Insurance Australia Group, New Zealand's largest general insurer, has gained approval from Australian Competition and Consumer Commission for its A$1.845 billion purchase of Wesfarmers' insurance underwriting business.
But the Australian owned company, which trades in New Zealand under the State, NZI and AMI brands, is looking to buy Wesfarmers' WFI and Lumley Insurance brands, and is still waiting for approval from New Zealand's equivalent competition regulator, the Commerce Commission, as well as the Reserve Bank of New Zealand and two other Australian regulators.
New Zealand's Overseas Investment Office approved the deal earlier this month.
The Commerce Commission extended the deadline for its decision by a month to the end of April, and has received nine submissions, including one which the submitter asked to remain private.
Insurance Brokers Association New Zealand have expressed concerns over competition in the market. After the proposed merger, IAG would have a 52 percent New Zealand market share, with the second largest competitor Suncorp's Vero at 25 percent, it said in its submission. Suncorp's submission to the Commerce Commission opposed the merger in New Zealand.
Multisure Risk Managers, the Motor Trade Association, Bus and Coach Association, the Rental Vehicle Association, and the Collision Repairs Association all made submissions to the commission over the merger, expressing concerns about competitiveness in the insurance industry.
In Australia, however, the ACCC found "no objection" to the takeover.
IAG and Wesfarmers were "the first and fifth or sixth-largest general insurers in Australia, respectively" and are also the nation's largest rural insurers.
"The ACCC found that, while the proposed acquisition would reduce the number of key underwriters from six to five for packaged farm insurance and crop insurance in Australia, the level of existing and potential competition in this market would be expected to constrain the merged firm," Rod Sims, ACCC chairman said in a statement.
IAG announced the deal last December and is confident the transaction will be completed by June 30.