Sydney-based insurer Calliden Group has gained a significant boost in premium and a new major shareholder after acquiring the general insurance business of Australian Unity.

The deal, which was announced yesterday morning, includes all Australian Unity’s general insurance subsidiaries. It will cost Calliden $62.5 million in scrip and cash.

The transaction will include a share placement of about 15% of Calliden’s pre-deal issued capital to Australian Unity, giving the Melbourne-based health and financial services mutual a 13% slice of Calliden.

“We’re gaining a very well run business with very good people,” Calliden CEO Nick Kirk told Sunrise Exchange News yesterday. “An added attraction for us is the fact that we’ll be able to provide general insurance products to Australian Unity members.”

Mr Kirk and Australian Unity MD Rohan Mead are adamant that the mutual’s shareholding in Calliden is regarded as a long-term investment. While the purchase agreement is understood to contain a 12-month “standfast” arrangement, Mr Mead says Australian Unity is a “patient investor. We are happy and confident with the Calliden shareholding.”

The deal includes well-known high-value homes specialist Mansions of Australia and Australian Unity’s 50% share in the local operations of NZ rural insurer Farmers Mutual Insurance. All existing Australian Unity general insurance employees are being invited to move across to Calliden.

Apart from the transfer of 15% of Calliden’s shares, an additional $25 million to be paid to Australian Unity will be provided from Calliden’s own investments.

The completion date for the sale is July 31 or the month APRA approval is received. The two businesses will operate separately under their respective licences until the sale is completed.

Mr Kirk says Calliden will continue to look for bolt-on acquisitions. The purchase “deepens our relationship with intermediaries and customers across Australia”.

Last week Calliden subsidiary Dawes Underwriting acquired the portfolio of niche motor underwriting agency Young & Cool. The business, which focuses on younger drivers and owners of high-performance cars, will be combined with the operations of Famous Classic Car Insurance, which Dawes acquired late last year.