Insurance Australia Group will acquire a 20 percent strategic interest in China-based general insurer, Bohai Property Insurance Pty Ltd (Bohai Insurance), for an estimated price of A$100 million or RMB687.5 million.

IAG’s Managing Director and Chief Executive Officer, Mr Mike Wilkins, said the acquisition was an important step in the Group’s strategy to boost its Asian footprint.

“Bohai Insurance is an attractive partner and provides an exciting opportunity for us to meet our long held ambition of entering China’s general insurance market,” Mr Wilkins said in a statement.

“Once the partnership is complete, IAG will have a foothold in the two fastest growing economies in Asia and most populous countries in the world – China and India. Together with our established businesses in Malaysia and Thailand, this puts the Group’s Asia division well on track to meet its target of contributing 10 per cent of IAG’s gross written premium by 2016, on a proportional basis,” he said.

CEO of IAG’s Asia division, Mr Justin Breheny said entering China’s general insurance market had been a priority for IAG for some years.

“China’s GDP grew in excess of 10 per cent in 2010 and is forecast to grow 9 per cent per annum for at least the next two years, and we expect the general insurance market to grow 10–15 per cent per annum over the next decade. This strong growth outlook is supported by low penetration rates, a large population, growing per capita income and asset accumulation. Already it is the largest individual market for new vehicle sales, exceeding the US,” he said.

Bohai Insurance is headquartered in Tianjin, at the centre of the pan-Bohai region in China’s North East, an area prioritised for new development initiatives. This region generates around 30 per cent of China’s national gross domestic product, and a similar proportion of China’s annual insurance premium pool of approximately US$60 billion.

Completion is expected in early calendar 2012 and remains subject to regulatory approval.