AXA has entered into an agreement with Grupo Mercantil Colpatria to acquire a 51% stake in its composite insurance operations in Colombia -Colpatria Seguros- for a total consideration of COP 672 billion (or Euro 259 million). AXA expects to consolidate the acquired operations within its Mediterranean & Latin American Region.
Colpatria Seguros is the number 4 insurance player in Colombia (7% market share), with operations in both Property & Casualty and Life & Savings. It is a leader in the segments of compulsory Motor Third Party Liability ( number 3 with 15% market share) and Workers Compensation ( number 4 with 14% market share). Its nationwide coverage and diversified distribution networks, with multi-tied agents representing approximately 40% of premiums, have supported its strong growth.
The transaction will allow AXA to enter the attractive Colombian market and benefit from its strong growth prospects through developed and profitable operations in a joint-venture with a well-established local partner. Colpatria Seguros will benefit from Axa’s strong know how to accelerate further its development and leverage its competitive advantages in the Colombian market.
“This acquisition gives AXA a unique opportunity to enter the fast-growing Colombian insurance market with well- established positions in all lines of business, while benefiting from the support of a solid and reputable local partner. Moreover, colpatria Seguros’ sustained historical growth and profitability, both above market average, provide AXA with a strong platform for further development. This operation strengthens Axa’s growth profile and marks another milestone in our strategy of accelerating in high growth markets, which is at the heart of our Ambition AXA plan” said Henri de Castries, Chairman and CEO of AXA.
“We are very much looking forward to working with Colpatria Seguro’s teams. By combining their extensive knowledge of the domestic market and Axa’s capabilities and expertise, we expect to provide individual and corporate customers with a wider product range and an innovative offer”, added Jean-Laurent Granier, CEO of AXA Mediterranean & Latin American Region.
Completion of the transaction is subject to customary closing conditions, including the receipt of regulatory approval, and is expected to take place in 2014.
About the Colombian Insurance Markets
The Colombian insurance market is the fifth largest in Latin America with ca. Euro 8 billion of revenues. Property & Casualty represent close to 50% of the market, followed by Life, Workers Compensation (Labour Risks) and Voluntary Health. The top 5 players represent ca. 50% of the volumes. Distribution is dominated by multi-tied agents (52%) and brokers (31%).
The Colombian insurance market has enjoyed robust growth over the past four years, at 12% per annum on average. It still presents further upside potential with a low penetration rate of 2.4% and assuming strong prospects for the Colombian economy. On top of increasing economic activity and a growing middle class, market growth has been boosted by the strong development of mandatory insurance coverage, such as Motor Third Party Liability, Workers Compensation and Health Insurance.
In 2012, there were 47.7 million inhabitants in Colombia and GDP was Euro 288 billion.