Good evening and welcome, everyone. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will be provided at that time. As a reminder, this call is being recorded. I would now like to turn the conference over to Ana Castro, Investor Relations Manager. Please go ahead, Ana.
Thank you, and good evening, everyone. Thank you for joining us today to hear more about the launch of Vinci Permanent Capital Solutions with the acquisition of AustralRe. Joining us today are Alessandro Horta, Vinci Compass Chief Executive Officer, Bruno Zaremba, President of Finance and Operations, and Bruno Freire, AustralRe's Chief Executive Officer. Earlier today, we issued a press release and slide presentation covering the transaction, which are available on our website at ir.vincicompass.com. I would like to remind you that statements or comments made on this call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections and other statements of the company's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties.
The company's actual results may differ materially from those projected or suggested in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. We do not undertake any duty to update these statements. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in Vinci Compass or in any Vinci Compass fund. With that, I will turn the call over to our Chief Executive Officer, Alessandro Horta.
Thank you, Ana. Good evening, everyone, and thank you for joining us. It is a pleasure to be here today to discuss a transaction we are very proud and excited about. Before we get into the details, I would like to share why this transaction matters so much to us. The launch of Vinci Permanent Capital Solutions, or VPCS, as we will start referring to from now on, marks a milestone for Vinci Compass and an unparalleled asset management transaction in the Latin America alternatives landscape. Vinci Compass will be the first player in this industry to have access to a growing source of permanent capital with the goal of supporting the seeding of proprietary fundraisings and leveraging growth, which we believe is a key differentiator and competitive advantage in this market. The transaction involves the acquisition of a business we know exceptionally well.
We founded AustralRe in 2011 alongside our VCP private equity strategy as a co-investor, and we have been on its board ever since. AustralRe was one of the first local reinsurers created in Brazil after the regulatory change that opened the market to competition. It was an innovative and entrepreneurial move at the time, and we are extremely proud that it has since become one of the most respected reinsurance franchises in Latin America. AustralRe has grown over the last 15 years to become a scaled, profitable, and well-capitalized platform with BRL 3 billion in gross written premiums, operations across 16 countries in Latin America, and BRL 1.8 billion in cash and investments. Bruno Freire, the CEO of AustralRe, is here with us today and will share more details shortly.
Going back to why we call it an asset management transaction, AustralRe will become an important client of Vinci Compass, investing in the same funds under the same structure as our LPs, as was our practice from the IPO until now with the asset manager's balance sheet. With AustralRe's capital invested alongside our LPs, our alignment with investors become even stronger, and that alignment has always been at the heart of who we are. Despite 15 years of history together, AustralRe represents almost none of Vinci Compass' AUM today, and we are very encouraged about how much this relationship can grow in coming years. But the benefits go both ways. AustralRe will be able to earn higher yields on its investment portfolio while Vinci Compass gains a stronger growth driver through permanent capital that may support GP commitments. This is particularly relevant in our region.
In Latin America, capital cycles are longer and GP commitment expectations are higher, which makes permanent capital a decisive competitive advantage. This is exactly what VPCS is built to deliver. It gives us an efficient and stable source of long-term capital that may support Vinci Compass GP commitments and the strategic flexibility to keep growing with conviction across market cycles. Over our history, AustralRe has operated with a disciplined combined ratio below 100%, generating positive technical underwriting results. This means the company's investable float has been accumulated essentially without operating costs, providing Vinci Compass with what is effectively zero cost, non-redeemable investment capital. Anchored by AustralRe, VPCS will operate as a new business vertical separated from our asset management division.
This creates a clear and most transparent segregation between our asset light and balance sheet businesses, and bring focus to the recurrent nature of our asset management business, which will from now on report basically FRE, PRE, and financial results from liquid cash, M&A related debt, and the Ares convert as components of our distributable earnings, leaving realized and unrealized gains from our GP commitments reported today as IRE to be reported as part of the VPCS business. One point that is of key importance to highlight is that despite opening a new business frontier, the execution risk we envision for this transaction is very limited. As we have been running the business alongside Bruno Freire and team since day one are extremely familiar with its dynamics and the reinsurance market. The integration takes place at a strategic level while AustralRe's operation will remain unchanged.
There is no need or plan to consolidate operations as the two businesses will continue to be run in the same way by the same people, and we can dedicate our full energy to capturing and maximizing the significant opportunities ahead. The financial impact is equally compelling. The transaction is expected to be immediately accretive, with double-digit accretion to distributable earnings per share. We expect for closing to happen in the first quarter of 2027, subject to regulatory approval and other customary conditions. We are bringing together two complementary businesses with aligned cultures, principles, and long-term vision. Vinci Compass gains a permanent and cost-efficient source of capital to support its growth, while AustralRe gains the strength of a Nasdaq-listed group with access to a larger capital base to grow its business, enhanced investment opportunities while keep the team that has been instrumental to its success.
Both businesses have substantial growth ahead of them, and together they are better positioned than ever to capture it. We could not be more confident about the journey ahead and the value it will create for our clients, investors, and shareholders. With that, I will hand it over to Bruno Freire, AustralRe's CEO, who will walk you through the company in more detail.
Thank you, Alessandro, and good evening, everyone. It is a pleasure to be here today. This is a defining moment in AustralRe's journey, and our entire team is very excited about what lies ahead. It is funny how Alessandro and Bruno hired me 16 years ago to start up the AustralRe project, and here we are combining the two franchises we built side by side during this time. It is really a remarkable development. Let us start with a snapshot of AustralRe, which was founded in 2011 with a clear strategic vision to build a leading independent reinsurance platform in Brazil and in Latin America. 15 years later, we are present in 16 countries around the region with offices in Rio de Janeiro, São Paulo, and Bogotá, have established longstanding relationships with our clients and leading market players.
Over the last 12 months ended in June 2026, we wrote BRL 3 billion in gross premiums with a diversified portfolio across lines of business and geographies. A balance that optimizes performance and mitigates risk. Property in Brazil is our largest line of business at around 30% of our gross written premiums, followed by property and casualty LatAm outside Brazil at 20%, and life at 13%. In terms of geography, Brazil accounts for 77% of the book, with Colombia, Argentina, and Mexico as our most relevant markets outside Brazil. Over the years, we have steadily strengthened our credit profile and achieved the ratings we have today, which are a source of great pride for us. Moving to slide four, this timeline tells us the story of how AustralRe grew from an entrepreneurial and strategic vision into Brazil's second-largest local reinsurer.
Our journey began in 2011, and soon after, we welcomed IFC as an equity investor in 2014. In the following year, we began expanding beyond Brazil into other Latin American markets. In 2019, we merged with Terra Brasis, creating Brazil's second-largest local reinsurer. Two years later, we acquired Markel Resseguradora do Brasil and kept investing in selected growth opportunities while deepening our presence across Latin America from 2022 onwards. As I mentioned earlier, our credit profile was consistently strengthened along the way. Austral Holding was upgraded to brAAA in 2018 by S&P, and received a positive outlook in 2020 and was upgraded to A- global rating by AM Best in 2023. More recently, we have combined record profitability with continued investment in the future of the business. In 2024, we delivered the largest technical result in AustralRe's history, followed by record net profit in 2025.
That same year, we made our largest investment to date in technology dedicated to underwriting. We are proud of how we have come and confident in the opportunities ahead with our culture providing the foundation for both. The culture that brought us here will continue to guide our growth. We are a customer-oriented company with an entrepreneurial spirit and a commitment to innovation. Technology plays a central role in putting that approach into practice. We invest heavily in technology to support accurate pricing, improve efficiency, and deepen our analysis. Combined with the expertise of our professionals, it strengthens our underwriting capabilities and help us to develop tailor-made solutions to our clients across multiple business lines, reinforcing our long-term relationship with them. Underpinning all of this is our underwriting discipline. Our ambition to innovate and grow is always grounded in sound underwriting principles.
These principles guide the business we write and ensure that we remain selective about the treaties we enter into. This combination of innovation, client partnership, and disciplined risk-taking is central to how we operate. Turning to slide six, when we founded AustralRe, we faced the natural limitations of a new entrant. Attracting key talent at every stage of our journey was essential to overcoming these challenges and building what is today one of the most experienced teams in the market. This team has navigated multiple market cycles and continue to deliver strong results along the way. Today, our senior leadership brings an average of 22 years of industry experience and nearly 11 years at AustralRe, supported by a broader team of over 80 professionals. That depth of experience will remain a cornerstone of the business following the acquisition.
AustralRe will continue to be led by the same team with no changes to our underwriting platform, risk management framework, or clients' relationships. Now looking into our growth over the years. In slide seven, we disclose our gain in market share over the years as we have expanded our position in Brazil's local reinsurance market. Our share of total premiums issued by local reinsurers increased from 6% in 2018 to 16% in 2026, a gain of 10 percentage points. Our rating upgrades, shifts in the competitive landscape, and market hardening created opportunities that we were well-positioned to capture. Looking ahead, we remain focused on building on these gains through disciplined underwriting. Finally, our financial performance reflects the progress we have discussed today. Gross written premiums continue to expand, reaching BRL 3 billion over the 12 months ended on June 2026.
Our average ROE in the past three years has hovered around 20% per year as the business has leveraged growth in investment income as our float grew with the business. Today, cash and investment balance represent approximately 3.5x equity, which means that most of this return is anchored by this leverage. Net income increased from BRL 75 million to BRL 93 million from 2024 to the second quarter 2026 last 12 months, while underwriting profit reached BRL 41 million. We have an investment portfolio totaling BRL 1.8 billion with limited exposure to alternatives. Joining Vinci Compass gives us direct access to a broad range of alternative investment strategies, and we see a meaningful opportunity to enhance portfolio yields over time and further boost ROE by increasing this allocation. Beyond the opportunity to enhance portfolio returns, we also see this transaction reinforcing AustralRe's financial strength.
We believe that access to a larger capital base as part of a Nasdaq-listed group with substantial earnings powers strengthens our credit profile and supports our long-term growth ambitions. Importantly, any asset reallocation into Vinci's alternative strategies will be executed strictly within SUSEP regulatory reserves limits and our conservative ALM framework, ensuring our local brAAA and global A- credit ratings remain fully protected. For us, this transaction is an opportunity to build on everything we have created over the past 15 years. We are joining a broader Latin American platform with shared roots, an aligned culture, and the same long-term perspective. We believe this transaction gives AustralRe an even stronger foundation to serve our clients, pursue new opportunities, and continue growing profitably across the region. With that, I will hand it over to Bruno Zaremba.
Thank you, Bruno, and good evening, everyone. Before turning to the transaction, I would like to provide more context on our longstanding relationship with AustralRe. As we mentioned, we have been part of this journey since the company's inception, serving on its board from the very beginning. Personally, I had the privilege of hiring Bruno Freire when we envisioned the project, serving as a board member since the company's foundation and as Chairman since 2019. So when we say that we know this business exceptionally well, that conviction is grounded in 15 years of direct involvement in its growth and development, and even longer if you take into account the pre-operational period in which we worked side by side with the team to start the business.
That long-standing partnership, combined with our confidence in the quality of the business, led us to identify the opportunity we are announcing today, the creation of Vinci Permanent Capital Solutions, or VPCS. VPCS represents an important evolution in Vinci Compass' competitive positioning. What makes it particularly compelling is that it addresses a challenge that is especially relevant in Latin America. As our platform grows, GP commitment requirements continue to increase, while the mechanisms available to recycle that capital remain more limited than in developed markets. At the same time, investors increasingly value alignment, making GP commitments a critical part of competing for capital and winning mandates. VPCS allows us to address those needs with a permanent and scalable source of capital while preserving flexibility to invest across different market cycles.
Taken together, these factors make VPCS the most efficient, stable, and strategically attractive source of capital that may support Vinci Compass GP commitments. The value of VPCS goes beyond long-term capital to support Vinci Compass GP commitments. The real innovation here is the combination of a permanent capital base with an asset management platform. Although similar setups have been explored with success in North America, we believe this is a pioneering move for the Latin American asset management industry and positions Vinci Compass at the forefront of a new model for growth and capital formation. What we call the asset liability engine is built on a simple idea. AustralRe continuously generates float and investable capital, while Vinci Compass may deploy part of that capital to support GP commitments across its strategies. This creates a powerful feedback loop.
As AustralRe grows, the capital available to support our strategies grows as well, enabling us to seed new products, support fundraising efforts, and expand the asset management platform. The result is a self-reinforcing model in which growth in the balance sheet can support growth in fee-paying AUM, revenues, and earnings, subject to AustralRe's investment policy solvency and liquidity requirements and applicable insurance regulations. A key advantage of this model is that these capital inflows are durable in nature and not subject to fundraising cycles or LP redemption decisions. Because our average GP commitment has represented approximately 7%-8% of total fund capital, every single riyal of long-term balance sheet capital acts as a catalyst to unlock roughly BRL 13 of third-party fee paying LP capital.
Looking forward, we will try to push this ratio closer to mid-single digit percentage of total fund capital, which would enhance the leverage of VPCS capital to grow the asset management arm. Another key benefit of this transaction is the change in financial reporting we will implement after closing, as we show in slides 12 and 13. Today, our GP commitment results impact our asset management profits and only realized investment gains are reflected in distributable earnings. As we have been discussing these past few years, since unrealized gains are not represented in our cash earnings reports, this creates a gap between the real value of the company and what the market sees as printed distributable earnings per share every quarter.
Going forward, these commitments will be transferred to VPCS, where both realized and unrealized investment results will be recognized within VPCS net income and thus fully incorporated into our reported EPS. VPCS will also fund future capital calls, allowing asset management to direct its cash flows towards shareholder capital returns, dividends or buybacks, or further growth initiatives. The outcome is a simpler and more transparent structure with each business reported according to its underlying economics. Asset management will reflect the recurring management fee-based earnings profile of the platform alongside with performance-based revenues, while VPCS will capture the value creation generated by the reinsurance business, its balance sheet, and investment portfolio. This dual reporting structure is a natural extension of the framework we are creating between asset management and VPCS, providing greater clarity on how each business generates value and contributes to our overall results.
Asset management will maintain its asset-light structure and will continue to report FRE, PRE, and distributable earnings, providing a clear view of the recurring fee-based earnings generated by our third-party asset management platform with financial income, a result only of the asset management company's liquid cash portfolio, the Ares convertible preferred, and asset management M&A debts. VPCS in turn will report net income, bringing together AustralRe's net income, Vinci Retirement Solutions, VRS, and the financial results associated with our GP commitments, including both realized and unrealized gains. Shareholders will get a live impact from our investment portfolio, including distributions and revaluations of the fund's portfolios. Additionally, the debt raised to fund the AustralRe acquisition will also be reported within VPCS, which ensures maximum tax efficiency on this financing. As for Vinci Retirement Solutions, this vertical is in fact incorporated as an insurance company.
Therefore, it makes sense for it to be allocated within VPCS. This new allocation should have a positive FRE margin impact of approximately 100 basis points to the asset management units. Currently, VRS is reported within the global IP&S segment. By incorporating the full GP investment balance sheet of Vinci Compass into VPCS, we will be able to make a visible source of value that is not reflected in our distributable earnings today, as unrealized mark-to-market gains on our GP commitments will now be recognized within VPCS net income. Beyond the reporting benefits, the transaction is also expected to be immediately accretive on a cash basis with a double-digit accretion to distributable earnings per share. Turning to the transaction terms, we believe we have reached an attractive outcome from both a strategic and financial perspective.
We are acquiring AustralRe at a valuation equivalent to one time tangible book value, implying an estimated equity value of approximately BRL 336 million, following pre-closing capital distributions and extraordinary dividends. This transaction will be funded through a combination of cash and newly issued Class A common shares, estimated at BRL 247 million in cash and 1.7 million in new Vinci Class A common stock. With the final mix depending on the preference of some minority shareholders who may choose to receive their consideration in cash or stock. Because this transaction involves an asset managed by our private equity vertical, we established very clear governance steps in the approval of the acquisition. The transaction was negotiated, reviewed, and approved by a fully independent committee of the Vinci Compass boards, supported by an independent fairness opinion from Kroll. Furthermore, we instituted a universal equality offer.
Every Austral shareholder, whether our founding partners, VCP II fund LPs, the IFC or Banco Genial, has been offered the exact same valuation of one time tangible book value with the identical rights to elect between cash and Vinci common stock. As a testament to our conviction in this combination, Gilberto Sayão, Alessandro Horta, Paulo Fernando Oliveira, and I have elected to receive 100% of the AustralRe consideration in Vinci shares. Just as important, this transaction is designed to preserve everything that has made AustralRe successful. Bruno and his team will continue leading the business with no changes to its underwriting approach, risk framework, or client relationship. With respect to dividends, Vinci Compass intends to distribute at least 80% of post-tax FRE through quarterly dividends, which is fully consistent with our historical distribution practice and comfortably supports our current dividend run rate.
Because 100% of our GP commitments will be funded and absorbed by VPCS, the asset management cash flow is completely unencumbered by future capital calls. This leaves our cash generation fully available not only to protect our current dividends, but also to evaluate value accretive capital allocation opportunities, including share repurchases or strategic investments. Finally, we expect to close the transaction during the first quarter of 2027, subject to customary regulatory and antitrust approvals. To summarize, we believe this transaction brings together a highly compelling set of attributes. It established a permanent capital base that may support Vinci Compass GP commitments backed by a recurring and growing base of investable assets that are not subject to redemption and a substantial investment portfolio. This provides a stronger foundation to seed new strategies, support fundraising efforts, and future growth.
It also creates Vinci Permanent Capital Solutions, which alongside Vinci Compass alternative asset management business, introduces a new model for growth and capital formation in the Latin American markets. Equally compelling, this is not a transaction between two businesses that are getting to know each other. Rather, it unites two organizations that share common roots, aligned cultures, and a history of working together that spans more than 15 years. We believe this combination positions both businesses to achieve more together than either could on a standalone basis. We are fortunate to have two growth businesses that together are better positioned to capture the opportunities ahead across Latin America. We could not be more excited about the future and the long-term value this combination will unlock.
I want to warmly welcome Bruno Freire and the entire AustralRe team as partners in building this next chapter, and thank our shareholders for their continued trust and partnership. With that, we would be happy to answer your question. Once again, thank you for joining us today. Operator, please proceed.
We will now begin the question and answer session for investors and analysts. If you would like to ask a question, please press the raise hand button. Wait while we poll for questions. Our first question comes from Ricardo Buchpiguel from BTG Pactual. Sir, you can open your microphone.
Hi, everyone, and thank you for the opportunity of making questions. I have two here on my side. It is clear on what you presented, the synergies between the two business and all the opportunities that this brings. But also you are gaining exposure to a different business, right, which involves risk pricing, insurance. It is much more regulated. With that in mind, can you please comment more on the advantage of pursuing this opportunity through an acquisition rather than a partnership? For my second question, a big part of the synergies involved using more of the capital commitments in the liquid strategy using the float from the reinsurance business, right? If you could comment any idea on how much of Austral or other Latin insurance in general float is invested in liquid strategies, and how that compares to the markets offshore that you mentioned as a reference.
Thank you very much.
Hi, Ricardo. This is Bruno Zaremba. I will take the questions, and Alessandro can complement me. Yes. Of course, it is a regulated business, so we are bringing a different type of, let us say, oversight and company regulation side of the platform. I think, the reason why we did the acquisition was a couple of reasons, right? Actually, I would say probably three. The first one is that we have been used to be regulated in this company. As we mentioned during the conversation, we founded the company 15 years ago. Bruno has been with us for these 15 years. Alessandro has served on the boards for at least 10 years, and I have been chairman of the board of this company for seven years now. So we are very comfortable with the regulatory part.
Obviously, the team deals with the day-to-day of the regulation, but it is a company that is very well controlled. All the systems and processes are in place. We have worked alongside SUSEP through all these years, and the relationship with them has been always very, very positive. So this is a part that, frankly, it is not something that we are concerned. It is something that we are used to. We do not see this as an issue. I think the advantage of the acquisition is the combination of the access to 100% of the floats, right, 100% of the investment balance. That is obviously an interesting part. We felt that on a return standpoint, from an acquisition pricing standpoint, we also felt that the access to this capital was being done at a good value for the platform, right?
We're bringing, as we showed, a last 12 months net earnings of close to BRL 100 million. On top of that, the company has been quite profitable with an average return on equity close to 20% over the past three years. We feel that the comfort that we have on the regulation being already part of this regulatory company for a number of years on top of a fair and attractive valuation, we felt that the combination of these 2 points made it very interesting for us to acquire the full platform. In terms of synergies, I think part of the synergies are obviously the access to the investment balance over time. I think that's the most visible short-term synergy that we see. But there are very interesting opportunities to grow the platform going forward.
There is a big overlap between exposures in the Latin American region between us and AustralRe. AustralRe has an office in Colombia. They have exposure to several countries where we have exposure as well. Those commercial opportunities, we feel that they will present themselves over time. We have offices in Mexico, Peru, Colombia, Argentina, Chile, Uruguay, which are all markets where AustralRe currently has businesses. The idea is that we would also be able to leverage, on a corporate development standpoint, the presence of the company on a premium generation and potential partnerships on the reinsurance side. We see this also as a very meaningful synergy going forward. The other one that we believe is also interesting is that AustralRe is going to have access to more capital.
As we mentioned, given the fact that VPCS is going to absorb 100% of the GP commitments that we have, both the existing and outstanding future commitments. That means that other than the dividends, the cash flow of the management company is going to be fully available, and I think this creates optionality for AustralRe as well. We see opportunities over time to internationalize more the company. We have studied opportunities potentially to launch international reinsurance platforms with the underwriting expertise of AustralRe. The company having access to this capital also potentialize the growth of the reinsurance platform over time. Finally, I think the launch of VPCS is being done with the acquisition of AustralRe, but this does not preclude us from potentially doing more investments in this vertical in the future.
The reinsurance platform has been a good risk return for us as the seed of this vertical, but it opens up another growth vehicle for the company. Now we're going to have Vinci Permanent Capital Solutions as a growth vertical for us and also the asset management unit, Vinci Compass, as another growth vertical. I think although the short-term synergies might be perceived only as being the allocation of the investments, of course, that is an important piece. We see many more levers that we can pull going forward that will allow the platform to grow in a faster pace together with the asset management company.
That is super clear. In terms of just a reference on the commitments that there are in the floats of reinsurance in Latin compared to other regions.
I do not know if I understood exactly your question, Ricardo . I will try to answer. If it is not the answer that you are looking for, please let me know. As Bruno explained in his session, today the investment book of AustralRe is completely unencumbered, right? It is 100% federal bonds practically, right? We have two limits in terms of what we can do with this capital that obviously we are going to observe both limits to their maximum extent. One is the limitation that we have on the reserves that we have in Brazil, which are regulated by SUSEP, and that creates some percentage allocation exposures that we can have.
That is the first limitation that today, obviously, given that we have close to 0%, we are very far from those limits. The other one is our credit rating. These are the two boundaries that we have, right?
Both are extremely important to us and both are boundaries that we are going to respect to their full extent. Today, as Bruno mentioned, we have an A- rating from AM Best which we intend to not only keep but to improve going forward. So the outlook for us is to potentially move this rating into a single A at some point, and this involves having capital to support the business, right? On top of that, we have these statutory limitations from SUSEP that we need to obviously fulfill. Today, we are, as I mentioned, with room on the SUSEP front, and on the AM Best front, we are going to inject the entire balance sheet of Vinci Compass into VPCS, and this equity is going to be part of the equity of VPCS.
We believe that also we are going to have significant coverage from the equity that we are going to inject there that today is close to BRL 900 million. So that equity is going to be directed towards VPCS as well. So that is the way that we are seeing this. So it is going to be a focus in credit ratings and a medium-term focus, given that today is not a problem because we are very far from the limits, a medium-term focus on the statutory limitations that we have from SUSEP and the level of exposure that we can have for each of the asset class.
No, that's clear. Thank you. Thank you very much.
The next question comes from Guilherme Grespan for JP Morgan. Sir, you can open your microphone.
Hi. Good evening, everyone. Thank you for the presentation. Interesting move. Two questions on my side. The first one is just on the valuation, just trying to understand a little bit better the multiple. A little bit different question here, but the multiple looks low, and I'm not sure if I'm missing something because looking at PE, it's going to be less than 4, but I read the release there's going to be some capital distribution, so maybe the earnings that you presented is not the pro forma earnings of the transaction valuation. But even on a tangible book value, we're paying 1x , and the business seems to be 19% ROE. So just trying to understand if I'm missing something here, because if I'm not mistaken, Austral has minorities, right? I think they did some M&A in the past.
Not sure if there is a third-part alignment here that valuation could impact if it's cheap or expensive. My second question is just on the duration of the book of Austral. I see it's mostly P&C. Part of, I think, of the strategy going forward is to optimize as well the long-term kind of alignment of the technical reserves. If you can just provide a color on how much is the duration of the book of Austral. Thank you.
Okay, Guilherme. That's Alessandro. I will start talking about the minorities and the price. Bruno will go over the profit multiple, then we'll have Bruno Freire to talk a bit about the book of reinsurance of Austral, a bit detail, a bit about P&C, treaty versus facultative, and that. Regarding the price, what we did here is that, as we saw, we announced it a few weeks ago, the sale of the insurance business of Austral to Liberty, that was announced. What we did is that, since it was the majority of the ownership of the Austral Holding that comprised both the reinsurance arm and the insurance arm, it was held by a private equity fund of us. We have been trying to sell this to create DPI and to give back these investments to our original LPs, because it's time to do that.
It's our second vintage of our flagship private equity fund. Now we are investing the fourth. So we hired an advisor to find offers for that. We thought in the beginning to sell this together, but then the possibility of selling separately these two business came in better for the investors. So Liberty gave the best proposal for the insurance part of the business, and of course, received several proposals also for the reinsurance part. At the end of the day, the proposal of Vinci Compass was the best one for all the stakeholders. Of course, we ran a lot of measures to mitigate any conflict of interest, so it was approved on the Vinci Compass board by the independent members, and on the fund also by the LPAC, so it's the LPs, they are independent from us also on the investment side.
Of course, the minority of AustralRe, and Austral Seguradora too, IFC and Banco Genial. So it was approved from all the sides, including the independent ones, and also from the side of the fund, the minority of the companies, and also by the board of Vinci Compass. So Bruno now could talk a bit about the valuation.
Yeah. So this is Bruno Zaremba. On the valuation, there's going to be a pre-closing distribution of dividends and capital, which is the best form for the current investors to receive their cash back. So we're going to reduce the capital pre-closing. The only reason why we have the ability to do this is because we have the BRL 900 million in equity to inject in the company alongside with the closing. Right? So it's going to be a pre-close distribution between BRL 150 million to BRL 200 million-something that we're going to distribute. Then we're going to come at the following moment capitalizing the company with the BRL 900 million. So to your point, the level of last 12 months profitability doesn't talk with the price.
So if you look at the BRL 336 million price, you need to take into account less financial income on about BRL 200 million distribution. Right? That would yield the correct price earnings multiple for the transaction. Then on the duration of the book, one of the things I am going to just start and then give Bruno Freire the floor, but one of the things that attracted us also to participate, as Alessandro said, as one of the bidders of the process for the reinsurance company, is that the leverage of the AustralRe business has improved a lot in the past, I would say probably five, six, seven years.
So we are now with a leverage of investments over equity of about 3.5x with the current equity book of the company. And that really creates a very strong base for the ROE because the leverage ratios are quite bigger than when you compare to other companies.
Which means that the production of AustralRe over the past five, six years has generated a lot of float. The production, the type of lines, the type of clients and the production has generated a lot of float. We did a lot of benchmarking with the international names, so looking at what Apollo did and the annuity companies in the U.S. and the type of capital leverage that they have in the U.S. And although the capital leverage in the U.S. is a little bit higher, they have something around 7x, 8x of investments over capital or investable assets over capital over time. We have a higher ROE because our fixed rates are higher. The short-term fixed rates are higher.
Having combined all of that information and obviously with the understanding and the type of returns that we saw in the deal for the company as a whole, given the price levels and the ability of generating ROE from the company, et cetera, we felt that it was a good transaction for Vinci Compass to get involved. And that is why we did put the bid in the process, and we ended up being the winner of the process. As Alessandro said, there were several other competitors, and we ended up with the best proposal for the business. With that, I will leave Bruno to talk a little bit more about the book of business, the duration of the book of business, and the type of production that we have.
Okay. Thank you, Alessandro, and thank you, Bruno. Now just explaining a bit of our book and the duration. We always wanted to have a diversified book of business here, so we basically operate in almost all lines of business in Brazil and the rest of Latin. As you asked, yes, most of our business is P&C but spread between the lines of P&C. So we have a lot of property, we have motor, we have a bit of casualty, not too much. We have marine, we have aviation. Life is 13% of our book of business as well. However, the life that we write is pretty much a short-term life. So we do not write annuities, we do not write long-term life. 99% of what we write in life is basically one year coverage.
Next year, if we leave the treaty, we do not have, for example, lives that we write for 10, 20 years coverage. The duration is low. As Bruno said, although we have this lower duration with this P&C book, which is more short tail, we have these 3.5x investments against equity, which is good because, besides we have this 3.5 leverage, we do not have a long duration on that. These examples, I think that Bruno gave from the U.S. are more annuities companies where they have eight, but they have a much longer duration, so a longer risk that they carry on. I think this is pretty stable as well. Just to complement on how this book of business, we also have surety, which is more or less 10% of the book.
In all this book of business, we buy a lot of retro as well. We try to keep a stable book and a non-volatile book. We have shown that in the last few years, we have had a few large events in the region, like the hurricane in Mexico in 2013, the floods in the South in 2024. This year, we have the earthquake in Colombia. Even without this, we have had the best results for our history ever. I think this is pretty much a bit of our book now.
That is clear. If I may just do a final follow-up on the BRL 93 million. It is clear to Bruno’s point that I need to adjust the float on the capital distribution, but to Alessandro’s point on the insurance, just to be sure, this number of BRL 93 million profits does not include any profit from insurance, right? It is only reinsurance here.
Yes. It is just the operating entity of the reinsurance business because we also had or still have a holding company that holds some excess capital, has some financial income, but the BRL 93 million is only the operating entity of the reinsurance business. It is the perimeter that we are acquiring in this transaction.
Perfect. That is super clear. I will go back to the queue. Thank you.
I would like to turn the floor back to Mr. Alessandro Horta for the closing remarks. Please, Mr. Horta, you can proceed.
I would like to thank you all for your continued support and interest. As we announce another transformative transaction, we would like to reinforce that we are extremely optimistic about the future, not just about this transaction, but all this what we have been doing in the last few years and how we think on the company moving forward. Thank you again, and to everybody, have a good night.
This concludes today's presentation. We thank you all for your participation and wish you a very good evening.