Broker network CEO discusses acquisitions, results

Broker network CEO discusses acquisitions, results | Insurance Business

Broker network CEO discusses acquisitions, results
Austbrokers CEO Mark Searles believes the company can continue to grow in the Australian and New Zealand market but will demonstrate “a disciplined approach to growth,” in future.

Speaking with Insurance Business, Searles said that the company has already experienced its biggest acquisition year to date in the half year up to December and the company plans to conitue its growth.

“In the half, up to the end of December, we’d already spent and already committed something to the order of $45 million and actually, to date, we’ve committed over $70 million so this is our biggest acquisition year to date.

“Clearly, we only make acquisitions if it accords with our business strategy and it fits the three main areas [of broking, underwriting agencies or risk services], we won’t go out and I certainly won’t go out with a big cheque just to acquire for acquisitions sake. It’s got to accord to our strategy and it’s got to accord equally to the Owner-Driver model as well so we are very clear about how we will grow.

“It’s a disciplined approach to growth and equally if we look at that level of acquisition growth in the first half of the year, there is a significant amount of cost attached to that and that’s why the results look as though they are yet to see the income flow through from those acquisitions into the second half of the year.”

The company, which announced its results and the hiring of a new CFO last week, believes that the half-year figures show a continuation of the company models whilst highlighting the path to further growth in the future.

"It’s a continuation of our discipline around our business model, the Owner-Driver model, it’s a continuation of our discipline around the execution of our business strategy. All operating areas recorded income growth which was good and we look forward to continuing the growth of Austbrokers now and in the future."

Searles noted that Austbrokers has invested in its three core businesses and he believes that the company growth can be tied to better communication between the different arms of the company.

“We invested in businesses in broking, underwriting agencies and risk services, each of those areas has to stand on their own two feet but fundamentally we see the opportunity to enable cross-sell and up-sell across the three businesses by them talking to each other.”

In their recent results announcement, Austbrokers noted a 4.3% raise in client numbers and Searles praised brokers for driving this growth in a competitive landscape and singled out two ways that brokers have increased their own income.

“We went out and we led the market with our announcement as to what was happening with premium rates in the commercial lines space back in January and when we looked into the detail of that despite on the same client basis premiums down on average just over 10%, what we’ve seen is that actually brokers income is up.

“So, whilst the income related to commission is off, what the brokers have been doing is looking for ways, and this is the strength of the Owner-Driver model, to effectively find ways to compensate for that reduction in commission income and they’ve done that in two ways.

“Firstly, they’re looking for fee and ancillary income; we’ve seen good growth in both of those and secondly, is to fill the hole with growing new business and they’ve been very successful in doing that.

“It really comes back the concept of Owner-Driver, the core business model, so broking shareholder partners do not want to be going backwards. They are there and they are looking to expand their businesses in the face of average premium rate declines and again, we don’t set the prices the insurers do, so the brokers look for other means to increase income so either through ancillary income or client growth and they’ve been successful in growth.”