SYDNEY (Reuters) - Insurance Australia Group Ltd (IAG) is set to become Australia's biggest insurer by market share after it agreed to buy the insurance underwriting businesses of Wesfarmers Ltd for $1.66 billion.
The deal allows IAG, previously Australia's second-biggest insurer, to cement its No. 1 position and surpass QBE Insurance Group Ltd, which flagged a yearly loss last week due to its struggling North American businesses.
“IAG appears to have taken an attractive step because it cements its position in the Australian market both in totality and importantly within the commercial insurance business,” said Toby Langley, an analyst of insurance and wealth management at Nomura.
IAG is acquiring Wesfarmers' commercial underwriting businesses under the Lumley and WFI brands, and a personal lines business through Coles Insurance with a 10-year distribution agreement with Coles, IAG and Wesfarmers said in statements on Monday.
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