Aviva has agreed to acquire Canada-based vehicle replacement insurance provider Optiom in a deal worth around £100m ($125m).

Optiom, which operates as a managing general agent (MGA), will be acquired from Canada’s private equity firm Novacap and other undisclosed minority shareholders.

The acquisition is expected to expand Aviva’s capital-light businesses, which make up more than half of its portfolio.

It is also expected to strengthen the specialty lines business and distribution capabilities of Aviva Canada.

Aviva, as an existing underwriting capacity provider for Optiom, also expects the transaction to provide an opportunity to increase its access to an attractive line of business.

Aviva Canada CEO Tracy Garrad said: “The acquisition strengthens our offering and distribution capabilities in a highly attractive segment of the Canadian insurance market. We know Optiom well through our existing relationship and are excited about what we can do together to better serve our brokers and customers.”

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Aviva said the agreement complies with its capital management framework.

In its press statement, Aviva said: “The acquisition is consistent with our capital management framework, which remains unchanged. We continue to anticipate further regular and sustainable returns of surplus capital.”

Subject to customary closing conditions and receipt of regulatory approvals, the transaction is expected to close in the first quarter of 2024.

Founded in 2008, Optiom is engaged in providing vehicle replacement insurance licensed across all provinces and territories in Canada, except Quebec.