Aviva has agreed to buy Irish insurer Friends First for €130 (£116m).
The FTSE 100-listed insurer said the acquisition will make Aviva "one of the largest composite insurers in Ireland", increasing its market share in life insurance to 15 per cent. The group also has a 15 per cent share of the general insurance market.
"This transaction is in line with Aviva's strategy to allocate capital in selected markets where it has scale or competitive advantage and where it can further expand its range of products across life and general insurance," the company said this morning.
Aviva said it expects the transaction to "meet the group's operating return on capital hurdle from year one and to significantly exceed the hurdle thereafter".
It added that the Irish economy has experienced a robust recovery in recent years and the prospects for continued growth remain strong.
The deal is subject to regulatory approval and is expected to complete in early 2018.
"Friends First is a natural fit for Aviva Ireland. The acquisition will enhance Aviva Ireland's product offering and accelerate our international growth agenda. It makes sense financially, strategically and for our customers," said Maurice Tulloch, chief executive of Aviva International Insurance.
"Our Irish business has been among the best performers in the Aviva group over the last couple of years. This acquisition underlines Aviva's disciplined approach to deploying capital into bolt-on acquisitions that meet our strict financial criteria and strengthen our businesses."
John Quinlan, chief exec of Aviva Ireland, added: "Friends First is an excellent business and will be a great addition to Aviva Ireland. Their expertise in the area of income protection and group risk, in particular, will complement and strengthen the broad range of insurance products we offer our customers.
"It will also make us the leading insurer for brokers in the Irish market. Together, our market leading insurance business will be well placed to take full advantage of Ireland's fast growing economy."