Tokio Marine Holdings to establish insurance joint venture in Brazil

Tokio Marine Holdings has agreed to establish a joint venture to underwrite mortgage and homeowners insurance between its subsidiary, Tokio Marine Seguradora (TMSR), and Caixa Seguridade Participações (Caixa Seguridade), an insurance holding subsidiary of Caixa Econômica Federal (Caixa), a Brazilian state-owned bank.

TMSR’s expected investment in the joint venture is R$1.52 billion ($370 million).

As a global insurer, Tokio Marine Group has been focusing on expanding scale and profitability of its international business as the key growth driver of the overall group.

It said in a release: “We have been pursuing organic and strategic M&A initiatives in both developed and emerging markets in order to capture growth opportunities in the global insurance market and to further diversify our business portfolio.

“Through a series of acquisitions, including the most recently announced acquisition of Privilege Underwriters, Tokio Marine Group has diversified its global portfolio in developed markets, especially focusing on specialty primary insurance business. We have also been actively seeking growth opportunities in emerging markets where we expect to see attractive mid-to-long term growth as seen in our recent acquisition of IAG’s P&C business in Thailand and Indonesia as well as our minority investment in Hollard Group, which engages in both life and P&C business in South Africa and other Sub-Saharan countries.”

TMSR claims it is now ranked 5th in terms of market share in the Brazilian auto insurance market and that its joint venture partner Caixa, a state-owned bank, holds around 70 percent market share in the Brazilian mortgage loan market. TMHD is expected to further diversify its operations through the expansion into the growing mortgage and homeowners segments within the joint venture.

Through Caixa Holdings Securitária, Caixa will establish a new insurer entity and allocate new shares to TMSR equivalent to 50.01 percent of the insurer’s voting shares upon the R$1.52 billion capital contribution.

Along with the capital contribution, the new insurer will also issue the same amount of nonvoting shares to Caixa Seguridade as the total outstanding voting shares. As a result, TMSR will hold 25 percent economic interest in the Joint Venture.

The Joint Venture is expected to initiate its operation by February, 2021.