The Insurance Australia Group (IAG) has entered into a provisional agreement to acquire a strategic stake of 30% in the AAA Assurance Corporation.
The IAG managing director and CEO, Mike Wilkins, said in a press release that the deal will cost approximately US$16 million.
'This investment will allow us to enter Vietnam's general insurance market, which has been growing at a compound rate of 25% per annum since 2009.
'With a low level of insurance penetration, the market is expected to continue growing at similar levels for another three to five years,' he said.
AAA is predominantly a motor insurer, selling directly to customers through a network of regional and city-based branches. Since its establishment in 2005, AAA has grown to become the sixth largest motor insurer in Vietnam.
IAG is expected to support AAA with expertise in the areas of underwriting, pricing and actuarial, as well as risk and claims management.
Under the joint venture arrangement, IAG will have board representation, the right to appoint certain key management personnel and affirmative voting rights over key business matters.
The investment is subject to regulatory approval and is expected to be completed by June 2012.