AIA Group has bought UK insurer Aviva’s Sri Lankan life insurance business for $US109 million ($104 million).

It has taken over Aviva NDB Insurance, which was 92.3% owned by the British insurer and Sri Lanka’s National Development Bank (NDB). The remaining 7.7% of shares are publicly owned and AIA has no plans to buy them.

As part of the deal, AIA will sell its 83.9% stake in NDB Aviva Wealth Management back to the NDB.

AIA Group CEO Mark Tucker says the insurer is moving into its 16th market in the Asia-Pacific region.

“This acquisition will immediately establish AIA as the second-largest life insurance company in Sri Lanka,” he said.

Aviva NDB Insurance has a composite insurance licence with more than 780 employees and a tied agency force of 3000 agents.

In the year ending December 31 it recorded gross written premium of $US81 million ($77 million), with life premiums making up about 75% of revenue and general premiums 25%. Its agency force accounted for 84% of life premiums.

Mr Tucker says a long-term bancassurance relationship with NDB will allow AIA to grow the highly attractive Sri Lankan market.

The deal is subject to the approval of the Exchange Control Department and the Securities and Exchange Commission of Sri Lanka.