Insurance Australia Group (IAG) has agreed to acquire the New Zealand-based AMI insurance business for A$288m.

The acquisition excludes all liabilities relating to the earthquakes which have affected the Canterbury region.

AMI wrote more than NZ$360m of premium in the year ended 30 June 2011 and its primary business is insuring homes, contents and vehicles, as well as some farms and boats.

IAG, which will fund the acquisition using its own internal resources, said the purchase would accelerate profitable growth in its home markets of Australia and New Zealand.

IAG managing director and CEO Mike Wilkins said that the acquisition brings together New Zealand’s top two direct personal lines insurers – IAG-owned State Insurance and AMI. It adds nearly 30% to their existing New Zealand premium base.

The transaction, which is subject to regulatory approvals, is expected to be completed in February 2012.