33421 - Orange

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Summary of Investment Information

Project Number

33421

Company Name

SUL AMERICA S/A

Date SPI Disclosed

May 17, 2013

Country

Brazil

Region

Latin America and the Caribbean

Projected Board Date

Jun 28, 2013

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Apr 25, 2013
Signed : May 16, 2013
Invested : Jun 13, 2013

Sector

Composite Insurance (Life and Non-life)

Project Description

The purpose of the proposed project is: (i) to support Sul América S.A., a leading Brazilian holding of multiline insurance providers (the “Company” or “SulAmérica”) listed in the Level 2 governance listing segment of BM&FBovespa, São Paulo stock exchange (BM&FBovespa: SULA11), during an important transitional period for the Company and the insurance sector in Brazil; and (ii) to facilitate Internationale Netherlanden Groep’s (also known as the “ING Group”) orderly divest the direct shareholding participation held by its subsidiary ING Insurance International B.V. (“ING”) in the Company (the “Project”). The Company is controlled by Sulasapar Participações S.A. (“Sulasapar”), a holding company that is currently jointly controlled by Sulasa Participações S.A. (“Sulasa”), holding company controlled by the Larragoiti family, with 55% and ING with 45%.

The proposed IFC investment consists of an equity investment of approximately BRL 400 million in SulAmérica through the purchase of units from ING, representing approximately 7.9% of the Company’s total outstanding capital stock. A unit is a hybrid security composed of one ordinary voting share and two non-voting preferred shares of Sul América.

Sulasapar and ING had previously entered into an agreement providing for the purchase by Sulasa of ING’s stake in Sulasapar for a combination of cash and units in Sul America, after which Sulasa will become the sole shareholder of Sulasapar. The closing of the transaction between Sulasapar and ING will only occur after all applicable regulatory approvals are obtained.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	197.60

Development Impact

i) Financial Inclusion: There is a significant need in Brazil for health insurance. With a penetration of 25% of the total population, coupled with current demographic trends, the country needs to increase access to health insurance in the short to medium term. This situation is particularly pressing in less developed regions of the country such as the North and Northeast, where penetration levels are 50% of those in the south of the country. The Company is also increasingly providing insurance to individuals through SMEs, the fastest growing segment in its health insurance business. Sul America''s plan to grow its health and dental business is expected to contribute to solving the shortage of health insurance in Brazil and hence positively contributing to the development of the country.

ii) Insurance Sector Improvements: There is significant potential impact from regulatory intervention on insurance and health sector in Brazil; policy and regulation will need to adapt so that private health care offerings can expand to meet increased demand as demographic changes in Brazil will make health care a major fiscal challenge. In this context, the company''s plan to grow its health insurance premiums by approximately 13% per year will over the next five years contribute to the appropriate evolution of this sector and continue to support government efforts in meeting these challenges.

iii) Improve Market Practices: The Company intends to further improve its health and motor claims handling process from an industry-leading 85% of claims settled in 3 months to 90% of claims settled in 2 months. Over time, other market participants would need to perform at a similarly high level, which could result in increased system efficiency, better service and customer satisfaction.

i) Corporate Governance: Under the leadership of a new CEO jointly appointed by the Family and ING, the Family is looking to implement significant organizational and strategic changes and sees IFC as an important partner through its role on the Board. IFC''s reputation and role in the corporate governance through a seat on the Company''s board would strengthen the company''s board of directors.

ii) Knowledge and Innovation: Through this partnership, SulAmerica will benefit from IFC''s expertise and network of insurance clients in Brazil and around the globe, to foster product innovation, especially in frontier areas and products for the bottom of the pyramid like low-ticket insurance products, weather or gender-specific coverages.

iii) Mobilization & Stamp of Approval: IFC is expected to bring a stabilizing effect and comfort to stakeholders, including public shareholders and regulators. IFC''s global expertise and local footprint in Brazil give comfort to other potential investors. The IFC can use this stamp of approval to mobilize additional long-term investors such as sovereign wealth funds to: (i) assist ING in its efforts to exit the shareholding of the Company; and (ii) diversify the Company''s base of long-term investors.

E&S Category Rationale / Risks and Mitigation

The proposed project involves the equity investment in the holding of a Brazilian insurance conglomerate and has been classified as Category FI-3 according to the IFC''s Sustainability Framework. Portfolio of services includes: Health and Dental, Auto, Property and Casualty, Life Insurance and Pension Plans, Asset Management and Capitalization. As part of the proposed investment, the Company will be required to develop an ESMS to screen activities against the IFC Exclusion List for its Asset Management operations and potential direct corporate insurance. The Company will also inform IFC in the event of any change in nature or scope of its business or operations.

Contacts

For Inquiries About the Project, Contact

Arthur Farme d’Amoed Neto – Chief Financial Officer and Investor Relations
Rua Beatriz Larragoiti Lucas, 121
Rio de Janeiro, RJ, Brazil
Telephone: 55 21 2506 8163
mailto:arthur.farme@sulamerica.com.br
ir@sulamerica.com.br

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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