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Insurance Australia Group (ASX:IAG) has bought up the insurance business controlled by RACQ for $855 million, with the strategic alliance now set up for the former to deliver general insurance to Queenslanders.
The two parties inked a 25-year exclusive strategic alliance through which IAG will acquire 90% of RACQ’s current insurance underwriting business, with the opportunity to take on the remaining 10% in two year on consistent terms.
IAG will make an upfront payment of $333 million to enter into an exclusive distribution agreement to last 25 years, in addition to payment of shares equivalent to the expected net tangible asset value at time of completion of around $522 million.
IAG managing director and CEO Nick Hawkins said the agreement would be a boon for both parties, as well as leveraging IAG’s experience in delivering insurance to Queenslanders.
“IAG has a well-established presence in Queensland through our trusted insurance brands, and we are excited to now help protect and serve RACQ’s members,” he said.
IAG has been trading at $8.18.
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