The Commerce Commission has, unsurprisingly, pushed out the deadline for its decision on whether to clear IAG's planned takeover of rival insurer Lumley.
The initial deadline for a ruling had been last Friday, January 24. However the Commerce Commission's website now shows a deadline of Friday, March 28. The extension is no surprise given the application was only registered on Friday, December 20.
In New Zealand IAG, or Insurance Australia Group, already owns NZI, AMI and State Insurance. In December it announced a A$1.845 billion deal to buy the underwriting businesses of Australia's Wesfarmers, which includes Lumley General Insurance in New Zealand. The deal requires approval from the Reserve Bank, Commerce Commission and Overseas Investment Office.
The deal would increase IAG's share of the overall insurance market to about 50.5% from 41.5%, lift its share of the home and contents and vehicle insurance market to 66% from 60%, and give it 40% of New Zealand's intermediated insurance market. In a December interview with interest.co.nz IAG's New Zealand CEO Jacki Johnson said IAG would sell assets to gain Commerce Commission approval for the Lumley purchase if it had to, but IAG sees itself as the natural owner of the assets.
IAG's full application for Commerce Commission clearance paints a picture of an already fiercely competitive insurance market with rivals queuing up to expand or enter, and banks poised to embark on a major insurance push.
The Commerce Commission approved IAG's takeover of earthquake-hit rival AMI on March 1, 2012, some two and a half months after the planned deal was announced on December 16, 2011.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.