Allianz has completed its $725 million acquisition of Westpac’s general insurance arm to cement its place as the third largest non-life insurer in the Australian market behind IAG and Suncorp.

Allianz Australia MD Richard Feledy says the acquisition “marks an important step in our strategy to grow our partnerships and consumer insurance portfolio in Australia”.

“Not only does this see Allianz become Australia’s third largest insurer, it also represents a significant growth in our talented team,” Mr Feledy said in a statement.

The completion of the acquisition last week means Allianz will start distributing general insurance products to Westpac customers as part of a 20-year exclusive agreement between the two businesses.

The distribution agreement was an important part of the terms agreed to when the acquisition deal was announced last December.

“Under our 20-year exclusive distribution agreement Westpac will continue to offer insurance under its own brands,” an Allianz spokesman told insuranceNEWS.com.au.

“That insurance will be underwritten by Allianz Australia in a similar way to how we offer motor, caravan and trailer, and travel insurance products under Westpac Group’s brands.”

In addition to providing Westpac with motor, caravan and trailer, and travel insurance – an arrangement which has been in place since 2015 – Allianz will now also issue and service a range of personal insurance products, including home and contents, to Westpac Group’s brands.

Allianz says more than 350 staff from the Westpac general insurance team have joined the business as part of the acquisition. insuranceNEWS.com.au understands that figure represents the majority of the Westpac team, apart from some managers.

The Allianz spokesman says the employees have joined the insurer’s Consumer, Customer & Operations and Personal Injury teams, as well as the Technical, Finance, Corporate Governance & Legal and Risk & Compliance teams.

Allianz Australia now employs more than 5100 people, the spokesman said.

IBISWorld Senior Industry Analyst Yin Yeoh says the acquisition is a “major step” in Allianz growing its market share in Australia.

“Allianz is a major player in the personal lines market,” she told insuranceNEWS.com.au. “Competition in the industry is expected to increase.”

In a report in March IBISWorld said IAG has a 21.7% share of the general insurance market by revenue, Suncorp Group 12.6%, Allianz Australia 7.7% and QBE 7%.

Ms Yeoh told insuranceNEWS.com.au the market’s overall revenue is projected to grow over the next five years as the economy recovers from the pandemic-fuelled downturn.

“Anticipated economic recovery…is likely to yield steady demand for general insurance, providing healthy premium revenue increases for industry operators over the period,” she said.

“However, strong industry competition is forecast to place downward pressure on profit margins and contribute to further mergers and acquisitions over the period.”