AUB Group has announced they have set aside an extra $29 million for acquisitions throughout the rest of the financial year as their half year results present a “very strong platform” for future growth.
Mark Searles, CEO and managing director of AUB Group, told
Insurance Business that
he was not worried about the slight slip in broking profits for the business and is hoping to make more acquisitions in the future.
“If we look at what we’ve been acquiring recently, it has been more in the risk services and New Zealand space,” Searles said.
“In acquisition at the moment, no–one is really making acquisitions,
we divested Strathearn and Gallagher picked it up, other than that there was only really
one stand-alone acquisition last year and that was KJ Risk and that was us.
“There isn’t a great deal of activity in the marketplace because of the nature of the economic environment we are in because brokers are very focused on supporting their clients.
“There are lots of conversations going on but not much activity so we just want to make sure we are primed for the right opportunities.”
Searles was “very pleased,” with the Group results and noted that the broking performance sets the business up for future growth as underlying metrics all point in favour of the company.
“If you think about the context of the market environment, premium rates on the half were down 6% not just the premium rates but the interest that basically brokers can earn is also dramatically down as well. You take those two components and in the context of a 1.8% down that’s a bloody good result.
“Now, the thing from my point of view that gives me great comfort is that clearly brokers don’t set the price, that’s set by insurers, and they can’t affect the interest rates so they’ve got no control over the two key drivers of the financials and yet all the underlying drivers are positive.
“If we look at things like premium funding, penetration is up, life insurance is up, client count is up and policy count is up, so this is really symptomatic of how the Owner-Driver Model works, which is our core business model, because the broker principals are saying ‘I can’t affect the price and I can’t affect the interest but what I can do is affect all the underlying’ and that is exactly what we are seeing and that makes me feel very confident about the future.”
Searles noted that the Group now gains some 27% of its business outside of its traditional, Australian broking core but the company will not “diversify for the sake of diversification” as a whole risk solution becomes more important to the business.
“From our point of view it is really looking at this whole concept of total risk solutions for a client,” Searles continued, “really putting the client in everything they do.
“Historically, a lot of general insurance brokers would just be focused on the physical risk side, so the property, the motor and all the rest of it, and our whole view is that if you want to be the trusted adviser to the client we can also help and provide solutions in the people risk and financial risk area as well and to me, that is pretty critical.”
