IAG has found something it likes on the acquisition trail at last. Several months after announcing it was looking for targets in Asia – and a week after speculation that it was casting its net wider – Australia’s largest general insurer has received approval from the Malaysian regulator to invest in Malaysia’s fourth-largest general insurer, AmAssurance Berhad.

It’s understood IAG is aiming for at least 30% of the company. It says it will buy a 10% stake in AmAssurance Berhad from Malaysian-based AMMB Holdings for an unspecified amount, but it’s also in talks to buy another 20% from ABH Holdings.

IAG CEO Mike Hawker has been looking at an Asian investment for some time, with the intention to build a portfolio of insurance assets in Asia and supplement its business in Australia and New Zealand. Now that approval has been granted, discussions to purchase a minority stake in AmAssurance can begin.

And it’s unlikely to stop there. Analysts say IAG is cashed-up and could still bring its long-lived talks with Chinese insurers to a satisfactory conclusion.

AmAssurance is a composite insurance company and expects to generate a gross written premium of about $350 million next year. It’s Malaysia’s second-largest motor insurer and fourth-largest general insurer. It has an extensive distribution network of around 30 branches and 8000 insurance agents.

JP Morgan analyst Shane Fitzgerald told Sunrise Exchange News IAG has been keen to push further into South-east Asia for some time.

“Growth in these markets is very high,” he said. “Most of these markets in Asia are tariff-based, which dilutes the ability to individually price risk.”

That will be a short-lived blessing, however. Malaysia will move to a non-tariff system in 2007. But Mr Fitzgerald says countries like China, India and Thailand are similarly attractive.

“IAG has been in talks with insurers in China for some time now, and a tariff-based based system ended more than 12 months ago there,” he said. “India is in the early stages of removing this system and Thailand is on a similar track.”