Swiss Re Acquires Columbia’s Main Surety Underwriter
Swiss Re, the major European insurer and reinsurer, plans to acquire a 51% stake in Compania Aseguradora de Fianzas SA Confianza, a specialist in the Colombian surety market. Terms of the deal were not disclosed, but it is subject to regulatory approval and expected to close in the second half of 2014.
Columbia’s planned increase in infrastructure spending has recently attracted the interest of both insurers and brokers. Last November, French insurer Axa bought a majority stake in Colpatria Seguros for €259m and this month London-based Howden Broking Group acquired stakes of 70% and 100% respectively in local broking firms Wacolda and Proseguros.
Planned infrastructure projects in Columbia involve billions of dollars and the Colombian surety industry is already the third largest in Latin America, accounting for 17.4% of the region’s market as of mid-2013. However, sureties account for no more than 3.8% of all Colombian insurance activity.
Colombia’s insurance penetration level amounted to 2.5% of gross domestic product (GDP) at the end of 2012, according to a report from Swiss Re, with non-life insurance penetration running at just 1.7%.
Established in 1979, Bogota-based Confianza is the largest local surety bond provider with a 17% market share in a regional market dominated by international firms, and the seventh largest surety writer in Latin America with 3.2% market share. It offers surety insurance products, third-party liability and all-risk construction insurance solutions.
“We are very pleased to join forces with Confianza, a firm with an excellent reputation and understanding of the local market,” said Swiss Re Corporate Solutions chief executive (CEO), Agostino Galvagni. “The combination of our capabilities and expertise will create a strong commercial insurer for corporate clients in Colombia.”