RACQ knocks back reports that its about to sell insurance business
9 December 2022
RACQ has declined to comment on “market speculation” that it aims to sell its insurance business, saying it is committed to continuing to offer insurance to its members.
A report published on the website of the Courier Mail today says the motoring club is close to selling its insurance operations to IAG in a $500 million deal. It says other potential buyers included Hollard and Auto & General but that IAG has emerged as favourite.
The newspaper quotes a person “with knowledge of the deal” as saying RACQ cannot compete with Suncorp in the region and has been hard hit by recent weather events.
“IAG has always had ambition to break into the Queensland market and this would give them a red carpet entrée,” the source says.
The article says IAG could work with RACQ in a similar way to its agreement with RACV in Victoria.
RACV Insurance is underwritten by Insurance Manufacturers of Australia, a joint venture which is owned 70% by IAG and 30% by RACV.
RACQ last month appointed Trent Sayers as Group Executive Insurance after he took up the position in an acting capacity mid-year following the departure of Tracy Green.
The RACQ annual report shows insurance posted an after-tax loss of $236 million last financial year, including a $149 million provision and an $87 million trading loss.
A provision was set aside for refunds to members arising out of a pricing promises review, while the insurance business has also been affected by above normal natural hazard claims, high compulsory third party and motor claims costs and unfavourable investment markets.
RACQ told insuranceNEWS.com.au today that it “does not comment on market speculation”.
“In line with the increased climate risk facing all insurers, we have and continue to take active steps to strengthen our balance sheet including long-term partnerships in reinsurance,” a spokesperson said.
“The club has been offering insurance for the past 50 years and we remain committed to continuing to do this for our members and to grow our market share.”
IAG declined to comment.