Austbrokers posted a better-than-anticipated adjusted after-tax profit of $32.1m on Tuesday, representing a profit increase of 17%. However, the group’s predictions for the coming year are only for a 5–10% increase in profit.
Searles laid this firmly at the feet of economic uncertainty, particularly in the SME sector.
“The SME sector is doing it tough and has been for the last year or so,” he told Insurance Business. “SMEs are being careful with investments: they’re not buying assets, therefore they don’t need to insure them. Growth in SMEs will be muted, and I don’t see that changing over the coming year.”
Searles added that even a post-election injection of funding into industry would probably have little impact on smaller firms, suggesting that government investment would take a “couple of years” to flow down.
Even so, Searles was bullish about the prospects of the insurance industry, and of cluster groups like Austbrokers and recently listed rival Steadfast in particular. When asked if the insurance industry would remain as a leading choice for investors, he replied: “Without a doubt.”
“We’ve got increased interest [in the industry],” he said. “The Austbrokers results over the years have fuelled that and a new competitor has only assisted to increase that interest. Having a new competitor is always a good thing – it keeps you focused on what you do and raising the bar accordingly.”
Searles also highlighted the growth in the group’s underwriting business, Austagencies, which posted a 22.7% profit increase.
“We’re consciously looking to grow [the underwriting side of the business]. Five years ago Austagencies was a $5m business; this year it made $220m. We have a clear strategy to identify chosen niche segments, then go to town on growing those segments. Wherever we can find market segments, we’ll look to exploit those.”