The NZ Commerce Commission has published a statement of preliminary issues relating to an application from IAG seeking clearance to acquire AMI Insurance. Both IAG and AMI supply general insurance including house, contents, and motor vehicles.
The acquisition involves the transfer by AMI of its business (excluding its Canterbury earthquake liabilities) to a newly created company ¬¬– AMI Newco. IAG will acquire 100% of the shares in this new company. AMI's Canterbury earthquake liabilities will be taken over by the Government.
Both IAG and AMI supply general insurance products including home, contents, and car insurance. IAG is part of the Insurance Australia Group of companies and is active in both New Zealand and Australia. In New Zealand, IAG offers insurance services under two brands – State Insurance and NZI. AMI has a national branch network across New Zealand and has around 500,000 customers.
In its Statement of Preliminary Issues, the Commission notes that the the proposed acquisition would result in aggregation of market share in three insurance product categories: domestic house, domestic contents, and domestic motor vehicles.
It intends to investigate and assess:
- in respect of market definition, whether there are separate underwriting and retail insurance markets;
- whether other related markets such as windscreen or motor vehicle repairs are relevant to the proposed acquisition; and
- whether or not banks are able to provide competitive constraint as a result of what IAG submits is strong competition post acquisition from existing insurance companies and from banks.