ACCC will not oppose IAG and RACQ merger
The Australian Competition and Consumer Commission (ACCC) has given the green light to the merger of IAG and RACQ Insurance, by not opposing the transaction.
The regulator considered the impact of the proposed acquisition on the supply of home and contents insurance and the supply of motor insurance and assessed the level of competition provided by other existing insurance providers.
“Several alternative suppliers of home and contents insurance and motor insurance, including the market leader Suncorp, more established insurers Allianz and QBE, and newer entrants such as Youi, Auto & General, and Hollard will continue to compete in Queensland,” Gina Cass-Gottlieb, Chair of the ACCC, said.
The regulator also found that RACQ competitive strength had softened in recent years.
“The ACCC’s investigation also found RACQI has not been a particularly vigorous competitor in recent times and that it has been losing market share since 2019.”
Transaction Includes Share Acquisition and Strategic Alliance
IAG announced in November to acquire a 90 per cent stake in RACQ and enter into a 25-year exclusive strategic alliance to provide RACQ general insurance products and services for RACQ members and Queenslanders.
The deal would involve a payment of $522 million for shares and an upfront payment of $333 million for an exclusive 25-year distribution agreement.
IAG expects the RACQ portfolio to add approximately $1.3 billion in gross written premiums.
IAG has an option to acquire the remaining 10 per cent from two years after completion on consistent terms.
The insurers anticipate the transaction will be completed in third quarter of calendar 2025.
“RACQ will maintain brand and customer relationships, while leveraging IAG’s scale, financial strength, best-in-class technology for claims, policies and pricing, customer orientated claims experience and underwriting expertise,” IAG Managing Director and CEO Nick Hawkins said.
In Queensland, there will be no change to IAG’s existing insurance business and brands, or RACQ’s brand, as a result of the alliance.
The ACCC is also reviewing Allianz Australia Insurance’s proposed acquisition of RAA Insurance and has taken note of IAG’s proposed acquisition of RAC Insurance from the Royal Automobile Club of Western Australia.
IAG announced last week it proposed to acquire 100 per cent of RAC Insurance shares and enter into a 20-year strategic alliance.
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