(By Balaseshan) ACE Ltd. (NYSE: ACE), a multiline property and casualty insurer, said it has agreed to buy Ally Financial Inc.'s Mexican insurance business, ABA Seguros, for about $865 million in cash.
ACE expects the acquisition of ABA Seguros to be accretive to earnings in the first year and to meet or exceed the company's long-term return on equity target by the third year.
"Following our announcement last month to acquire Fianzas Monterrey, a surety writer in Mexico, and now ABA, a major personal lines and agency company, we are extremely well positioned to take advantage of the many growth opportunities we believe will occur in this important country over the next decade and beyond," said Evan Greenberg, Chief Executive of ACE.
ACE has been operating in Mexico for many years through ACE Seguros, a business with an industrial commercial and personal accident focus.
ABA Seguros, which is based in Monterrey, Mexico, is a provider of auto and property and casualty insurance in Mexico.
Earlier this year, Ally Financial began a process to pursue strategic alternatives for its international operations, and the company has been encouraged by the breadth and depth of interest in these operations.
"Taking these actions with respect to the international operations will enable Ally to further invest in and grow its leading U.S.-based automotive services and direct banking franchises and be best positioned to return additional capital to the U.S. taxpayer," said Ally Chief Executive Michael Carpenter.
ABA Seguros, which was founded in 1956, has over 30 sales offices throughout Mexico and distributes its products through a network of nearly 2,000 independent agents as well as through auto dealerships, banks and direct channels.
ACE closed Wednesday's regular session up 0.75% at $79.29. The stock has been trading between $61.60 and $79.35 for the past 52 weeks.