CNP Assurances Negotiates Amendment to Exclusive Distribution Agreement With Caixa Econômica Federal

September 23, 2019

Cleary Gottlieb represented French insurance company CNP Assurances in the negotiation of an amendment to a binding framework agreement executed in August 2018, providing for the establishment of a new long-term exclusive distribution agreement in the network of Caixa Econômica Federal (CEF).

As agreed in 2018, the new exclusivity perimeter in CEF’s network includes life insurance, consumer credit life insurance, and private pension plans (vida, prestamista, previdência). The new distribution agreement will be implemented through a newly formed insurance joint venture between CNP Assurances and Caixa Seguridade, the holding company for CEF’s insurance operations, with CNP Assurances and Caixa Seguridade owning 51% and 49% of the voting rights and 40% and 60% of the economic rights respectively. Pursuant to the August 2019 amendments, the term of the new exclusivity distribution agreement was extended from February 2041 to February 2046.

CNP Assurances has agreed to increase the fixed amount to be paid on the closing date from R$4.65 billion to R$7 billion and to pay an earn-out amount of up to R$800 million as an incentive mechanism based on performance. The closing of the transaction is subject to a number of condition precedents, including, in particular, approval by the relevant regulatory and antitrust authorities.

CEF is one of the leading Brazilian banks and one of the five largest in Latin America.