Insurance Australia Group updates on RAC alliance and ACCC review

Insurance Australia Group (IAG) has provided an update regarding its proposed alliance with the Royal Automobile Club of Western Australia (RAC). The company anticipates the transaction will add approximately $1.2 billion in annual gross written premium and expects the deal to be earnings per share accretive within the first full year.

IAG is targeting annual pre-tax synergies of roughly $100 million following integration, while anticipating integration costs between $15 million and $25 million annually over the next three years. The company has also committed to a $20 million community investment in Western Australia over the next decade.

To address competition concerns raised by the Australian Competition and Consumer Commission (ACCC), IAG has proposed a package of commitments. This includes the sale of renewal rights for NRMA Insurance home and motor policies in Western Australia to another insurer. IAG also plans to expand RAC home insurance availability in northern Western Australia. The ACCC review process is expected to conclude by December 2026.