German insurer Allianz has reached an agreement to acquire the Polish business of Aviva in a cash deal worth $2.9bn (€2.5bn).

Allianz reportedly outbid Dutch insurer NN Group and Italy’s Assicurazioni Generali to reach the deal.

Under the agreement, London-based Aviva will offload its entire shareholding in Aviva Poland. The transaction values Aviva’s Polish arm at €2.7bn.

The Polish unit to be acquired by Allianz includes the British insurer’s interests in life insurance business in Poland and Lithuania, along with its Polish general insurance, asset management and pensions operations.

The business also includes Aviva’s 51% stake in life and general insurance joint ventures with Santander.

The deal, which concludes Aviva’s strategy to sell non-core operations, is said to help Allianz become the fifth largest insurer based on gross written premiums in Poland.

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Aviva CEO Amanda Blanc said: “The sale of our eight non-core businesses will generate total cash proceeds of £7.5 billion.

“We have made significant progress with our debt reduction plan and in due course we will make a substantial return of capital to shareholders. Our strategic focus is now on our strongest businesses in the UK, Ireland and Canada where we have leading market positions and strong growth potential.”

Allianz said that the acquisition, which awaits regulatory nod, will immediately add to its earnings.

Aviva Poland management and employees will be retained, while customers’ policies are expected to remain unaffected.

The IFRS profit after tax of Aviva Poland stood at £130m last year. Aviva Investors Poland, which manages funds of Aviva Poland, will be part of the deal.

The deal is expected to close within the next 12 months. Aviva intends to utilise the transaction proceeds to drive its earlier announced capital framework of debt reduction, long-term growth and return of excess capital to shareholders.

Through the deal, Allianz aims to double its revenues in the Polish insurance space and also reach a balanced business mix between property/casualty as well as life insurance.

Allianz CEO Oliver Bäte said: “By combining our insurance and digital expertise and strong investments in technological innovation, customers will benefit from our innovative products and outstanding services.”

Allianz recently also entered into an agreement to buy the general insurance business of Aviva for €330m.