The New Zealand Automobile Association (AA) and Pyne Gould Corp (PGC) have entered into a new joint venture agreement to provide a range of insurance services.
Under the joint venture, to be launched on April 1, 2010, AA will have 50% share of MARAC Insurance, a provider of mechanical breakdown, lifestyle protection and guaranteed asset protection insurance products.
As per the agreement, the MARAC Insurance products will be available to AA Members and AA authorised dealers. The new products and services are expected to be added over time with the first new initiative likely to be providing business finance given that 20% of AA’s members own SMEs.
According to AA, the sale of a 50% share of MARAC Insurance to the AA will see PGC recognise a one-off capital gain of $2.2m.
In addition, PGC which includes MARAC and the Perpetual Group, has secured a five-year agreement. This creates the pathway to explore opportunities to offer a range of financial services to AA Members.
Brian Gibbons, chief executive of AA said: “We have learnt more about each other’s businesses and the needs of AA Members over the past year. The opportunity to provide a broader range of services to AA Members was identified. A joint business venture was the logical way to realise some of these opportunities.”
Jeff Greenslade, chief executive of PGC, said: “The AA is a premium and respected brand. The joint venture is an exciting development that gives us the ability to tap into AA’s substantial distribution network and membership base (totalling more than 1m).”