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The consideration will be RM170m (£30m) in cash, payable upon completion, and Friends believes the investment will give it a stake in a fast-growing business with what it describes as ‘excellent potential’.

The agreement includes provision for a potential future increase in Friends Provident’s stake, subject to regulatory approval.

Friends’ says AmAssurance has an established position in both agency and bank distribution in Malaysia.

Its annualised new life business premiums grew by 18 per cent to RM93m (£17m) for the year to 31 March 2008, including 27 per cent growth in sales through bank distribution.

The agreement has been approved by the Malaysian regulators, and is subject to completion of an associated transaction between AMMB Holdings Berhad and Insurance Australia Group for which regulatory approval has also been granted and an agreement has been signed.

Trevor Matthews, chief executive officer of Friends Provident, said: "I am excited about our new investment in Malaysia, which positions us well to participate in the many opportunities in this market.

"This is further evidence of our commitment to international growth in general and to Asia in particular. It is a modest investment but an important strategic development."