Insurance Australia Group (IAG) said it would buy the insurance underwriting businesses of Australia's Wesfarmers for A$1.845 billion to strengthen its position in its home markets of Australia and New Zealand.
IAG NZ is New Zealand's largest general insurer.
The acquisition comprises Wesfarmers' underwriting companies trading under the WFI and Lumley Insurance brands, as well as a ten-year distribution agreement with Coles.
IAG managing director and chief executive Mike Wilkins, said the acquisition was a "compelling strategic fit'' for IAG.
"This is a unique opportunity, which is expected to deliver significant long term value for IAG shareholders and unlock further growth potential for our businesses in Australia and New Zealand," he said.
"Acquiring these businesses supports the group's strategic priorities of accelerating profitable growth in Australia and sustaining our market-leading position in New Zealand,'' Wilkins said in a statement.