Brazilian reinsurers Austral Re and Terra Brasis Re to merge

Brazilian reinsurers  Austral Re and  Terra Brasis Re have signed an investment agreement to merge their operations in order to create the second-largest domestic reinsurer in the vast South American country.

Together, the companies would hold gross premiums of R$ 672 million ($172 million) based on 2018 figures, and become the fourth-largest local reinsurer in terms of shareholders' equity.

Bruno Freire will become the CEO of the new company, and Rodrigo Botti will become the CFO.

Following the merger, the controlling bloc of the operation will be held by Vinci Partners, along with partners from the Brasil Plural group and the International Finance Corporation (IFC), the investment arm of the World Bank, which already have stakes in the two companies.

The reinsurer said it will maintain its strategic focus on serving the insurance industry in all the business lines with innovative solutions, risk management and the highest standards of corporate governance.

The completion of the deal is conditional on the approval of Brazil's official anti-trust agency CADE, and the Private Insurance Supervisory Regulator (SUSEP).

“The merger provides an extraordinary opportunity for long-term value creation," said Freire, CEO of Austral Re. "We expect the combined businesses to capture significant operating, administrative and economic- financial synergies. This is a partner which has a broad knowledge of the sector and will bring about an invigorated capacity for growth and international expansion of business.”

Botti, president of Terra Brasis Re, added: “It is a unique opportunity to speed up the expansion strategies with a new strength and dimension. We are excited about the opportunity to gain scale, the product portfolio and the commitment of our teams.”

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