US based Travelers Companies Inc is to invest in Brazilian firm Malucelli Participações em Seguros e Resseguros S.A via a joint venture agreement. The American based firm announced it had gone into an agreement for which it would invest in Malucelli, Brazil’s foremost firm in the surety insurance business. The Brazilian firm commands a market share of more than 30 per cent.

Travelers' investment in newly issued shares will significantly increase J. Malucelli's capital level, positioning it for substantial growth in Brazil. Travelers will make an initial investment of approximately US$370 million for 43 percent of the common stock of J. Malucelli, with an option to increase its interest to up to 49.9 percent within 18 months.

Jay Fishman, Chairman and Chief Executive Officer of Travelers said he believes that the combination of Travelers’ broad insurance expertise with J. Malucelli's established distribution network and extensive customer base provides the firm with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.

This is a very significant opportunity for Travelers to leverage its leading U.S. surety franchise to enter the Brazilian market and to do so with a local market leader, said Jay Fishman. He further said Travelers expects this transaction will be modestly accretive to its earnings in the first year, and it positions us in one of the fastest growing insurance markets in the world.

On his part, Alan Schnitzer, Vice Chairman and head of Travelers' Financial, Professional & International Insurance business segment said the combination of Travelers’ broad insurance expertise with J. Malucelli's established distribution network and extensive customer base provides Travelers with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.

The transaction is subject to Brazilian regulatory approvals and other customary closing conditions and is expected to close in the first half of 2011. Greenhill & Co. served as Travelers’ financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP and Barbosa, Müssnich & Aragão served as legal advisors.

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and generated revenues of approximately $25 billion in 2009.

5 Nov 2010.