CorpGroup announces deal to sell Chilean insurance units

Chilean financial services group CorpGroup has reached an agreement to sell its insurance units to local holding Inversiones La Construcción (ILC). CorpGroup, which controls local bank CorpBanca, announced on Monday that it had signed an MOU with ILC for the sale of a controlling stake in its general insurance unit, CorpSeguros, and its life insurance arm, CorpVida. Under the deal, CorpGroup will receive US$165mn in cash, while ILC will assume a proportional share of the units' debt obligations. The deal values the two insurance subsidiaries at some US$650mn, CorpGroup said in a release. CorpGroup's owner, Chilean businessman Alvaro Saieh, had reportedly received at least three offers for the insurance companies. Saieh is seeking to raise capital in response to funding and performance issues at CorpBanca sister firm, supermarket chain Unimarc (SMU), according to reports last week. In addition, Moody's recently announced a review for downgrade of CorpBanca, citing the bank's increased exposure to Colombia through its US$1.3bn acquisition of Helm Bank, completed in August this year. CorpGroup and ILC have begun due diligence proceedings and the deal is expected to close by November 30, according to the CorpGroup release. ILC is set to acquire a 67% stake in CorpGroup Vida, the parent company of CorpSeguros and CorpVida, while CorpGroup will retain the remaining 33%. In Chile, ILC's assets include private pension fund manger AFP Habitat and life insurer Vida Cámara.