Investing.com-- Insurance Australia Group Ltd (ASX: IAG ) said on Thursday it had entered a deal with the Royal Automobile Club (RAC) of Western Australia to purchase its insurance unit and to engage in a licensing and distribution deal.

IAG will pay a total A$1.35 ($867.4 million) billion under the agreement- A$400 million for RAC Insurance, and A$950 million for the licensing agreement.

The deal comes after reports earlier this year showed IAG was interested in RAC, which is among the biggest insurance firms in Western Australia. The acquisition, if approved by regulators, stands to further IAG’s spot as Australia’s biggest insurer.

RAC had reportedly commence a strategic review in late-2024 and was seeking buyers.

RAC offers policies for a wide range of subjects- from cars to personal pets.

IAG had in November said it would acquire 90% of RAC Queensland’s insurance underwriting business.