No 1 local insurer IAG has added another notch to its takeover belt with the $350 million acquisitions of British motor insurance broker Hastings Insurance Services and direct personal lines insurer Advantage Insurance Company.

CEO Michael Hawker says the acquisitions, which are subject to regulatory approval, present the perfect entry point to the UK. And it’s these kind of mature insurance markets the insurer will continue to pursue.

He says IAG’s strategy is to aim mainly for motor insurance providers in established insurance markets where it can access new customers and local market expertise, while taking advantage of its product, underwriting and claims experience to enhance its growth profile.

“We are building the group’s portfolio in mature and emerging markets, aiming to achieve diversity of products, income stream and geography,” Mr Hawker told a media teleconference. “This leads to capital diversification, a key driver of the economics of our business.”

The deal is expected to generate hundreds of millions of dollars for IAG. Hastings, which trades under the names Hastings Direct and Peoples Choice, is on track to achieve gross written premiums (GWP) of $500 million. Advantage is set to underwrite $250 million in GWP this calendar year.

Hastings is Britain’s fifth-largest motor insurance broker and has 50% of its book underwritten by Advantage.

Hastings has grown at an annual rate of 20% over the past five years, compared with an average of 4% for its competitors.

Mr Hawker says there are opportunities to expand Hastings further, and it is expected to contribute about 3% of IAG’s target growth of 5-10% for this financial year.

He says IAG may learn something from the Hastings acquisition. “In the UK, customer segmentation and marketing is highly sophisticated – which could offer some insights for our existing markets at home and in Asia.”

The acquisition is expected to be earnings per share positive within 18 months.

Ratings agency Standard & Poor’s (S&P) says the insurer’s AA rating should be stable.

“S&P expects that in funding the acquisition IAG will maintain its financial structure at a level consistent with its AA insurer financial strength ratings, and capitalisation will remain very strong,” S&P credit analyst Kate Thomson said.