-based surety insurance business J Malucelli Participacoes em Seguros e Resseguros, under which Travelers will invest in Brazillian firm.
The investment from Travelers in newly issued shares is expected to significantly increase J Malucelli’s capital level, positioning it for substantial growth in Brazil.
Initially, the Travelers will make investment of approximately $370m for 43% of the common stock of J Malucelli, with an option to increase its interest to up to 49.9% within 18 months.
Travelers chairman and CEO Jay Fishman said, this is a very significant opportunity for Travelers to leverage its leading US surety franchise to enter the Brazilian market and to do so with a local market leader.
We expect this transaction will be modestly accretive to Travelers’ earnings in the first year, and it positions us in one of the fastest growing insurance markets in the world, Fishman said.
Travelers vice chairman and head of Financial, Professional & International Insurance business segment Alan Schnitzer said, the company believe that the combination of Travelers’ broad insurance expertise with J Malucelli’s established distribution network and extensive customer base provides us with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.
The transaction is subject to Brazilian regulatory approvals and other closing conditions and is expected to close in the first half of 2011.