Insurance Australia Group (IAG) M&A Announcement summary

Deal rationale and strategic fit

• Strategic alliance with RAC expands presence in Western Australia, leveraging a trusted brand and access to 1.3 million members, and complements existing retail portfolios and motoring club partnerships.

• Enhances geographic diversification, scale, and member-focused offerings in Australia and New Zealand.

• Maintains existing brands in WA and invests in member experience and local presence.

Financial terms and conditions

• Acquisition of 100% of RAC Insurance for AUD 400 million, plus AUD 950 million for a 20-year exclusive distribution and brand agreement, totaling AUD 1.35 billion.

• Funded from surplus capital, debt, and organic capital generation.

• IAG expects to recognize a $950 million intangible asset, amortized over 20 years.

• Transaction costs are ~$20 million, with annual integration costs of $15–25 million over the next three years.

• No change to dividend policy; EPS accretive from day one, with mid-single digit accretion at full synergy.

Synergies and expected cost savings

• Anticipated ~$100 million pre-tax annual synergies from claims, technology, reinsurance, and operating efficiencies.

• Integration onto the retail enterprise platform expected to drive operational efficiencies and customer experience improvements.

• Full synergy run rate expected within 1.5 to 2 years post-approval.

• Expected to be EPS accretive in the first full year and deliver mid-single digit EPS accretion on a full synergy run-rate basis.