IAG has conditionally agreed to acquire Malaysian insurer Kurnia after receiving regulatory approval, giving it a leading position in the Malaysian motor insurance market.

The Sydney-based insurer’s 49%-owned Malaysian associate AmG Insurance Berhad will buy the general insurance business of Kurnia Asia Berhad, known as Kurnia Insurans (Malaysia) Berhad.

The purchase price is RM1.55 billion ($483 million), of which IAG will pay 49% ($237 million), funded internally.

The acquisition is subject to Kurnia Asia Berhad shareholder approval, and IAG expects completion in the second half of this year.

IAG CEO Mike Wilkins says the acquisition will make AmG the country’s largest general insurer with 13% of the market.

“This is another important step in IAG’s strategy to boost its Asian footprint, contributing to the Asia division’s target of representing 10% of IAG’s gross written premium by 2016 on a proportional basis,” he said in a statement.

Malaysia’s general insurance market grew 7.8% last year and is expected to grow 6% a year over the next three years.

IAG Asia CEO Justin Breheny says the acquisition is consistent with the division’s strategy of pursuing consolidation opportunities in its established markets, where good long-term growth prospects exist.

“The addition of Kurnia will more than double AmG’s annual gross written premium to more than RM1.7 billion ($530 million), broaden its distribution base and expand its product service offering,” he said.

Although there are risks for Western insurers expanding in Asia, an IAG spokesman told insuranceNEWS.com.au the company is comfortable with its strategy.

“We have a deep understanding of the Malaysian market, having been there since 2006, and we have established a strong record of profitability through our JV arrangement with AmG,” the spokesman said.

IAG has also finalised its acquisition of a 20% stake in Chinese general insurer Bohai Property Insurance Company Limited after receiving regulatory approval.