Australian Unity is forming a joint venture with NZ-based Farmers Mutual Insurance (FMG) to service Australia’s regional insurance market.

FMG has a small but lively Australian operation based in Albury, NSW, and has made some inroads into the regional insurance market. The acquisition therefore gives Australian Unity an attractive boost into an important niche market, without losing the selling ability of the FMG operation.

Under the joint venture agreement, Australian Unity will take over the underwriting of FMG’s farm, commercial, domestic and other products in Australia, while FMG will give up being an underwriter – and Insurance Council of Australia member – to assume the lesser role of an underwriting agency.

FMG and Australian Unity will be equal shareholders in the underwriting agency, which will continue to trade under the FMG brand.

Australian Unity Group Executive General Insurance Warren Lockett says the move will boost the company’s premium income to $120 million and expand its reach.

“For some time now we have been investing in our operational capabilities to position ourselves for growth within the Australian market,” he said.

The joint venture is subject to regulatory approval and due diligence and is likely to be up and running by July.