Insurance firms Allianz SE and Insurance Australia Group Ltd. are among parties considering bidding for Western Australia’s top insurer, according to people familiar with the matter.
Allianz and IAG are mulling the offers for the insurance arm of The Royal Automobile Club of Western Australia, according to the people, who declined to be identified discussing confidential information. The firm tapped Barrenjoey to run a strategic review of this business, the Australian Financial Review reported late last year.
“RAC is constantly looking for ways to improve our member experience and the services we provide, including insurance,” according to a spokesperson, confirming the ongoing review but declining to comment further when asked about the potential bidders. IAG said it regularly explores growth opportunities and is well-positioned for them, while declining to comment on market speculation, according to its spokesperson. Allianz declined to comment.
The process pits the top insurers against each other in a race to build scale, as they expanded their books in recent months through dealmaking with the mutual lenders and automobile clubs that represent other Australian states.
The Royal Automobile Club of Western Australia offers a wide range of insurance products from cars and homes to caravans and pets, according to its website. The group made an after-tax profit of A$105 million ($65.6 million) in the financial year ending in June and had net assets of A$1.13 billion.
IAG said in November it would acquire 90% of the Royal Automobile Club of Queensland’s existing insurance underwriting business, with an option to buy the remaining 10% in two years along with a 25-year distribution agreement. Allianz entered a partnership with the Royal Automobile Association of South Australia for the purchase of its general insurance business and a 20-year exclusive distribution agreement for some of its insurance product lines.
For Allianz, another deal in Australia will give the firm a boost after facing deal setbacks in other countries like Singapore and India in the region.
Photograph: The Allianz SE logo sits on a top of a building in Berlin, Germany, on Wednesday, Jan. 4, 2017. Photo credit: Krisztian Bocsi/Bloomberg
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