Austbrokers Holdings reports tenth year of consecutive growth despite challenging market – non-broking areas and new markets delivering
Announcement posted by AUB Group Limited 27 Aug 2015
Austbrokers Holdings reports tenth year of consecutive growth despite challenging market – non-broking areas and new markets deliveringKey highlights:
The result of 2.5% Adjusted NPAT growth is in the middle of the guidance range indicated back in January 2015 and above market consensus.
“Our client-focussed strategy is bearing fruit. 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%. Furthermore, growth in non-commission based income sources has helped enhance broking revenue growth despite the challenging premium rate environment. The Group’s ambition of delivering sustainable growth is being achieved through strong focus on execution and increasingly servicing clients’ total risk needs” said Mr Searles.
Acquisitions
FY15 has been Austbrokers Holdings’ biggest year-to-date for acquisitions, with over $70m committed across the Group. “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. In New Zealand, we’re already seeing our new market delivering profit after having quickly become the third largest broking group in the country since November and positions us well for future growth,” adds Mr Searles.
All areas delivering
Despite the market, Austbrokers continues to experience organic growth in the broking sector. Positive signs of growth include higher policy counts, growing premium funding income and increased client numbers. Whilst average premiums have declined resulting in lower average commission income, this rate of decline has been at a lesser level than the average market rate decline. The Company has noted that there has been a gradual improvement in the premium rates being charged by insurers and expects the negative environment to tend to a flat premium market during the year.
Mr Searles notes “With 30 years of experience in establishing mutually beneficial partnerships, the Austbrokers Owner-Driver model is demonstrating resilience in a challenging market – the capability and professionalism of our network positions us well for the future especially when an upswing occurs”.
“Our Underwriting Agencies have continued to enjoy strong progression with 29% growth in revenue and profit contribution before tax up 35%. We’ve been investing in select start-up underwriting agencies over the last three years, which now contribute 25% to our Underwriting Agency net profit before tax.
“In its first year, Risk Services is already outperforming plan delivering over $2m of profit before tax and importantly building increasingly strong relationships with the Broking network, Underwriting Agencies and insurer partners. The outlook for its second year is strong in a sector not impacted by the insurance premium cycle.
“This year’s solid performance in a challenging market reflects Austbrokers Holdings’ continuing focus on its sustainable growth strategy. Our disciplined approaches, especially in respect to our unique Owner-Driver partnership model, our client-focussed total risk strategy, our income diversification initiatives and our market leading services are all designed to enable our partner businesses to share in the opportunities that exist in this extensive market.”
Outlook
The commercial lines insurance market outlook remains challenging, and while premium rates are expected to stabilise in FY2016 in Australia and New Zealand, premium growth is unlikely before late FY2016. Drivers of revenue in Risk Services remain positive and are not impacted by the soft insurance cycle.
"We will continue to build on the strength of our business strategy, our core ‘owner-driver’ business model and to optimise our Group operating model to be the leading Insurance Broking, Specialist Underwriting and Risk Services group. As our products and services mix continues to expand, this will enable growth across our business divisions building value for our partners and for our clients in Australia and New Zealand," said Mr Searles.
In FY2016, the Group expects continued organic growth, supplemented by executing relevant acquisition and start-up investment opportunities across Insurance Broking, Underwriting Agencies and Risk Services in Australia and New Zealand.
The Group is targeting growth in Adjusted NPAT for FY2016 of 5% over FY2015. The achievement of this target is subject to prevailing economic conditions.
For all media enquiries please contact:
Melissa Montang, PR & Communications Manager, Austbrokers Holdings
+613 9236 6208 or +61431251339
melissam@austbrokers.com.au
- ENDS -
About Austbrokers Holdings Limited
Austbrokers Holdings Limited (ASX: AUB) is Australia and New Zealand’s leading equity-based insurance distribution, underwriting agency and risk services group.
AUB employs a unique Owner-Driver business model – where businesses retain active control of their businesses while benefitting from group-level operational support. AUB comprises more than 70 equity businesses, representing over 450,000 clients with in excess of $2.5 billion of GWP.
AUB operates three market leading business divisions in Australia – an insurance broking network (Austbrokers), specialised underwriting agencies (Sura) as well as a Risk Services division. All three business divisions are supported by market leading operational and technology services to help drive the efficiency and effectiveness of each equity business. AUB also operates the third largest insurance broking group in New Zealand under the banner ‘NZbrokers’.
For more information about Austbrokers Holdings, visit http://www.austbrokers.com.au
Melissa Montang
PR & Communications Manager
E melissam@austbrokers.com.au
T 03 9236 6208 M 0431251339
If you wish to be unsubscribed from this list, click the following link
- 10th consecutive year of underlying profit growth since listing
- 2.5% increase in Adjusted NPAT to $36.3 million, within middle of guidance range and above consensus
- 9.4% increase in group revenue to $217.3m
- Group’s GWP pool grown by over 20% in the year driven by New Zealand and new Austbrokers partners
- Final fully franked dividend of 27.7 cents per share bringing total distribution for 2015 to 39.7 cents per share, up 3.1%
- Income diversification strategy executing to plan with 23% of profit now derived from non-broking sources
- Control of corporate expense with overall cost:income ratio held below seven year rolling average
The result of 2.5% Adjusted NPAT growth is in the middle of the guidance range indicated back in January 2015 and above market consensus.
“Our client-focussed strategy is bearing fruit. 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%. Furthermore, growth in non-commission based income sources has helped enhance broking revenue growth despite the challenging premium rate environment. The Group’s ambition of delivering sustainable growth is being achieved through strong focus on execution and increasingly servicing clients’ total risk needs” said Mr Searles.
Acquisitions
FY15 has been Austbrokers Holdings’ biggest year-to-date for acquisitions, with over $70m committed across the Group. “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. In New Zealand, we’re already seeing our new market delivering profit after having quickly become the third largest broking group in the country since November and positions us well for future growth,” adds Mr Searles.
All areas delivering
Despite the market, Austbrokers continues to experience organic growth in the broking sector. Positive signs of growth include higher policy counts, growing premium funding income and increased client numbers. Whilst average premiums have declined resulting in lower average commission income, this rate of decline has been at a lesser level than the average market rate decline. The Company has noted that there has been a gradual improvement in the premium rates being charged by insurers and expects the negative environment to tend to a flat premium market during the year.
Mr Searles notes “With 30 years of experience in establishing mutually beneficial partnerships, the Austbrokers Owner-Driver model is demonstrating resilience in a challenging market – the capability and professionalism of our network positions us well for the future especially when an upswing occurs”.
“Our Underwriting Agencies have continued to enjoy strong progression with 29% growth in revenue and profit contribution before tax up 35%. We’ve been investing in select start-up underwriting agencies over the last three years, which now contribute 25% to our Underwriting Agency net profit before tax.
“In its first year, Risk Services is already outperforming plan delivering over $2m of profit before tax and importantly building increasingly strong relationships with the Broking network, Underwriting Agencies and insurer partners. The outlook for its second year is strong in a sector not impacted by the insurance premium cycle.
“This year’s solid performance in a challenging market reflects Austbrokers Holdings’ continuing focus on its sustainable growth strategy. Our disciplined approaches, especially in respect to our unique Owner-Driver partnership model, our client-focussed total risk strategy, our income diversification initiatives and our market leading services are all designed to enable our partner businesses to share in the opportunities that exist in this extensive market.”
Outlook
The commercial lines insurance market outlook remains challenging, and while premium rates are expected to stabilise in FY2016 in Australia and New Zealand, premium growth is unlikely before late FY2016. Drivers of revenue in Risk Services remain positive and are not impacted by the soft insurance cycle.
"We will continue to build on the strength of our business strategy, our core ‘owner-driver’ business model and to optimise our Group operating model to be the leading Insurance Broking, Specialist Underwriting and Risk Services group. As our products and services mix continues to expand, this will enable growth across our business divisions building value for our partners and for our clients in Australia and New Zealand," said Mr Searles.
In FY2016, the Group expects continued organic growth, supplemented by executing relevant acquisition and start-up investment opportunities across Insurance Broking, Underwriting Agencies and Risk Services in Australia and New Zealand.
The Group is targeting growth in Adjusted NPAT for FY2016 of 5% over FY2015. The achievement of this target is subject to prevailing economic conditions.
For all media enquiries please contact:
Melissa Montang, PR & Communications Manager, Austbrokers Holdings
+613 9236 6208 or +61431251339
melissam@austbrokers.com.au
- ENDS -
About Austbrokers Holdings Limited
Austbrokers Holdings Limited (ASX: AUB) is Australia and New Zealand’s leading equity-based insurance distribution, underwriting agency and risk services group.
AUB employs a unique Owner-Driver business model – where businesses retain active control of their businesses while benefitting from group-level operational support. AUB comprises more than 70 equity businesses, representing over 450,000 clients with in excess of $2.5 billion of GWP.
AUB operates three market leading business divisions in Australia – an insurance broking network (Austbrokers), specialised underwriting agencies (Sura) as well as a Risk Services division. All three business divisions are supported by market leading operational and technology services to help drive the efficiency and effectiveness of each equity business. AUB also operates the third largest insurance broking group in New Zealand under the banner ‘NZbrokers’.
For more information about Austbrokers Holdings, visit http://www.austbrokers.com.au
Melissa Montang
PR & Communications Manager
E melissam@austbrokers.com.au
T 03 9236 6208 M 0431251339
If you wish to be unsubscribed from this list, click the following link