Allianz Australia has struck a $642 million deal with SA motoring group RAA that includes the acquisition of its insurance business and a 20-year distribution agreement.

“We were strongly drawn to partner with RAA due to its compelling strategy and platform for growth, the underlying quality of the business, and the relative stability and profitability of the insurance market in South Australia,” MD Richard Feledy said today.

Allianz will underwrite the general insurance policies, excluding travel, and manage claims under the RAA brand. About 270 RAA employees will transfer to the Allianz Adelaide team.

RAA CEO Nick Reade says the partnership will enable the motoring group to reduce its exposure to risk, rebuild its balance sheet and deliver more value for its 825,000 members.

“The driving principle was to develop a long-term model for insurance that was better for our members and our people – and this partnership delivers that,” he said.

“RAA is a local insurer, and it’s become increasingly difficult to shield our members from the global challenges in the insurance industry.”

The group says it reviewed its operating model to determine the best way to provide insurance to members, and decided to partner with an insurer that is part of a leading global group.

“Allianz is a great fit for RAA. We have complementary areas of expertise and our values are aligned,” he said.

“This partnership will help us rebuild our capital base and secure a long-term, reliable revenue stream to reinvest back into our organisation to deliver more for members.”  

The transaction is expected to be completed in the middle of next year, subject to regulatory approval.

Today's news follows IAG's similar announcement last week that it plans to acquire RACQ Insurance for $855 million.