The FTSE 100 group said the takeover would bolster its share of the life insurance market to 15%, with hopes of further growth as the Irish economy accelerates.
Aviva, which has 33 million customers across 16 markets, said it dovetailed with its strategy to make “bolt-on” acquisitions in areas where it has a significant operation or a competitive advantage.
It added that the Irish economy had mounted a “robust recovery” and the prospect for further growth “remained strong”.
Maurice Tulloch, chief executive of 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.”
While the deal still needs to win the backing of regulators, Aviva expects the takeover to be completed by the first quarter of next year.
Friends First has more than 250,000 customers and provides life protection, pension and investment products for both companies and individuals.
The 180-year-old firm is currently owned by Dutch insurer Achmea Holding NV and has market share of 6%.
John Quinlan, chief executive of Aviva Ireland, said: “Friends First is an excellent business and will be a great addition to Aviva Ireland.
“Their expertise in the area of income protection and group risk, in particular, will complement and strengthen the broad range of insurance products we offer our customers.
“It will also make us the leading insurer for brokers in the Irish market. Together, our market leading insurance business will be well placed to take full advantage of Ireland’s fast growing economy.”
Aviva reported a steep rise in first-half profits in August after it was boosted by its general insurance division.
Operating profit grew 11% to £1.46 billion in the first six months of the year, with the general insurance and health profits jumping 25% to £417 million.