AUB Group forecasts its earnings will increase 5-10% this financial year after a stronger performance across all operating divisions in the past year.

Adjusted net profit grew 7.5% to $40.4 million in the year to June 30, from $37.6 million the previous year, as the group pursued a strategy aimed at growing throughout the insurance price cycle.

“Our growth has been, especially over the past year or so, pretty much organic,” CEO Mark Searles told insuranceNEWS.com.au.

“We don’t rely on acquisitions, and we don’t rely on premium rates to drive the results.”

Instead, he says improvements in areas such as customer numbers and policy counts have helped drive the result as the company focuses on meeting clients’ risk management requirements.

“It is really a cocktail of a whole host of drivers that add to the organic growth. From our point of view, if the premium rate environment is improving, that is icing on the cake.”

Premiums were flat over the financial year but in the final two months showed average increases of 2-3%, and Mr Searles says it looks like the pattern is continuing this financial year.

The group’s earnings forecast reflects expectations it will benefit from low single-digit rate increases in Australia, and to a lesser extent in New Zealand.

Mr Searles says pressure for further gains may come from insurers rebuilding margins and covering claims inflation, but AUB is taking a cautious view.

AUB’s statutory net profit fell 21.5% to $32.99 million last year, reflecting non-cash accounting adjustments related to mergers and acquisitions and profits on the sale of investments in the prior year. Revenue increased 13.1% to $264.5 million.

Australian broking, the largest division, reported a 2.5% rise in pre-tax profit to $49.17 million. The business acquired 50% of Lea Insurance Brokers in May, while four acquisitions were made by equity partners.

New Zealand broking earnings grew 90% to $5.47 million, including a full-year contribution from Runacres as the division consolidated its position as the country’s third-largest broker by gross written premium.

Underwriting agencies’ earnings grew 21% to $12.53 million, lifted by the performance of plant and equipment, commercial and strata agencies.

Risk services earnings increased 5% to $7.52 million, with revenue growth driven by expansion into new regions and services.

Changes to NSW workers’ compensation were positive for the longer-term, but expectations for this year have been moderated to focus on retention, rather than growth in the area, the company says.

Mr Searles says AUB has moved away from being an acquisition-led organisation, but the group will continue to take opportunities as they arise.

“We will do it where it makes sense, but it is not the reason for being,” he said.