• Acquisition of RAC Insurance (RACI) business and 20-year exclusive distribution agreement
• Strengthens IAG's presence in Western Australia and expands its retail insurance strategy
• Expected to deliver ~$100 million in pre-tax annual synergies

IAG announced it will enter a strategic alliance with The Royal Automobile Club of Western Australia (RAC) to provide general insurance products and services for RAC members and Western Australians. The transaction includes IAG's purchase of the RAC Insurance (RACI) business and a 20-year exclusive distribution agreement for RAC branded home, motor and niche insurance products. The total consideration is $1,350 million, comprising $400 million for the acquisition of RACI and $950 million for the distribution and brand licensing agreement. The transaction is expected to add approximately $1.5 billion to IAG's Gross Written Premium and result in around $100 million in pre-tax annual synergies from reinsurance, operating efficiencies and other benefits. IAG expects the transaction to be earnings per share (EPS) accretive in the first full year, and mid-single digit EPS accretive on a full synergy run-rate basis. The transaction is consistent with IAG's 'through the cycle' 15% insurance margin target and contributes to an upgrade in the ROE target to 15%. The transaction is subject to regulatory approvals and is expected to complete in the first half of calendar year 2026.

The RACI portfolio is expected to add ~$1.5 billion to IAG's Gross Written Premium. IAG estimates the RACI insurance business to achieve NPAT of ~$150 million based on HY25 normalised PBT of $110 million. The transaction is expected to result in ~$100 million pre-tax annual synergies.

The transaction is expected to be EPS accretive to IAG shareholders in the first full year, and mid-single digit EPS accretive on a full synergy run-rate basis. It is consistent with IAG's 'through the cycle' 15% insurance margin target and contributes to an upgrade in the ROE target to 15%.