Brasil Insurance sees fewer acquisitions in 2014 as economy sags

Reuters

By Natalia Gomez

SAO PAULO, Oct 25 (Reuters) - Brasil Insurance expects a slowdown in acquisitions next year, as familybusinesses are more hesitant to sell with a weaker economyhurting valuations.

The Brazilian holding company has bought 23 brokerages sinceit went public in 2010, nearly doubling its portfolio to 50businesses. The values of its acquisitions are usually based ona multiple of brokerages' net income over the prior 12 months.

"Knowing that rule, owners don't want to sell their assetsnow, in the hopes that their results will improve," said FabioFranchini, vice chairman of the board of Brasil Insurance, in aninterview in Sao Paulo.

Brokerages serving small and medium-sized businesses havebeen especially affected by the shaky economy, Franchini said.Brasil Insurance is in talks with dozens of brokerages, all ofwhich have expressed some caution, he added.

Still, Franchini said there is room for consolidation in thepromising Brazilian insurance industry.

Brazilians spend less than a tenth of the amount Britons orAmericans do on insurance products. As the country's middleclass grows, insurers are luring new clients by transformingtraditional, costlier policies into cheaper products.

In April, BB Seguridade Participações SA sealedthe world's biggest initial public offering in seven months, as state-controlled Banco do Brasil SA tapped stronginvestor appetite in its pension, annuity and insurance unit.

Lower interest rates, stable household income and a strongjob market have boosted Brazilian demand for retirement packagesand health and auto insurance.

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