One of Australia’s prominent broker networks has announced another acquisition in an effort to bolster its growth strategy following strong FY15 results.
Austbrokers Holdings have announced the acquisition of corporate insurance, risk and alternative risk financing specialists KJ Risk Group.
The move marks Austbrokers’ continued progression toward diversifying their service base, a strategy which has resulted in 23% of the company’s profit now being derived from non-broking assets.
Austbrokers CEO and Managing Director Mark Searles says that the acquisition is another step toward achieving the company’s strategic initiatives.
“This significant acquisition is another milestone in delivering our sustainable growth strategy,” Searles says.
“KJ Risk Group enhances our existing capabilities and provides skills our broking partners can offer to their association and franchise-style clients.”
News of the acquisition comes off the back of the 2014/2015 results for the brokerage group, with the company reporting a 2.5% increase in adjusted net profit after tax to $36.3 million.
Searles says that the company’s expansion within non-broking areas, such as risks services and underwriting agencies, has achieved growth due to its customer focus.
“Our client-focused strategy is bearing fruit,” Searles says.
“Not only did we expand our business internationally into New Zealand but organic growth in underwriting agencies and investments in risk service businesses has meant contribution from non-broking areas has grown in the last three years from 12% to 23%.”
“Our recent acquisitions are adding value for shareholders. We’ve invested significantly in our risk services division, which helps position Austbrokers in offering total risk management solutions to clients across the spectrum of physical, people and financial risks,” Searles adds.
Austbrokers’ revenue reached $217.3 million, reflecting a 9.4% growth from the previous year, and the gross written premium across the network swelled by more that 20% – Austbrokers’ brokers registered $2.5 billion and New Zealand brokers registered $500 million.
Paralleling this success, competitor Steadfast also reports strong growth despite a challenging market, due to its acquisitions strategy and underwriting focus.
Steadfast Underwriting Agencies experienced a 165% increase in gross written premium from the previous year, reporting $385 million, boosted by the company’s acquisition of Calliden and QBE agency.
Reflecting these acquisitions, consolidated revenue increased by 72% to $298.7 million, while gross written premiums across the entire company increased by 8% to $4.4 billion.
Steadfast CEO and Managing Director Robert Kelly says that acquisitions have largely influenced the company’s successful growth.
“Acquisitions transacted during the financial year enabled us to achieve strong growth despite soft market conditions,” Kelly says.
“Most acquisitions came from within our network or from our long-term strategic partnerships, where Steadfast played a major role in the distribution of their niche products.”
Moving forward, Kelly says that Steadfast plans to prepare for the eventual market turn by now focusing on savings.
“While we have taken advantage of acquisition opportunities during the year, we remain focused on delivering synergies, in particular back office cost savings, to our brokers and underwriting agencies,” Kelly says.
“These savings should materialise in a more meaningful way when the market hardens.”