Marac Finance eyes AA members

Marac Finance hopes a sale and distribution deal with the Automobile Association will allow it to extend its car and corporate insurance business to the association's 1.2 million members.

The Pyne Gould Corporation-owned finance company yesterday sold half of its Marac Insurance business to the AA for $2.2 million. The deal includes a five-year exclusivity arrangement between PGC and the AA to sell insurance to AA's 840,000 individual members as well as its 360,000 corporate clients.

PGC chief executive Jeff Greenslade said the deal would allow it to tap into a "bank-like" distribution network. The company had already worked with the AA over the past nine months and had seen the potential to expand its car, lifestyle and asset protection insurance business.

"We were both very keen to grow that space and both came to the conclusion we couldn't do it alone."

Greenslade said apart from a one-off capital gain from the sale, the impact of the new distribution arrangement would not come through until the next financial year.

The insurance company was still on track to meet its forecast of $20.9 million for the year to June 30.

PGC's share price yesterday closed up 1c on 48c.