Insurance Australia Group (IAG) has inked a conditional agreement to acquire 30% of Vietnam-based AAA Assurance Corporation (AAA) for $20m.

IAG managing director and chief executive officer Mike Wilkins said the investment, valued at less than $20m, marked another step in IAG’s strategy to boost its Asian footprint.

"Our goal is for our business in Asia to represent 10% of IAG’s Gross Written Premium on a proportional basis by 2016," Wilkins said.

"We have previously indicated that we were targeting six markets in the region: India, China, Thailand and Malaysia, where we already have a presence, as well as Vietnam and Indonesia."

"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," Wilkins added.

IAG chief executive officer Asia Justin Breheny said the firm would have an option to increase its shareholding in AAA to 49%, subject to regulatory approval.

"In line with our strategy, IAG would bring to this partnership proven capabilities in the areas of underwriting, pricing and actuarial, and risk and claims management, enabling AAA to expand its operations and become a more significant player in this exciting market," Breheny said.

The significant stake acquisition of AAA, which is expected to be completed by June 2012, is an active step of the Australian insurance firm to strengthen its grip on Vietnamese insurance market.

"We have a successful track record with other partners in the Asian region and we look forward to working with AAA as we continue to grow this successful general insurance business together."

As per the terms of the agreement, IAG will appoint its board members as well as key management personnel, with confirmatory voting rights over key business matters.