Travelers Increases Stake In Brazil Surety Insurer

The Travelers Cos. exercised an option to increase its ownership stake in a Brazil company that it invested in two years ago from 43.4 percent to 49.5 percent.

Travelers said in November 2010 it planned to spend $370 million for a 43 percent stake in J. Malucelli Participações em Seguros e Resseguros S.A., the market leader in surety insurance in Brazil.

Travelers would not say how much it spent to expand its ownership stake in the company. Travelers increased ownership by exercising an option at a price based on the same valuation as the original investment, the company said, which would be about $52 million.

“We are very pleased with the performance of our joint venture in Brazil,” Travelers head of Financial, Professional & International Insurance business segment, Alan Schnitzer, said in a prepared statement. “The venture continues to be the market leader in the surety insurance business in Brazil, with a market share of approximately 30 percent. In addition, we are making good progress on our early efforts to expand beyond the surety business into the growing property and casualty market.”

Surety coverage generally offers a payment to an individual or business if a principal, or policyholder, doesn’t fulfill an obligation, such as terms of a contract.

Brazil is a hot market for investment. UnitedHealth Group said in October it plans to spend $4.9 billion on Brazil’s largest health care company, which is the company’s priciest acquisition in years.

In December 2011, Cigna Corp. expanded its expatriate health benefits business in Brazil, establishing a partnership with Gama Saúde, which has 20,000 doctors, hospitals and health-care professionals in Brazil.