IAG will acquire 90% of the RACQ insurance underwriting business, with an option to buy the remaining 10% in two years, under an $855 million deal announced today.

The sum comprises net tangible asset value and entry into an exclusive 25-year distribution agreement as part of a long-term strategic alliance.

“RACQ will maintain brand and customer relationships, while leveraging IAG’s scale and financial strength, best-in-class technology for claims, policies and pricing, customer-oriented claims experience and underwriting expertise,” IAG CEO Nick Hawkins said.

The RACQ portfolio is expected to add about $1.3 billion to IAG’s gross written premium. The pair aim to complete the deal in the third quarter of next year, subject to conditions including Australian Competition and Consumer Commission clearance.

In Queensland, there will be no change to IAG’s insurance business and brands or RACQ’s brand.

IAG, whose brands include NRMA Insurance and which has a joint venture with motoring group RACV in Victoria, says the Queensland deal is a “true partnership”. 

“It builds on our proven track record of working collaboratively with leading member motoring organisations that share our values,” Mr Hawkins said. 

RACQ CEO David Carter says the group is pleased to partner with IAG to “help our 1.7 million members”. 

“IAG has made a major commitment to Queensland and RACQ, and brings a deep understanding of member-focused organisations,” he said.