Spain Investments in Latin America

Spain Investments in Latin America

Spain Investments in Latin America

In 2011, Spanish insurer Mutua Madrilena took the sector by storm when it shot to number 4 from number 13 in the industry rankings after teaming up with top savings bank La Caixa. Two years later, and now the country’s third largest insurer with over 8 million customers, Mutua Madrilena is on track to fulfill its ambitions to become an international player, setting its sights on South American and Latin American expansion.

 

BANKING AND INSURANCE – A DREAM TEAM 

Mutua Madrilena’s decision to team up with La Caixa was the culmination of its 2009-2011 Strategic Plan and an undoubted success story. It allowed the company to diversify away from its traditional car insurance business, while the bank´s over 5,000 branches provided a distribution network which was second to none.

The two main pillars of the agreement were:

  • Mutua Madrilena’s acquisition of 50 percent of SegurCaixaAdeslas from La Caixa
  • An indefinite contract for the exclusive distribution of SegurCaixaAdeslas non-life insurance products, such as health, home and car insurance

The benefits for Mutua Madrilena from the deal, which was self- financed, were:

  • It became Spain´s number 1 health insurer, with an over 25 percent market share.
  • It rose to the number 2 position from number 7 in non-life insurance, with a 10 percent market share.
  • It was given the opportunity to target potential growth areas, such as Catalonia and Andalucia , nearly doubling its business outside of its home region of Madrid to 56.6 percent of the total.

SOUTH AMERICA – A GOOD INSURANCE IN THE DOWNTURN?

Mutua Madrilena posted a 5.7 percent rise in profits in 2012, no mean feat given the tough business environment in Spain, which is the company´s sole market. However, with limited opportunities for growth at home, apart from the possible privatisation of export credits company Cesce, Mutua Madrilena is now focusing on overseas expansion to beat the crisis and maintain a healthy balance sheet. And where better than South and Latin America, the mecca for many Spanish companies which have cashed in on historic, cultural and linguistic ties?

According to comments from Mutua Madrilena’s management earlier this year, Mexico, Peru and Colombia are all on the company’s radar, with around 500 million euros earmarked for investment in the three countries. In Colombia, the insurance sector is currently growing at rates of 6 percent. Mutua Madrilena’s internationalisation strategy revolves around teaming up with a local partner to acquire a company already operating in the health or automobile insurance business.

The team of M&A experts at Argali Abogados have extensive experience in joint ventures and transactions between insurance companies. Want to find out more? Contact us!

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