Bank of America is understood to have paused the sale process for Australia’s Royal Automobile Club of Queensland (RACQ) after potential buyers reportedly lost interest in acquiring the business.
RACQ’s business has been presented to potential buyers as generating about AU$50m in annual profit, with market expectations suggesting a sale price between AU$500m and AU$1bn.
Allianz, who already has a significant presence in Australia and acquired Westpac’s general insurance operations for AU$700m in 2020, was reportedly close to acquiring RACQ but has now pulled out, according to The Australian.
The German insurer sees Asia Pacific as part of its growth strategy and recently announced that it would acquire a 51% stake in Singapore’s Income Insurance, but has decided against pursuing the Queensland insurer.
RACQ, founded in 1905 to assist motorists with broken-down vehicles, has since expanded into travel services, insurance, and banking. The member-owned organisation has an annual turnover of more than AU$2bn but faces increasing competition in the auto insurance sector, including from Sunshine Coast-based Youi.
The business is understood to have been working to separate its banking operations from its insurance unit in preparation for the sale.
Insurance Australia Group (IAG), which manages insurance operations for other motoring clubs such as NRMA and RACV, was linked to the potential acquisition last year, but it appears that interest has also cooled.
Previously, insurers, including South Africa’s Auto & General and Hollard, had considered acquiring the business.
RACQ Insurance posted an after-tax loss of US$236m in 2022. In 2023, RACQ announced it would stop covering over one million motorists for compulsory third-party insurance, with the insurer citing inequality in the scheme’s structure.
The firm was also fined AU$10m over discount misrepresentations last November.
