SA motoring group RAA’s after-tax profit jumped to $276.1 million last financial year due to an upfront payment from the deal to sell its insurance underwriting operations to Allianz.

The cash payment, which lifted earnings from $2.1 million a year earlier, ensured RAA entered this year with a much more resilient balance sheet, chair Kathy Gramp and CEO Nick Reade say in the annual report. 

RAA says excluding the one-off benefit, underlying profit before tax rose to $24.3 million from $4.1 million, reflecting a stronger insurance result and the addition of about 15,000 members, taking the total to 834,000.

Allianz Australia announced the move to acquire RAA’s insurance operations and enter into a 20-year distribution agreement last year. The $642 million deal took effect in July.

Ms Gramp and Mr Reade say that as a state-based insurer, it was increasingly difficult to shield members from insurance sector challenges such as rising reinsurance costs, home and car repair costs, and an increasing frequency and intensity of natural disasters hitting SA.

RAA was particularly affected by the Murray River floods in 2022-23, resulting in a significant drawdown in capital reserves.

“We were fortunate to have these reserves, but in order to de-risk RAA from further capital risk, we decided to enter into a long-term partnership with Allianz Australia to underwrite our home and motor insurance products,” they say.

The report also shows RAA paid more than $31 million to about 132,500 members last fiscal year as part of a pricing promises remediation program for past instances when insurance discounts were not applied in line with advertising material.