updated 7/13/2006 9:00:54 AM ET 2006-07-13T13:00:54

Aviva PLC, Britain’s largest insurance company, said Thursday it will take over U.S. insurance company AmerUs Group Co. in a $2.9 billion deal that will expand the U.K. insurer’s reach into the U.S. market.

Aviva will pay $69 in cash per AmerUs share, a 10 percent premium to the closing price of July 6 — the day before Aviva confirmed they were in talks.

The British company has long said it wants to expand in the United States, and the companies were linked earlier this year.

Aviva said the purchase, which has been recommended by the Iowa-based company’s board, will “transform” its U.S. business and gives it a top position in the world’s largest savings market.

“In a single move, the combination of AmerUs’ national distribution networks and the resources and expertise of Aviva, provides the platform for significant profitable growth in the U.S.,” Richard Harvey, Aviva’s group chief executive, said in a statement.

It will combine AmerUs with its Aviva U.S. unit, and the business will use the Aviva name. Tom Godlasky, AmerUs’ chief executive, will head the U.S. operation.

Aviva said it will raise $1.7 billion (900 million pounds) in new shares at $12.90 (700 pence) each to finance the cash purchase, with the remainder to be paid with debt and money it has on hand.

Aviva said it anticipates the acquisition will contribute $45 million in annual pre-tax cost savings. The transaction is expected to be completed in the fourth quarter.

Earlier this year, Aviva withdrew a $30 billion (17 billion pound) proposal to buy smaller rival Prudential PLC after its approach was rebuffed. However, it added at the time that it intended to remain on the acquisition trail to consolidate its position as Britain’s largest insurance company.

“We believe this to be a good deal for Aviva, increasing the group’s exposure to the huge U.S. market, whilst the business is of a size that integration should not be too difficult,” Numis Securities said.

AmerUs, based in Des Moines, Iowa, is the largest provider by sales of indexed life insurance products in the United States, and one of the country’s top five providers of indexed annuities.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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