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AUB makes 'transformative' UK broker acquisition

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AUB Group says its $880 million acquisition of UK broker Tysers will transform the company, expanding its operations and specialist capabilities and offering direct access to the Lloyd’s market.

As reported in a Breaking News bulletin earlier today, AUB has entered into an agreement to acquire Tysers, the sixth largest wholesale broker in the Lloyd’s market. The broker, which has a 200-year history, writes annual gross premium of $3.6 billion.

“This is a bold and significant step for AUB Group and not one we have taken lightly,” CEO Mike Emmett told a briefing this morning.

“An investment in Tysers unlocks the potential for an acceleration in profit growth whilst also enabling AUB Group to strengthen our broking and agency propositions for clients.”

The business is being purchased on attractive financial terms after a thorough, forensic examination of its operations and is high quality, Mr Emmett says.

“Following this rigorous process, we are confident to state the acquisition provides transformational economic and strategic benefits to AUB Group,” he said.

The acquisition will be funded from proceeds of a $350 million equity raising, a placement of $176 million of AUB shares to the vendor of Tysers, and a new $675 million multi-currency debt facility.

Mr Emmett and AUB board member Peter Harmer, who both have experience in the London market, will join the board of Tysers, being sold by Odyssey Investment Partners.

AUB says Tysers’ wholesale operations provide the most significant benefit to AUB and it will divest a 50% interest in the UK retail operations through a proposed joint venture deal with PSC Insurance Group.

PSC, which already has operations in the UK, says its contribution is expected to be around $60-70 million, net of debt in the joint venture.

“We are excited at the opportunity to partner with AUB for the proposed JV of the Tysers UK retail business,” PSC CEO Tony Robinson said. “It presents an opportunity for us to secure 50% of a meaningful UK retail broker which is in line with our strategy to grow in the UK and diversify our insurance intermediary business.”

Mr Emmett reaffirmed AUB earnings guidance for this year and said strong revenue growth and margin expansion are anticipated to continue as the company delivers on its strategy.

“Additionally, the market fundamentals for AUB Group remain highly attractive amid a rising premium rate environment which we anticipate to continue for a number of years,” he said.

AUB says it sees opportunities to improve the performance of Tysers, which has been affected in the past couple of years by issues including a stop-start sales process and covid impacts that affected areas such as sports and entertainment.

The acquisition is expected to deliver annual synergies of $25 million for AUB, to be realised in full after 18 months.