A recently disclosed acquisition of an insurance broking network to the sum of almost $32 million has been marred by legal action over alleged misconduct by associated licensees.
Three days following PSC Insurance Brokers’ announcement to acquire part of the Australian Reliance Group businesses, Reliance’s parent company Vantage took legal action against two Reliance licensees for alleged misuse of funds.
Andrew Donnelly and his business partner Kim Hanson are being sued by Vantage for the alleged misappropriation of more than $5.1 million.
Reliance Franchise Partners’ David Wyner says the news is a disappointing distraction from what was otherwise a winning outcome.
“It is concerning that the alleged acts of just two individuals, who were in fact the founders of the Reliance Group, have brought our brand into the mainstream news for all of the wrong reasons,” Wyner says.
“The fact is that Reliance Franchise Partners is taking Supreme Court action against these individuals to account for their alleged actions, as we consider ourselves victims in this matter.”
“Thanks to the quick action of the Chairman of Vantage Holdings Group, once the alleged misuse of funds was uncovered and verified, immediate steps were taken to ensure all clients were protected and that all premiums paid by clients are remitted to insurers,” Wyner adds.
“It is disappointing to have the extremely good news regarding the upcoming PSC purchase overshadowed by the news reported today.”
Wyner says that although the alleged misappropriation is a bad example for broking, he is pleased to know that his client base will not be affected.
“From my role as NIBA Director, I think this is a sad day in the world of insurance broking where trusted individuals allegedly do the wrong thing and risk bringing the industry into disrepute,” he says.
“However, it is comforting to know that, no matter what transpires, our clients are always protected and that our promise to them is always fulfilled.”
Following the acquisition, Wyner will be appointed CEO of Reliance Franchice Partners, PSC Director John Dwyer will be appointed CEO of the broader Reliance Group and Dougald Elmer will be appointed CFO.
Wyner says that with PSC now involved, the network is looking to grow significantly within the next year.
“The Reliance Franchise Partners model is unique in Australia and is essentially based on bringing the insurance broker back into the community as a respected, experienced and well-regarded commercial entity,” Wyner says.
“The key to our success is not through micro-managing our investments, but by truly partnering with our brokers to enable them to grow their businesses without the worry of having to perform work that is non-income generating.”
“With the involvement of PSC, we now have firm plans for expansion and expect to see the network grow significantly over the next 12 months,” Wyner adds.
It is expected that the PSC-Reliance agreement will be completed by February 2016, with transaction agreement including the following acquisitions:
- 100% of Reliance Franchise Partners Pty Ltd business
- Between 50% and 100% of shares of 33 franchisee entities operating in the Reliance Partners network
- 66% of Melbourne-based Reliance Insurance Brokers Pty Ltd
- 60% of Brisbane-based Australian Reliance – Brisbane Pty Ltd
- 70% of Perth-based AR (WA) Pty Ltd
- 100% of the AR Portfolio (NSW) Pty Ltd and the Australian Reliance (NSW) Pty Ltd businesses