Chilean insurer purchases FAF unit

Chilean-based insurer Aseguradora Magallanes has announced the purchase of the Chilean subsidiary of First American’s international insurance division (FAF).

Aseguradora Magallanes informed SVS, the local securities regulator, of its plan to attain 100% of FAF International’s Chilean subsidiary’s shares earlier this month.

At present, both companies are performing a due diligence process, and the acquisition is pending approval by the regulator. The firm hopes to close the transaction over the next six months.

Local ratings agency, Feller Rate, said the procurement is consistent with Aseguradora Magallanes’ risk diversification strategy, by developing niche businesses that broaden its product offering.

According to the report, Aseguradora Magallenes is financially strong enough to perform the acquisition without pressuring its solvency indicator and financial profile.

“Under the buyer’s perspective, the purchase will increase synergy between the group’s companies and diversify its risk profile, focused on personal lines,” Eduardo Ferretti, senior director at Feller Rate told LatAm Insurance Review.

“The organisational structure of FAF’s subsidiary as a result of the merger process will depend on the agreement reached and regulatory approval,” he added.

The ratings agency, Feller Rate, affirmed Aseguradora Magallenes’ ratings A+ with a stable outlook and FAF International’s ratings at Ei with an “in development” outlook.

By Ruth Gillbe