) closed the acquisition of the fourth largest property and
casualty (P&C) insurer in Mexico, ABA Seguros from Ally
Financial Inc. The deal had been previously announced in Oct 2012
and was pending regulatory approval.
The total purchase consideration equates to $865 million out of
which $690 million was paid in cash and $175 million was taken by
the seller as pre-closing dividend.
Monterrey-based ABA Seguros provides auto, homeowners and small
business insurance coverage. The company was set up in 1958 and
has more than 30 sales offices across Mexico. Additionally, it
has almost 2,000 independent agents for product distribution. The
company also distributes its products through auto dealerships,
banks and direct channels.
ABA Seguros is a reputable company in Mexico with a history of
profitability. Additionally, it has a strong brand name in the
P&C business. Thus, the acquisition should strengthen ACE
Limited's P&C business, particularly its personal lines and
agency businesses. The deal will also strengthen the company's
foothold in Mexico.
As previously announced, the acquisition is expected to bolster
ACE Limited's earnings from the first year of purchase. Moreover,
the deal is likely to enable ACE to achieve or even surpass the
company's targeted long-term return on equity projection by the
ACE Limited is positioning itself to capitalize on the expected
growth opportunities in Mexico. Towards this end it acquired
Fianzas Monterrey from New York Life Insurance Company for a cash
consideration of $293 million last month, to expand its surety
The addition of ABA Seguros to ACE Fianzas Monterrey and the
company's existing facility that specializes in industrial
commercial and personal accident insurance - ACE Seguros, is
expected to help the company write more business in Mexico over
the next decade.
Net premiums written by the property and casualty business of ACE
in the first quarter of 2013 were $1.3 billion, up 9.3% year over
year. The acquisition of ABA Seguros is expected to augment the
ACE currently carries a Zacks Rank #2 (Buy). Among others from
Axis Capital Holdings Limited
Global Indemnity Plc
HCC Insurance Holdings Inc.
) carry a favorable Zacks Rank #1 (Strong Buy) and are worth
ACE LIMITED (ACE): Free Stock Analysis Report
AXIS CAP HLDGS (AXS): Free Stock Analysis
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis
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