Aviva has agreed to acquire Irish insurer Friends First Life Assurance Company (Friends First) for €130m (£116m).

Aviva says that as a result of the deal it will become one of the largest composite insurers in Ireland, with its market share in life insurance increasing to 15%, alongside its existing 15% market share in general insurance.

This transaction is in line with Aviva’s strategy to invest in markets where it has scale or competitive advantage and where it can further expand its range of products across life and general insurance, says the company.

A strengthening Irish economy, in the doldrums for many years, has encouraged Avivia to expand in the Republic. Aviva says “the prospects for continued growth remain strong.” The life insurance market in Ireland has grown by about 9% since 2014 and Aviva Ireland has demonstrated consistent growth over the past few years.

Friends First, currently owned by Dutch insurer Achmea Holding NV, has been operating in Ireland for over 180 years with a focus on life protection, pension and investment products for individuals and companies. It has over 250,000 customers, a market share of 6% and is a market leader in group risk and income protection.

The transaction is subject to regulatory approval and is expected to complete in the first quarter of 2018.

Maurice Tulloch, chief executive Aviva International Insurance said: "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.

“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."