The Travelers Companies, Inc. (TRV) wrapped up the acquisition of J. Malucelli Participações em Seguros e Resseguros S.A., a market leader in the surety insurance business in Brazil.
Initially in November 2010, Travelers inked the deal to acquire the 43% stake in the Brazilian company with an option to increase its stake up to 49.9% within 18 months. Travelers has already invested $410 million.
With the investment from Travelers, the capital level of J. Malucelli will likewise increase. The company already has more than 30% market share.
New York-based Travelers is of the opinion that the Brazilian insurance markets are growing at a faster pace and its joint venture with J. Malucelli will leverage its position. Through the venture the company will be able to tap new surety business as well as explore the growing property and casualty market. Travelers also expects the acquisition to be accretive to earnings in the first year.
Travelers posted a stronger first quarter on the heels of higher underwriting gains, favorable resolution of prior year tax matters, lower catastrophe losses and lower outstanding shares helped the company to post an improved result.
The Zacks Consensus Estimate for second-quarter 2011 is a loss of 4 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $4.93 per share and $6.16 per share.
We maintain our Neutral recommendation on Travelers. The quantitative Zacks #4 Rank (short-term Sell rating) for the company indicates downward pressure on the stock over the near term.
Based in New York, The Travelers Companies, through its subsidiaries, provides a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and in select international markets. It competes with Hartford Financial Services Group Inc. (HIG) and W.R. Berkley Corporation (WRB).
HARTFORD FIN SV (HIG): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
Be the first to comment