IAG to Acquire RAC WA Insurance Business, Adding $1.5B to GWP
Insurance Australia Group (IAG) has announced an agreement to acquire the insurance business of the Royal Automobile Club of Western Australia (RAC). The deal, valued at $1.35 billion, includes $400 million for the acquisition of RAC shares and an upfront payment of $950 million for a 20-year exclusive distribution and brand licensing agreement for RAC-branded insurance products. This strategic move is projected to increase IAG's gross written premium (GWP) by approximately $1.5 billion.
The transaction will be financed through a combination of IAG's surplus capital, debt, and organic capital generation. Post-completion, IAG expects the acquisition to be accretive to earnings per share from the first full year. The agreement is subject to regulatory approvals, including clearance from the Australian Competition and Consumer Commission (ACCC), with completion anticipated in the first half of 2026.
IAG will maintain its existing insurance operations and brands in Western Australia, ensuring continuity alongside the RAC brand. The partnership is positioned to leverage IAG's national scale, global reinsurance capabilities, and advanced technological infrastructure to support RAC members and enhance service delivery.
This acquisition follows IAG's recent agreement to purchase a 90% stake in the Royal Automobile Club of Queensland's insurance underwriting business, signaling its continued expansion in the regional insurance markets. Earlier in the year, the ACCC raised concerns regarding the competition and market impact of that previous deal, one factor to consider in the regulatory review of the RAC WA transaction.
Overall, this deal represents a significant consolidation in Western Australia's insurance market, with implications for competition, distribution channels, and brand strategy within the sector. Industry stakeholders will monitor regulatory developments closely, given the ACCC's prior scrutiny and the sizable market influence of both IAG and RAC entities in the region.