By Cyril Tuohy
Ohio National Financial Services, looking to expand beyond the tepid growth of the U.S. life insurance market and tap into the burgeoning Latin American middle class, has bought a 50 percent stake in the Brazilian life insurance company Centauro Vida e Previdencia.
The deal is the third overseas expansion in the last 14 years for Ohio National, which has $38 billion in assets.
Gary T. “Doc” Huffman, Ohio National chairman, president and chief executive officer, said the Brazilian joint venture would offer Ohio National the “opportunity for even faster growth.”
“There has been double digit life insurance premium growth in every major Latin American market over the past five years,” Huffman said in a news release.
The deal is the third expansion for Ohio National outside the U.S. The company bought stakes in life insurance companies in Chile in 2000 and in Peru in 2013.
Centauro, headquartered in the city of Curitiba, offers auto liability insurance and claims administration. The deal will allow Centauro to expand its life insurance product line, Ohio National said.
Last year, Ohio National created ONSV (Ohio National Seguros de Vida) Peru to participate in that nation’s pension system by selling group disability coverage, life insurance coverage and annuities.
Ohio isn’t alone in tapping the Latin American market in search of premium growth. In 2012, Principal Financial Group offered $1.5 billion for the Chile pension fund AFP Cuprum.
Christopher A. Carlson, Ohio National vice chairman and chief investment officer, said middle-class consumers in Latin America provide an emerging need for insurance products.
“With the success of ONSV Chile, Ohio National can continue to transfer its management and insurance expertise built over the past decade,” he said. “We are continuing to evaluate opportunities, reviewing ‘best fits’ in terms of corporate strategy, investment and opportunity.”
Other U.S.-based life insurers have looked to for premium growth abroad. In December, MetLife said it would buy majority and minority stakes in two life insurance subsidiaries of a Malaysia bank holding company. Prudential has sold life insurance in Japan for years.
Premium growth has been stagnant in the U.S.
First quarter annualized premiums for universal, variable universal, term and whole life dropped 7 percent compared to the year-ago period, and the number of policies sold dropped 5 percent in the first quarter compared to a year ago, according to LIMRA.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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