CANBERA (dpa-AFX) - IAG and RACQ said they will enter a 25-year strategic alliance to provide RACQ general insurance products and services for RACQ members and Queenslanders. IAG will acquire 90% of RACQ's existing insurance underwriting business, with an option to acquire the remaining 10% in two years on consistent terms. The consideration of $855 million comprises net tangible asset value and entry into the 25-year distribution agreement.
IAG expects the transaction to be EPS accretive in the first full year of ownership and consistent with investment targets of a 15% insurance margin and ROE of between 14% and 15% on a through the cycle basis.
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