WA motoring club RAC Group says the sale of its insurance arm to IAG offers the “best path forward” for the business after the competition watchdog raised concerns over the $1.35 billion deal.

RAC Insurance, which has a large share of the state’s home and motor markets, increased its profit to $290 million last financial year from $116.89 million in 2023-24. Insurance revenue grew to $1.45 billion from $1.2 billion.

“The motor and home insurance portfolios experienced growth in premium revenue,” RAC Group said in its annual report.

“Gross written premium was 11.4% higher than the prior year, driven by growth in policies issued, increases in amounts insured, and price increases.”

The motoring club made a group profit of $254.17 million, up from $111 million.

Earlier this month, an Australian Competition and Consumer Commission preliminary review said IAG’s proposed acquisition of RAC Insurance is likely to substantially reduce competition in the WA motor and home and contents markets.

But RAC Group CEO Rob Slocombe told ABC News the deal “is the best path forward … we’ll continue to co-operate with the ACCC, but there’s a limited amount I can say while they’re still deliberating”.

The deal includes a 20-year distribution and brand licensing agreement, and IAG will maintain a claims presence in the state.

Mr Slocombe told the ABC that IAG has agreed to keep a WA workforce.

“Over time, that may change as more technology comes in and various things change, but IAG has committed to keeping a significant claims handling presence here.”