IAG moves to buy NZ and Malaysia businesses

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30 January 2012

IAG has followed up its proposal to pay $380 million to buy New Zealand insurer AMI’s non-earthquake affected business with an acquisition in Malaysia.

As part of its plan to dominate the Malaysian motor insurance market, IAG’s 49%-owned Malaysian associate AmG Insurance Berhad has proposed buying the general insurance business of Kurnia Asia Berhard.

IAG said the deal to buy Kurnia Insurans (Malaysia) Berhard, if approved by local regulators, would give it a leading position in the Malaysian motor market.

An IAG spokesman declined to provide further information about the purchase price or the increased market share that would result from a successful transaction.

The group is planning to fund its share of the purchase price from internal resources.

Shortly before Christmas, IAG also proposed paying $380 million for beleaguered New Zealand mutual AMI, which has been gutted by a large exposure to the Canterbury earthquakes.

The takeover plan involves transferring AMI’s non-earthquake related business into a company called AMI Newco.

But the NZ Commerce Commission must approve the deal, which would give IAG a dominant 40% share of the New Zealand market.

The commission last week released an issues paper on the takeover deal and extended the date for its decision until February 29. It has called for submissions on the issue before February 7.