RAC WA Sells Insurance Arm to Sydney-Based Company

RAC WA has sold its insurance arm to a Sydney-based company, with the CEO insisting customers won't be impacted but unable to rule out premium hikes. The deal is part of RAC WA's strategy to focus on its core services, including roadside assistance and membership programs. The sale is expected to be finalized in the coming months.

Insurance Australia Group (IAG) has announced its acquisition of The Royal Automobile Club of Western Australia's (RAC) insurance business, marking a significant move in the Australian insurance sector. The deal, valued at A$1.35 billion ($867.51 million), includes the purchase of RAC's insurance business and its existing portfolio for A$400 million, along with a 20-year exclusive distribution agreement for RAC's branded home, motor, and niche insurance products for an upfront payment of A$950 million [1].

RAC WA, established in 1905, is a motoring club and organization based in Perth. It offers a range of services, including roadside assistance, insurance, travel, finance, driver training, and exclusive member benefits. The acquisition will provide IAG with general insurance products and services for RAC members and Western Australians [1].

IAG plans to fund the transaction through existing surplus capital, debt, and organic capital generation. The company expects the deal to be earnings per share (EPS) accretive in its first full year. Completion of the transaction is expected in the first half of 2026, with RAC's insurance portfolio adding approximately A$1.5 billion to IAG's gross written premium [1].

The CEO of IAG has stated that customers will not be immediately impacted by the acquisition but has not ruled out potential premium hikes in the future. The sale is part of RAC WA's strategy to focus on its core services, including roadside assistance and membership programs [1].

In contrast, State Farm in California is facing a different set of challenges. Homeowners insured by State Farm in California will see a 17% increase in their premiums starting next month, following a "dire" financial crisis following the Los Angeles fires. The increase is expected to affect around 1 million California homeowners with State Farm policies [2].

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3RM242:0-insurance-australia-group-to-buy-rac-insurance-arm-and-enter-licensing-deal-for-868-million/
[2] https://krcrtv.com/news/local/state-farm-policyholders-in-california-face-premium-hikes