The year is not over for Solamerica. This morning, the company completed the acquisition of 100% of the Japanese insurance company Sompo Saúde, which has 116,000 health insurance users in Brazil, for R$230 million.
The deal is surprising, as Sompo has not shown interest in ditching health insurance, even though it is a general insurance that the Japanese company has paid more attention to in recent years. On the other hand, SulAmérica recently made the opposite move: It sold off the automotive district and prime lines to focus on health.
Sola the centenary went to knock on the door of the centenary also for Sombo about two months ago, arguing that scale is the name of the game in the health insurance market. The buyer, founded by the Larragoiti family, already has about 2.4 million users of medical insurance and more than 2 million dental plans. Sompo does not have a dental plan. We see opportunities for synergies and cross selling. We serve the same client profile, our brokers are the same, and the certified network is the same too, says Ricardo Bottas, CEO of SulAmérica.
Ricardo Bottas, CEO of SulAmérica: Developments in the health sector
It is estimated that Sompo will end the year with operating income of R$650 million, with the health insurance business. It is part of the SulAmérica operation, which, in the nine-month period, generated revenue of R$14.3 billion in the health and dental sectors.
“We will focus our plans on strengthening the business targeting the multiple branches of the Brazilian general insurance market in which the company operates in Brazil,” says Alfredo Lalea Neto, President of Sompo Seguros in Brazil. In 2020, the Japanese insurance company calculated premiums of about R$3.5 billion in Brazil.
Proceeds from the acquisition will come from SulAmérica’s cash, with payment upon closing of the transaction, subject to Cade’s approval. The Sompo purchase should not be isolated, as the company is analyzing six other assets, with good chances of closing part of those negotiations in 2022.
In the middle of last year, SulAmérica bought Paraná Clínicas, a Curitiba-based vertical operator, for R$385 million, and in March acquired Health Plans Group in Santa Casa de Misericórdia in Ponta Grossa (both in Paraná) and created One Health Insurance with a network They are restricted from the service providers, which already have 50,000 users in Rio and Sao Paulo.
Despite operating in different markets, SulAmérica came into conflict with Hapvida this year by operator HB Saúde, from São José do Rio Preto – it ended up with Hapvida. “We’ve entered the mid-tier ticket market, but we’re not directly competing with them,” Bottas says.
The CEO says it’s not plans to have a large network of his own, with a series of hospital and clinic acquisitions as industry leaders do. But, even without a large-scale vertical process, Sola wants to attract the part of the public that has health insurance in the lower middle class. This market consists of 11 million users, which is 23% of the segment.
Today, SulAmérica is the fourth largest operator in this segment, with a market share of 12% in the São Paulo metropolitan area, which is its main area of operations. With Sompo, it touches insurer Bradesco, which has a 13% share, and Amil, which has 17% of the market (but the UnitedHealth subsidiary will see that percentage drop as it sells its portfolio of individual health plans, with nearly 400,000 users) .
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