Brasil Insurance Participações e Administração S.A., a publicly held company with common shares traded on the Novo Mercado of the Bovespa, announced that it has acquired Fazon Corretora de Seguros Ltda.

The acquisition is in line with Brasil Insurance’s strategy of growth through acquisition of interest in insurance and reinsurance brokerages. The investment makes Fazon Corretora de Seguros Ltda the 33rd Insurance Broker of the Brasil Insurance Group.

Fazon, which is headquartered in Belo Horizonte, is the Brasil Insurance’s first acquisition in the capital of Minas Gerais state. Fazon operates mainly in the health, life, auto/fleet and pension plan segments. The broker sold in 2010 approximately R$55 million in insurance premiums.

Brasil Insurance will hold 99.99% of the shares representing the capital stock of Fazon Corretora. The value of the acquisition is R$15.0 million plus three variable annual installments calculated using an earn-out structure based on the future results of Fazon Corretora.
 
The total acquisition price is estimated at R$36.1 million, of which 50% should be paid in cash and 50% in Brasil Insurance stock. Altogether in 2011, the Brasil Insurance acquired six Insurance brokers that accounted for a total investment, including the earn-outs installments estimative, of $ 126.4 million.

Brasil Insurance is a company that, once this acquisition is approved, will have 33 brokerage firms, each founded by brokers with significant experience and an average of 19 years of activity in the insurance or insurance brokerage markets.
 
The company’s brokerage companies sell a broad range of insurance products, including health and dental insurance plans, auto, fleet, large risks, surety, liability, engineering risk, transport and other insurance policies will have 40 offices located in 10 states in Brazil, serving customers across the country.

The main activity of Brasil Insurance Brokerage Companies is insurance brokerage, and their revenues derive principally from commissions paid by insurers and health plan operators on sales of insurance policies.
 
According to data from the SUSEP, and based solely on the types of insurance segments regulated by the SUSEP, the ten largest insurance groups account for approximately 80% of the net premiums for policies issued in the Brazilian market.
 
According to Swiss Re, insurance penetration in Brazil (expressed as net premiums as a percentage of GDP) was 3.1% in 2009, considerably lower than more developed markets such as the United States (8%) or other emerging markets such as India (5.2%).

20th July 2011