Insurance Australia seeks antitrust clearance to buy AMI

Tuesday 20th December 2011

Insurance Australia Group has sought Commerce Commission approval for its $380 million acquisition of AMI insurance.

IAG agreed to buy the Christchurch-based insurer last week, the culmination of AMI’s search for new capital after the Canterbury earthquakes drained its reserves and drove up reinsurance costs, leading to a government bailout.

Under the proposed deal AMI would become a new company called AMI Newco, 100% owned by IAG, while current and future claims from the earthquake would be held by a new government-owned company.

The government provided $500 million financial backstop to AMI, which faced almost $2 billion in claims for the earthquake.

IAG operates NZI and State insurance and will use its own resources to fund the merger, which is expected to cost about $40 million.

The acquisition will bring IAG’s market share up to 40% and add 30% to its premium income from New Zealand.

Suncorp and Tower had also expressed interest in acquiring AMI.

BusinessDesk.co.nz

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