Two die in NSW yacht race

SYDNEY - Two people have died and 16 have been rescued from sloppy waters after a yacht overturned during a race off the NSW south coast.

The yacht carrying 18 people hit rocks at Flinders Islet off Port Kembla early on Saturday during a race from Sydney to the island and back, police said.

A police and emergency services rescue began shortly after 3am (5am NZT) on Saturday after authorities received a number of distress calls about the 24.4 metre yacht PriceWaterhouseCoopers.

A 46-year-old man and a 50-year-old woman died after they were pulled from the water by crews from Sydney yachts Ragamuffin and Quest, now moored at Wollongong Harbour.

The pair could not be revived and are yet to be formally identified.

Fifteen survivors managed to make it onto the island and were later winched to safety by helicopter during the three-hour rescue operation, police said.

They were taken to Wollongong Hospital suffering a range of minor injuries and hypothermia, while a 14-year-old boy sustained burns to his hands, Ambulance Service of NSW said.

Another man was pulled from the water by water police and his condition is unknown.

The 92 nautical-mile Flinders Islet Race started off Point Piper on Sydney Harbour at 8pm on Friday.

The yacht ran aground about seven hours into the journey, and activated a series of red flares about 2.55am (AEDT) on Saturday, which were noticed by competing vessels.

Race organisers, Cruising Yacht Club of Australia (CYCA), said the Australian Maritime Safety Authority (AMSA) - which sent a rescue helicopter - and Wollongong water police were alerted and began searching the area.

Ragamuffin and Quest went to help the PriceWaterhouseCoopers' crew, CYCA said in a statement.

Sydney yacht Yendys also detoured to help their competitors.

Navigator Will Oxley said the crew of Yendys saw three flares as they were approaching the island.

"We saw torchlight in the water too and people on (Flinders) Islet. We knew something was wrong, so we tacked towards them to see if we could give assistance," he said in a statement.

"Ragamuffin and Quest were there too. (The yacht) Loki (Stephen Ainsworth, of CYCA) had rounded the Islet and was six miles away, but radioed to see if they could help."

Detective Superintendent Mark Hutchings said the rescue mission was extremely difficult.

"Waves were about 2.3 metres, the sea was sloppy, but the wind was quite calm," he said.

"I want to thank everyone involved in what was an extremely difficult rescue mission that was handled very professionally."

Investigations are continuing and Maritime Area Command police are preparing a report for the coroner.

- AAP