CGNU strengthens Australian base

CGNU, Britain's biggest insurer, is strengthening its presence in Australia with the purchase yesterday of the general insurance company Fortis Australia for A$293m (£111m) in cash.

The move forms part of a major restructuring of CGNU's Australasian operations - earlier this year it sold part of its New Zealand insurance business to an Australian company as one of a series of disposals.

Fortis Australia has been acquired from the Dutch-Belgian financial services group Fortis, and CGNU group executive director Philip Twyman said the purchase "reinforces our top five position in the Australian general insurance market".

Fortis Australia includes a small life insurance business and made profits after tax of A$35m (£13m) last year. CGNU - formed from the merger of CGU and Norwich Union last year - said the company has a strong busi ness fit with its own Australian general insurance operations.

"The acquisition will create the market leader in both the motor dealer and financial institution distribution channels, areas in which CGNU is already strong," said a spokesman.

"It also provides opportunities for cost savings from a business that is already performing well." Both CGNU and Fortis have their Australian bases in Melbourne.

The deal, which requires regulatory approval, is expected to be completed by the end of September. In addition to the A$293m cash payment Fortis will receive a dividend of A$37m (£14m) prior to completion.

In February CGNU sold Norwich Union's New Zealand general insurance business to Australian insurer NRMA for £125m. And last autumn the group sold its general insurance business in the United States to White Mountains Insurance Group for £1.4bn.