Insurance Australia Group gets ACCC approval for RACQ acquisition

Insurance Australia Group Limited has received approval from the Australian Competition and Consumer Commission (ACCC) for its proposed acquisition of RACQ. Insurance Australia Group is a general insurance company in Australia and New Zealand, offering personal and commercial lines insurance products. The acquisition will expand Insurance Australia's market presence and customer base.

Insurance Australia Group Limited (IAG) has received approval from the Australian Competition and Consumer Commission (ACCC) for its proposed acquisition of the insurance business from the Royal Automobile Club of Queensland (RACQ). The acquisition, valued at AUD 400 million, is expected to expand IAG's market presence and customer base in Australia [2].

The ACCC's decision not to oppose the sale was welcomed by RACQ Managing Director and Group CEO David Carter, who stated that the decision recognizes the benefits of the partnership between the two organizations. The partnership includes a 25-year strategic agreement that will bring a wider range of products and leading digital capabilities to RACQ members, as well as new career pathways for employees [1].

IAG Managing Director and CEO Nick Hawkins expressed excitement about the opportunity to partner with RACQ, stating that the acquisition will allow IAG to provide its leading insurance products, services, and support to RACQ members and people across Queensland. RACQ will maintain its brand and customer relationships while leveraging IAG's scale, financial strength, and best-in-class technology [1].

The transaction is subject to approval from the Australian Prudential Regulation Authority (APRA) and the Federal Government. Mr. Carter assured RACQ insurance policyholders that their existing policies remain unchanged during the transition process. Additionally, the partnership will enable RACQ to invest in and accelerate its 2032 Strategy, which includes developing new products and services to help members transition to a low-carbon future [1].

The acquisition is expected to complete in the first half of 2026 and is anticipated to be earnings per share (EPS) accretive. The transaction is funded from IAG's existing surplus capital, debt, and strong, stable organic capital generation. The deal is subject to conditions including ACCC clearance and Commonwealth Treasurer (FSSA) approval [2].

Shares of IAG traded ~2% lower at A$8.725 following the announcement, but several brokerages have raised their price targets and earnings estimates for the company. Citi raised its price target to A$10.00 from A$9.05, retaining a "buy" rating, while Morgan Stanley considers the deal an attractive opportunity for IAG but requires regulatory approvals and strong execution [3].

References:
[1] https://www.racq.com.au/latest-news/news/2025/05/racq-welcomes-accc-decision
[2] https://www.marketscreener.com/quote/stock/INSURANCE-AUSTRALIA-GROUP-6491422/news/Insurance-Australia-Group-Limited-agreed-to-acquire-RAC-Insurance-business-from-The-Royal-Automobile-49956843/
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3RO06L:0-insurance-australia-group-slips-despite-brokerages-upbeat-on-rac-deal/