Insurance Australia Group (IAG) is to buy the underwriting businesses of Wesfarmers, including Lumley Insurance in New Zealand.
IAG New Zealand chief executive officer Jacki Johnson said the Lumley operations, which sells commercial insurance through brokers and personal insurance through a partnership with Westpac, would be combined with IAG's NZI business.
"Lumley in New Zealand has very complementary strengths, such as its expertise in the commercial motor vehicle and professional indemnity insurance segments and IAG will look to build on these strengths to broaden our offering to our customers and partners," Johnson said.
The Lumley purchase is part of a wider acquisition by IAG of the insurance underwriting companies of ASX-listed Wesfarmers, trading under the WFI and Lumley Insurance brands for A$1.8 billion (NZ$1.95b).
The sale is subject to approvals from the Reserve Bank, Commerce Commission and Overseas Investment Office, and Australian authorities, a process that is expected to take several months.
On completion of thesale, Wesfarmers expects to record a pre-tax profit of about A$700 million to A$750m in the second half of the 2014 financial year.
Wesfarmers said the sale did not include its insurance broking operations in Australia, New Zealand and the UK, or its premium funding businesses in Australia and New Zealand.
- © Fairfax NZ News