The contribution of the New Zealand broking arm of
AUB Group has jumped to $2.9 million in FY16, up from $0.3 million last year, with the company’s CEO and managing director
Mark Searles describing the result as a ‘particular success story’.
“In 18 months we have become the largest broking management group in the country under the banner of NZbrokers and the third largest broking entity in the market with over $520 million of gross written premium,” he announced today, adding that the NZ performance was ahead of expectations.
“We have successfully imported both our business model and our operating model in to the market resulting in excellent income and profit growth over the year by active acquisition and organic growth.
“Pleasingly, our approach has enabled organic growth of 31% including a 14% growth in premium funding income.”
He said this had been supplemented by three acquisition investments, and since the year end the company had also announced the 50% acquisition of leading Rotorua based company Dawsons.
The overall Group reported a 20.4% increase in reported consolidated net profit after tax (NPAT) for FY16 of $42.0 million, up from $34.9 million in FY15.
Adjusted NPAT, which reflects underlying business performance, was $37.7 million in 2016 (FY15: $36.3 million), increasing 3.3%.
New Zealand’s contribution sat positively alongside that of the Group’s risk services arm which grew from $2.0 million last year to $7.2 million this year.
However, the $10.3 million contribution from underwriting agencies was described as ‘disappointing’ as it was down from FY15’s $13.2 million.
The company cited the impact of a reducing premium rate environment, with average premiums down 9% across the portfolio.
These were exacerbated by strong competition in the strata and plant and equipment portfolios and continued investment in developing future business streams.
Australian broking also dipped by 2.1% with Searles citing the ‘twin headwinds’ of premium reductions and reducing interest rates.
The mixed results from different operations underlined the importance of adhering to the Group’s strategy, Searles said.
“A particularly pleasing aspect of our Group result has been how our business model responded in the challenging market conditions with our partner businesses demonstrating good cost control and continued focus on the development of organic growth initiatives,” Searles said.
He said the actions of insurers now were critical to the company’s outlook.
“The commercial lines insurance market outlook remains challenging, with some signs that premium rates are stabilising.
“The continuation of a stable rate environment in Australia and New Zealand in FY17, and even targeted rate increases in underperforming segments, is dependent on actions by insurers.
“In the absence of catastrophic events significant rate increases are considered unlikely in FY17.”
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