IAG plans to buy the RAC Insurance business and enter a 20-year distribution agreement for home, motor and niche products, in a $1.35 billion deal.

The transaction includes $400 million for acquisition of the WA motor club’s insurance business and $950 million for the 20-year distribution and brand licensing agreement.

IAG CEO Nick Hawkins says the alliance with RAC builds on the insurer’s track record of partnering with leading motoring member organisations that share its purpose and values.

“RAC is a highly trusted institution with a quality insurance business and strong member relationships,” he said.

“This partnership lays a solid foundation for continued commitment to WA, the nation’s top-performing economy.”

On completion, the RAC Insurance portfolio is expected to add about $1.5 billion to IAG’s gross written premium.

RAC group CEO Rob Slocombe says the long-term partnership with IAG will strengthen the value the club delivers to its 1.3 million members across WA.

“IAG brings national scale, global reinsurance capability and industry-leading technology to support RAC members, along with a deep understanding of member-focused organisations,” he said.

The transaction, subject to conditions including Australian Competition and Consumer Commission clearance, is expected to be complete in the first half of next year.

IAG announced a similar deal last November with RACQ, and the ACCC is due to make an announcement on that purchase next Thursday. The regulator has indicated it could release either a final decision or a statement of issues.

In December, Alllianz announced a $642 million deal with SA motoring group RAA that includes the acquisition of its insurance business and a 20-year distribution agreement. This is also being examined by the ACCC.

IAG says the RACQ and RAC deals combined are expected to add about $3 billion in GWP and about $2 billion in net earned premium, and increase insurance profit by at least $300 million.