A recent strategic partnership between Allianz and RAA has emerged as one of the most significant transactions in Australia’s general insurance market, with pricing metrics surpassing previous industry benchmarks.
According to a research note from Macquarie, the transaction valued RAA’s insurance operations at 23.9 times net profit, well ahead of recent deals involving RACQ and RAC WA, which traded at 18 and 16.5 times profit, respectively.
The price-to-gross written premium (P/GWP) ratio in the Allianz-RAA deal also led the market at 1.15, compared to 0.73 for RACQ and 0.9 for RAC WA.
These valuations have drawn attention from market participants and analysts, with the transaction setting a new reference point for similar deals in the mutual and regional insurer space.
RAA appointed The Bridge International, a local advisory business, to manage the process from strategic planning to partner selection and final negotiations. The firm was selected over several larger investment banks and consulting groups.
RAA CEO Nick Reade (pictured) said the organisation needed advisors who understood the nuances of insurance and mutual structures.
“Critically, we could have used a big tier one investment bank, but what we really wanted were advisers who had a very deep understanding of the insurance industry and our insurance business as well as member-owned organisations,” he said, as reported by Macquarie.
Former RAA chairman Peter Siebels said the growing financial pressures on regional insurers, particularly after multiple extreme weather events, led the board to consider structural changes.
“With several catastrophic weather events in one year, it was clear we had to do things differently and find an alternative and better way forward for the members and our organisation. That’s when we engaged The Bridge to see what our options could be,” he said.
The advisory scope included:
This led to the conclusion that forming a strategic partnership would deliver the best outcome for members.
One of the core elements negotiated in the agreement was the preservation of the RAA brand and distribution rights.
Reade noted that The Bridge was instrumental in designing a model that retained local brand presence while integrating with Allianz’s underwriting and capital capabilities.
Siebels highlighte the importance of cultural alignment in choosing the partner and shaping the agreement.
“Their goal was to provide us with a recommendation that met our key strategic criteria, including de-risking RAA’s financial future, securing ongoing investment and incentive to keep growing RAA’s insurance portfolio, and ensuring member and employee experience would be protected,” he said.
The Bridge’s involvement extended beyond transactional advisory to weekly board updates and internal strategic alignment.
Managing director Stuart Blake described the firm’s role as an embedded partner.
“At The Bridge, we pride ourselves on being different and truly care for our partners. It is this difference that helped us achieve the best possible result and outcome for RAA, their members, and Allianz,” he said.
The Allianz-RAA deal is part of a broader consolidation trend in Australia’s motor insurance market.
Insurance Australia Group’s (IAG) acquisition of RACQ Insurance has been approved by the Australian Competition and Consumer Commission (ACCC) while its proposed underwriting agreement with RAC WA is still under review.
The Motor Trades Association of Australia (MTAA) has raised concerns over the implications of these deals for competition and independent repair businesses.
Interim executive director Rod Camm said the transfer of underwriting to national insurers could reduce consumer choice and strain small service providers.
“Consumers may continue to see trusted local brands, but the reality behind the scenes is a corporate takeover,” he said. “These arrangements ruthlessly strip decision-making away from locally accountable institutions and hand control to national corporate agendas that prioritise profits.”
The MTAA is advocating for reforms to the Motor Vehicle Insurance and Repair Industry Code of Conduct, including the introduction of penalties and greater oversight from the ACCC.
