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Swiss Re to Buy Sul America Stake as ING Groep Retreats

Swiss Re Ltd. (SREN), the world’s second-largest reinsurer, agreed to buy an 11 percent stake in Sul America SA (SULA11) from ING Groep NV (INGA) to expand in Brazil.

The reinsurer will also purchase a 3.8 percent holding in Rio de Janeiro-based Sul America from members of the Larragoiti family for a total of about $334 million, according to a statement yesterday from the Zurich-based company.

“The acquisition shows Swiss Re’s commitment to high market growth,” Fabrizio Croce, an analyst with Kepler Cheuvreux in Zurich, said in a note to investors. “The company has so far been under-represented in the Brazilian reinsurance market.”

Swiss Re has been looking to expand in high-growth markets such as China, India and Brazil. In October, Chief Executive Officer Michel Lies agreed to invest as much as $425 million in Richard Li’s FWD Group. The deal announced yesterday will give the reinsurer a stake in Brazil’s largest independent insurance group. Sul America offers property, casualty and life insurance, as well as pension and asset-management products.

Swiss Re rose 0.1 percent to 82.30 Swiss francs by 12:45 p.m. in Zurich trading, valuing the company at 30.5 billion francs ($33.4 billion). The stock climbed 25 percent this year. Sul America advanced 0.8 percent to 15.95 reais ($7.05) in Sao Paulo yesterday.

‘Growth Opportunities’

“Sul America is a well established and successful multiline insurer in Brazil where we see attractive growth opportunities,” Swiss Re’s Lies said in the statement.

ING, forced to sell its entire insurance operations after receiving state aid in 2008 and 2009, will get about 185 million euros ($250 million) in the sale, and expects to book a gain of about 100 million euros.

“ING is progressing well with its disposal program,” JanWillem Knoll, an Amsterdam-based analyst at ABN Amro Group NV, said in a note today. Following its restructuring, ING will become a “relatively clean bank, focused on the more stable northern European economies,” said the analyst, who recommends clients buy the shares.

ING shares slipped 0.6 percent to 9.56 euros by 12:45 p.m. in Amsterdam, paring their gain this year to 35 percent.

The transaction helps ING unwind a joint venture formed in 2002. Earlier this year, the Amsterdam-based company agreed to sell a 7 percent stake to the Larragoiti family. Proceeds will be used to pay down debt, ING said in a separate statement yesterday. After both deals are completed, the Dutch company will have a stake of 10 percent in Sul America.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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