IAG gets antitrust clearance to buy NZ insurance rival

Thursday 1st March 2012

Insurance Australia Group has been cleared by the Commerce Commission to acquire the ‘good’ assets of New Zealand rival AMI Insurance.

The deal comes after AMI was forced to seek a financial rescue from the government because the Christchurch earthquakes drained its reserves. The terms of the government bailout will see AMI’s earthquake liabilities transferred to a company owned the Crown, leaving IAG free to pick up the good assets.

The commission is satisfied that the proposed acquisition will not be likely to substantially lessen competition in the national markets for house, contents, and motor vehicle insurance, chairman Mark Berry said in a statement. That’s the regulator’s standard wording for such approvals.

There will probably be enough competition from existing participants to the merged AMI-IAG from exercising market power.

IAG offered $380 million for AMI’s good assets. The Australian insurer’s local brands include State and NZI.

The tie-up will lift IAG’s market share to about 40 percent and add about 30 percent to its locally sourced premium income.

IAG’s shares last traded on the ASX at A$3.31 and have gained 10 percent this year.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

No comments yet