(Adds clarification from Itau that earnings boost is pretax)
By Asher Levine
SAO PAULO, July 4 Itau Unibanco Holding SA
, Brazil's largest nongovernment bank, expects a
pretax earnings boost of 1.1 billion reais ($497 million) from
the sale of its high-risk corporate insurance portfolio to
global insurance company ACE Ltd, according to a Friday
ACE will pay 1.515 billion reais in cash for the unit,
according to terms of the deal, which was signed on Friday. A
later securities filing clarified that the 1.1 billion reais the
sale is expected to add to Itau's profit is pretax.
The unit specializes in offering insurance coverage for big
corporate projects in high-risk segments such as oil and gas and
ACE said in a separate statement that the transaction is
expected to be completed in the first quarter of 2015, adding to
earnings immediately. Upon completion, it will make ACE the
largest commercial property and casualty insurer in Brazil.
In 2013, the unit had about 2 billion reais in gross
premiums written and an 18 percent market share.
The deal, which is subject to contract conditions and
regulatory approval, is part of Itau's strategy to focus on mass
market insurance policies that are more associated with retail
banking, Itau said in an emailed statement.
Brazilian government officials have said they expect policy
underwriting in the high-risk and reinsurance segments to grow
three times as fast as overall economic growth through 2015. But
with economic growth trailing the government's 4.5 percent
average target between 2011 and 2014, returns and policy
underwriting have suffered.
Preferred shares of Itau Unibanco were unchanged at 31.79
reais in early Sao Paulo trading on Friday. ACE shares did not
trade in New York due to the U.S. Fourth of July holiday.
($1=2.2132 Brazilian reais)
(Reporting by Asher Levine; Editing by Bernard Orr; and Peter