UK-based global insurer Aviva plc has confirmed it has entered into an agreement to sell its Australian and New Zealand general insurance businesses to IAG. The acquisition of the CGU Insurance Group in Australia includes all divisions and stakes in joint ventures with other insurers, together with its subsidiaries.

The acquisition, which is subject to regulatory approval, is expected to be completed in December.

CGU MD Ian Balfe said this afternoon that the move will see CGU becoming part of a strong, wholly Australian-owned insurance group, further enhancing IAG’s position as Australasia’s leading general insurance group.

“IAG is primarily a direct insurer and the CGU acquisition will diversify its business in terms of product, distribution channels and geography,” he said. “Our expertise in commercial and rural insurance will greatly complement their existing business.

“We also bring great experience to IAG in the areas of financial institutions business, consumer credit insurance and niche commercial insurance products. Our strong intermediary base was one of the key reasons IAG pursued the acquisition, and they are committed to further developing and enhancing these relationships.”

Mr Balfe said CGU’s existing business channels and established brands will continue to operate following the acquisition. GM Intermediary Business Bob Wagstaffe and GM Consumer Business Lou Power will join IAG’s group executive.

Mr Balfe said the key message he wants to share with brokers “is that it’s business as usual with CGU”.

“At this stage, nothing changes in terms of our day-to-day contact with brokers,” he said. “Their customers will continue to receive the same products and services from the brands they’ve come to know and trust. Policy benefits, terms and conditions and claims servicing processes haven’t changed.

“Brokers are an integral part of our business and we are committed to keeping them informed about the acquisition and integration process as developments occur. Our top priority is ensuring there is no disruption to their business or impact on customer service standards.”

CGU expects to retain its S&P’s AA- rating, with the outlook improving from negative to stable. “There is also the potential to improve and eventually equalise this rating with other IAG entities that are rated AA,” Mr Balfe said.