Banco do Brasil, Latin America's largest lender by assets, said on Thursday that it was seeking control of state-run reinsurer IRB-Brasil, a move that would give it access to a booming $4 billion market.
IRB, which was founded in 1939, is Latin America's largest reinsurer. By taking control of IRB, Banco do Brasil would tap into a market that is expected to double in terms of underwritten policies by 2013. Investment in massive infrastructure projects to extract oil from offshore reserves and build the venues for the 2014 Soccer World Cup and the 2016 Olympic Games requires additional coverage by reinsurers, who help primary insurers shoulder the risks assumed for clients.
The bid is part of Banco do Brasil's revamping of its insurance unit, according to the filing. The lender wants insurance to account for 25 percent of net income within five years.
Last year, reinsurance expanded in Brazil while it shrank in most countries. Brazil's insurance market grew by 8.4 percent in underwritten policies, compared with a global drop of 2 percent. The opening up of Brazil's reinsurance market in January 2007 brought an end to IRB's 69-year monopoly, resulting in a surge in the number of private companies operating in the sector. By May 2009 these totaled 59.
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