UPDATE 1-Bradesco, Porto Seguro end combination talks

Fri Aug 21, 2009 8:17am EDT

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* Porto Seguro, Bradesco end talks over combination

* Shares of Porto Seguro had jumped since talks emerged (Recasts, adds Porto Seguro share performance)

SAO PAULO Aug 21 (Reuters) - Brazil's largest automobile insurer Porto Seguro (PSSA3.SA) said on Friday it ended talks with Banco Bradesco over a possible combination, ending months of speculation that sent the insurance company's shares sharply higher.

Porto Seguro said in a regulatory filing "talks didn't move forward" to combine its car insurance business with the Bradesco Auto RE unit of Bradesco (BBDC4.SA)(BBD.N). Besides leading the country in the automobile insurance market, Porto Seguro also offers health and life insurance, as well as home owner's insurance.

The company's shares have jumped 12 percent since June 30, when Porto Seguro disclosed it was holding preliminary talks with Bradesco, compared with a 9 percent gain in the benchmark Bovespa index .BVSP over the same period.

The shares reached a one-year high on Aug. 6, when local media reported Porto Seguro shareholders would sell a controlling stake to Bradesco. The news was later denied by Porto Seguro.

Bradesco, Brazil's largest insurer, has a huge business in life and health insurance, but lags in the automobile market. The bank's insurance and retirement business accounts for about one-third of profits. (Reporting by Elzio Barreto and Guillermo Parra-Bernal, editing by Gerald E. McCormick)

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