(Reuters) - British insurer Aviva has agreed to buy Irish insurer Friends First for 130 million euros ($151 million) in cash, making it one of the biggest insurers in Ireland.
On completion of the deal, expected by the end of March 2018, Aviva’s Irish business will have 15 percent shares of both the life insurance and general insurance markets in Ireland, Aviva said in a statement.
The deal is in line with its strategy to allocate capital in markets where it has scale or a competitive edge and can grow its product offering across life and general insurance, it said.
“The acquisition will enhance Aviva Ireland’s product offering and accelerate our international growth agenda,” Maurice Tulloch, CEO Aviva International Insurance, said.
Friends First Life Assurance Company, which has over 250,000 customers and a market share of 6 percent, is currently owned by Dutch insurer Achmea Holding NV and has operated in Ireland for over 180 years, focusing on life protection, pension and investment products.
Aviva Ireland Chief Executive John Quinlan said Friends First’s expertise in income protection and group risk would complement Aviva’s product line and make it the “leading insurer for brokers in the Irish market”.
“This acquisition is just an example of Aviva consolidating its businesses wherein it is exiting small/low market share non-core businesses and is expanding in core markets where it already has a strong position,” J.P.Morgan Cazenove analysts, who rate Aviva as “overweight”, said.
They added Aviva was in a strong position to generate about 10 billion pounds in cash from subsidiaries and disposals during 2016-2019.
The insurer has pulled back from several markets this year, selling its stake in three Spanish joint ventures, its Italian joint venture, part of its French business and its Taiwan joint venture stake, to focus on core markets including Britain and Canada.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong