Talanx goes big in LatAm with $1.5bn Liberty Mutual deal
European insurance group Talanx has become the third-largest player in the property and casualty insurance market in Latin America through the acquisition of Liberty Mutual Insurance businesses in Brazil, Chile, Colombia, and Ecuador.
The retail international division of the Talanx Group has signed a purchase agreement to acquire the Liberty Seguros personal and small commercial business in Brazil, Chile, Colombia, and Ecuador.
The purchase price is expected to be approximately €1.38 billion (approximately $1.48 billion) at the closing date of the transaction, subject to customary purchase price adjustment mechanisms. The closing of the acquisition is expected in the first half of 2024, following approval from the relevant governmental and regulatory authorities.
The transaction includes Liberty Specialty Markets direct insurance business in Brazil, Chile and Colombia. It 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.
HDI International AG is currently represented in Brazil, Chile and Colombia through its subsidiaries. HDI Seguros generated a gross premium volume of around 4.5 billion BRL (€789 million) in Brazil in 2022, 488 billion Chilean pesos (€533 million ) in Chile, and 425 billion Colombian pesos (€82 million) in Colombia.
HDI is expected to increase its gross written premiums (IFRS 4) in Latin America by around €1.7 billion. With this transaction, HDI reaches pro forma rank 2 in Brazil, rank 1 in Chile, and rank 7 in Colombia. Furthermore, the division's overall portfolio will be significantly better diversified as a result of the increase in Latin American business to approximately 45 percent.
Liberty Mutual operates in 29 countries. Liberty Seguros Brazil holds a top 5 position in motor and a top 10 position in property/casualty after full year 2022. In 2022, the Brazilian company generated gross written premiums of BRL $6.1 billion (€1.1 billion). Liberty Seguros Chile offers non-life products and achieved a gross premium volume of CLP $325 billion (€0.4 billion) in 2022. Liberty Seguros Colombia's gross premium volume in 2022 was COP $1,033 billion (€0.2 billion). Liberty Seguros Ecuador generated a gross premium volume of $33 million (€31 million) in 2022.
“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," said Torsten Leue, chairman of the board of management of Talanx AG.
"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.”
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, said: “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.”
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