AUB Group earnings have jumped following a strong rise in profit from Australian broking and expansion of the agencies business, as the company looks toward the completion of its major UK Tysers acquisition.

Underlying net profit from continuing operations rose 22.2% to $74 million in the year to June 30, while reported net profit increased 14.5% to $80.8 million.

“We continue to demonstrate our ability to grow revenue and profits organically as well as through selective acquisitions,” CEO Mike Emmett told a briefing. “I am also pleased that we have strong momentum into the new year.”

AUB in May announced an $880 million acquisition of London-based Lloyd’s brokers Tysers, which places about $3.6 billion in gross written premium, marking a significant step for the company.

Mr Emmett said the regulatory approval process for the deal is progressing well, with completion targeted for late this year. Tysers has said its revenue grew 8% in the June half compared to the year-earlier period, accelerating from 6% March quarter growth.

“We remain confident about the financial outlook for Tysers and the synergy opportunities we presented in May, and in fact AUB Group’s international placement volumes have continued to increase as predicted, reinforcing the synergy benefits,” Mr Emmett said.

In the past year, Australian broking underlying pre-tax profit increased 19.7% to $86.1 million, supported by increased commercial lines premiums, growth in client and policy count and cost reductions from network rationalisations.

Australian Broking made a number of acquisitions during the year including Vaughan & Monaghan and a number of strategic equity step-ups in existing businesses.

Agencies profit increased 53.5% to $22.8 million following the previous acquisition of 360 Underwriting and a restructuring of the division.

“Our expansion of underwriting agencies to support our brokers and clients has delivered robust scale and profit improvement over the past 18 months,” Mr Emmett says in the annual report. “The utilisation of these agencies and products by AUB Group brokers continues to increase.”

SME-targeted insurance platform business BizCover reported an 18.4% increase in profit to $10.5 million, while New Zealand earnings fell 15.3% to $9 million.

The majority of New Zealand businesses reported strong revenue and profit growth, AUB says, but underperformance in largest equity broker BWRS, where changes have been made, and investment in the Project Lola technology project, which is running some months behind schedule, led to the profit decline.

AUB anticipates underlying net profit this year of $86-91 million, representing growth of 16.2-23%, excluding Tysers. The company says outlook assumptions include continued strong premium rate rises for Australia and moderate but accelerating rate rises in New Zealand.

Insurance News  | 25 Aug 2022 | Read article