The Reserve Bank has approved Insurance Australia Group to buy Wesfarmer’s Lumley General Insurance unit, which would give New Zealand’s biggest general insurer a boost to market share.
New Zealand's Reserve Bank it was satisfied Lumley will continue to meet licensing criteria under IAG ownership, it said in a statement. The central bank's sign-off was the final hurdle in the New Zealand regulatory approval process, and IAG is now waiting on the Australian Prudential Regulation Authority and the Federal Treasure to allow the A$1.845 billion deal, which will add Wesfarmers’ WFI and Lumley Insurance brands to IAG stable which includes NZI, AMI and State, the Australian insurer said separately.
Last month, the Commerce Commission approved the deal saying it was satisfied the transaction wouldn't substantially lessen competition for personal and commercial insurance products. The application was opposed by a variety of organisations including rival insurer Suncorp, the Insurance Brokers Association New Zealand, Multisure Risk Managers, the Motor Trade Association, Bus and Coach Association, the Rental Vehicle Association, and the Collision Repairs Association. In February, Tower chairman Michael Stiassny told shareholders there was a “significant risk” from the proposed level of market dominance.
The deal has previously been approved by the Australian Consumer and Competition Commission and New Zealand’s Overseas Investment Office.
IAG said it was confident the deal would be completed by the end of the month.
ASX-listed shares in IAG rose 0.5 percent to A$5.88 yesterday, and have increased 0.5 percent this year.