Munich Re has purchased a US speciality insurer for $US1.3 billion ($1.5 billion). The acquisition of Midland Company is part of the German reinsurer's drive to diversify into the $US80 billion ($90 billion) specialty primary insurance market.

The acquisition will more than double Munich Re America's presence in the sector. Last year it wrote $US747 million ($839 million) in the speciality market.

Munich Re director Peter Roder says the specialty market provides more reliable returns than reinsurance or the more volatile overall property-casualty sector.

"The specialised business model of insurers like Midland helps us to mitigate the volatility of our traditional reinsurance business."

The acquisition is expected to be completed in the first half of next year.