SURA Asset Management Chile SA has reached an agreement to sell life insurance unit Seguros de Vida SURA SA's annuity business in Chile to BICECORP SA and Inversiones BICE Chileconsult SA for a base price of about US$232 million, the companies said.
Grupo de Inversiones Suramericana SA, which controls SURA Asset Management, said the deal only entails the divestiture of Seguros de Vida SURA's annuity business, noting that the company will retain its life insurance operations in Chile.
The selling price, which represents a price-to-book ratio of 1.36 based on local accounting standards, "is the result of a highly competitive process that allowed it to be taken to a maximum level," Grupo Sura noted. The company was said to be considering the sale as early as December 2017, with Grupo Security SA also reportedly expressing interest.
In its own statement, BICECORP said it plans to merge the acquired annuity business with life insurance subsidiary BICE Vida Compañía de Seguros SA once the deal is approved by regulators.
"This transaction forms part of a wider portfolio optimization initiative as well as a re-allocation of capital to the SURA business group's core lines of business," Grupo Sura said. "It also creates additional value to the extent that its profitability outweighs the cost of the capital invested in this company."
Additionally, Grupo Sura noted that based on IFRS accounting standards, the deal will have an impact on book profit that will be seen in its earnings report for the first quarter of 2018.
