One of Australia’s prominent brokering networks has increased its war chest for acquisitions by $29 million in an effort to boost growth.
AUB Group, formerly Austbrokers, announced in its half-yearly results that it has increased its parent entity debt facility limit to $79.45 million.
AUB Group CEO & Managing Director Mark Searles says that the company wants to ensure that they are able to make new acquisitions promptly.
“If acquisitions are available and they fit our strategy then we want to have the cash available to go and make them. So it’s always on the cards,” Searles says.
“But we don’t use acquisition as the only reason for driving growth, it basically has to be complementary to our overall strategy.”
It comes as the business announced a consolidated net profit after tax of $23.8m, up 72% on the prior year, partly due to the sale of Strathearn Insurance Group to Arthur J Gallagher & Co, announced in December 2015.
Searles said he was very pleased with the half-year results considering the tough market, which saw profit contributions from AUB’s broking businesses take a 1.8% dip.
“[The dip] was absolutely driven by the premium rates environments and lower interest rates,” Searles says.
However, he adds that strong contributions from expansions in risk services and New Zealand more than offset the impact of reducing insurance premium rates in the insurance broking and underwriting agencies sectors.
“We don’t control the price. What we have seen is the rates and premium rates decline – it’s still negative,” he says.
“Others are talking about it being flat. We don’t see it like that. We don’t see it being flat until the end of the year.
“So there’s still pressure out there, but all the activities that help mitigate against it continue forward. The beauty of diversification is that we have other areas taking the strain.”
Meanwhile, AUB Group has announced the addition of an industry veteran to help strengthen its total risk solution offering for clients.
The Group has added Jordan Hawke to aid its financial risk offering as he will join the business to lead the life and financial services initiative at the company.
A 25-year veteran of the industry, Hawke joins from Suncorp Life where he was executive general manager of distribution.
“The groups Life & Financial Services strategy has continued to progress strongly over the past 18 months, and this appointment will be a critical resource that will plan and deliver the next phase of the strategy,” Searles said.