Insurance Australia Group (IAG) has agreed to acquire the insurance business of the Royal Automobile Club of Western Australia (RAC), along with a 20-year exclusive distribution and brand licensing agreement for RAC-branded insurance products.
The total consideration for the deal stands at $1.35bn, which includes $400m for the acquisition of 100% of RAC shares and an upfront payment of $950m to enter the exclusive distribution agreement.
Go deeper with GlobalData
The shares value is based on the expected net tangible asset value at the time of completion.
The transaction will be funded through IAG’s existing surplus capital, debt and its organic capital generation capabilities.
This move is expected to improve IAG’s gross written premium (GWP) by approximately $1.5bn.
IAG has assured that its existing insurance business and brands in Western Australia (WA), as well as the RAC brand, will remain unchanged.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe transaction is anticipated to be earnings per share “accretive” to IAG shareholders from the first full year post-completion.
This deal is due to be finalised in the first half of the 2026 calendar year (H1 2026), contingent on regulatory approvals and other customary conditions including clearance from Australian Competition and Consumer Commission (ACCC).
RAC Group CEO Rob Slocombe said: “IAG brings national scale, global reinsurance capability and industry-leading technology to support RAC members, along with a deep understanding of member-focused organisations.
“The partnership will contribute to our organisation’s purpose, vision and mission of being the driving force for a better Western Australia, providing a safer, sustainable and connected future.”
IAG managing director and CEO Nick Hawkins said: “We are excited to partner with RAC to help protect and serve more Western Australians. RAC is a highly trusted institution with a quality insurance business and strong member relationships. This partnership lays a solid foundation for continued commitment to Western Australia, the nation’s top-performing economy.”
This acquisition follows IAG’s November 2024 agreement to purchase a 90% stake in the Royal Automobile Club of Queensland’s insurance underwriting business.
However, in February this year, the ACCC expressed concerns regarding the potential impact of the deal on personal lines general insurance and ancillary repair services.
