Allianz has agreed to acquire a 49 percent stake in LV=’s general insurance business for £500mn, with the two carriers agreeing to launch a joint venture under the LV= name.

The joint venture will create the UK's third largest general insurer with annual premium income of over £1.7bn.

The new, long-term joint venture will acquire Allianz’s personal home and motor insurer’s renewal rights while AIlianz will obtain LV= GI’s commercial insurer’s renewal rights.

The joint venture will be run by Steve Treloar, reporting to a board of directors drawn from LV= and Allianz.

The transaction will see Allianz acquire a 69.9 percent stake in the joint venture. The agreement also contains a provision for Allianz to pay LV= a further £213mn by 2019 for an additional 20.9 percent stake in the joint venture through an agreed forward purchase based on a total valuation of £1.02bn.

The first stage of the transaction is expected to close during the second half of 2017 and remains subject to regulatory approvals.

LV= also has a put option under which it can sell all or part of its remaining shares to Allianz.

Allianz CEO Oliver Bäte commented: "This partnership will first and foremost benefit our customers who will have access to an expanded range of products backed by the financial strength of Allianz. We value LV='s strong brand and market positioning."

Richard Rowney, chief executive of LV=, said: “With this deal, LV= has a positive future in both general insurance and life and pensions.

“The strategic partnership with Allianz will allow us to continue to benefit from a growing personal insurance business while also enabling us to strengthen our capital position, leaving us well placed to continue to expand our life and pensions business and pursue new digital opportunities.”