MADRID (Reuters) - Spanish insurance company Mapfre (MC:MAP) said on Thursday it had acquired the Italian and German affiliates of Britain's largest motor insurer Direct Line (L:DLGD) for 550 million euros (431.19 million pounds).
The deal would be immediately positive for the Spanish company's earnings, Mapfre said in a statement to the market regulator.
"The Italian and German assets acquired are absolutely strategic for Mapfre, strengthening the two main lines of our global growth plan, allowing us to increase our presence in Europe and, at the same time, it fits with our move in to digital business," Chairman Antonio Huertas said.
Deal activity in the insurance sector has risen this year, helped by the stock market listing of Dutch insurer NN Group
All net proceeds from the sale would be returned to Direct Line's shareholders, the British company said in a statement.
The German and Italian affiliates come with insurance premiums worth 714 million euros and 1.6 million clients and would be worth 19.5 million euros against pre-tax profit against 2013 earnings, Mapfre said.
Direct Line, whose brands include Churchill, Privilege and the Green Flag roadside recovery service, had been in advanced talks with at least four suitors for the two affiliates, according to sources.
(Reporting by Paul Day and Karen Rebelo; Editing by Robert Hetz)