IAG has targeted growth in WA with the proposed $1.35 billion deal to acquire the RAC underwriting business and enter into a 20-year distribution agreement.

CEO Nick Hawkins says the move builds on the insurer’s track record of partnering with motoring member organisations, and RAC “is a highly trusted institution with a quality insurance business and strong member relationships”.

The deal follows a similar $855 million transaction the company announced last November with RACQ in Queensland.

Both deals require clearance from the Australian Competition and Consumer Commission, which is expected to deliver findings on Thursday for the RACQ transaction.

Morningstar says a decision will probably hinge on how many competitors are still active in the region and how much success challenger insurers and subsidiaries of large global insurers are having.

JP Morgan notes that a ruling on the proposed RACQ purchase this week could give some idea of the regulator’s approach and implications for the WA transaction.

“We think the ACCC would likely be troubled by this if they took a state-based and class-of-business approach to defining market for assessing competition,” it says.

“We do note lawyers for the sellers and potential purchasers, however, have advised that there was a meaningful chance of approvals, as they have all decided to proceed with this transaction.”

IAG says the RAC deal will provide about $1.5 billion in additional gross written premium and deliver about $100 million in pre-tax annual synergies, including from reinsurance and operating efficiencies.

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.