THE Royal Automobile Club of WA has revealed it paid $104.
THE Royal Automobile Club of WA has revealed it paid $104.6 million to buy-out joint venture insurance partner Suncorp-Metway Ltd, the Queensland financial services player hit by the current credit crunch.
The cash consideration, little more than the $100 million paid by Promina for the half-share in 2001 before it was acquired by Suncorp-Metway, is revealed in the RAC's annual report to members and well below industry expectations.
In the annual report, RAC, arguably WA's biggest locally-run financial services group following the sale of BankWest to Commonwealth Bank, has also revealed its own financial hit from the financial crisis engulfing the world, with group reserves decreasing by $31.5 million.
RAC CEO Terry Agnew said the volatility in the share market had hit equity investments, but rising interest rates would help lift the value of other investments.
He said the group has also benefited considerably from rises in the commercial property market, notably its major holdings in its West Perth headquarters, an adjoining block and centres in Joondalup and Balcatta.
Mr Agnew said RAC's key business segments were typically essential services and not likely to be hit by a cut in discretionary spending, should it occur.
RAC's insurance business is focused on the home and private motor vehicle markets.
Mr Agnew added that current market conditions could create buying opportunities for the group in the next 12 months.
Net assets dropped to $631.5 million from $653.1 million, total assets fell to $879.2 million from $929.6 million and non-current, available-for-sale, financial assets fell almost 40 per cent in the financial year to $227.7 million from $369.2 million.
Net profit was down considerably at $9.7 million, though the previous year's result of $98.9 million was boosted by a $74.3 million disposal of available-for-sale financial assets and the strong share market performance.
However, the net result still reflected significantly higher costs across the board, notably a jump of almost 14 per cent in employee benefits expenses to $66.4 million from $58.5 million. Mr Agnew said this reflected a bigger organisation and investment in training and development.
"These are investments in talent which you don't get an immediate benefit from," he said.