AUB Group says its net profit grew 72% to $23.8 million for the six months to December 31, as it reaps the rewards flowing from its diversification strategy.

The figure includes the sale of Strathearn to Arthur J Gallagher at the end of the year, but adjusted net profit was still up 3.5% to $12.9 million.

“Strong contributions have been made from the expansion in risk services and New Zealand, more than offsetting the impact of the reducing insurance premium rates in the insurance broking and underwriting agencies sectors,” the company, formerly called Austbrokers Holdings, says.

Net profit from Australian broking operations was down 4.7% to $35.26 million, while underwriting agencies fell 10.1% to $4.75 million.

However, net profit from the risk services sector was up 382% to $5.6 million.

CEO and MD Mark Searles says the results prove the strategy to diversify and focus on total risk solutions is succeeding.

“Given the premium rate environment for broking, we are very pleased,” he told insuranceNEWS.com.au. “It was tough on broking, but other areas can take the strain, which shows our strategy is working.

“The strategy is around providing total risk solutions to clients, and thinking about what a client needs.”

AUB predicts growth in adjusted net profit of 0-5% for the full year, given the commercial lines insurance market remains challenging.

“The environment has been gradually improving but it’s still negative,” Mr Searles says. “It is trending towards flat but we’re not there yet. There are green shoots, but we had expected it sooner. We take a more realistic view of the market than some.”

Mr Searles says the Strathearn sale was unusual, and further acquisitions are on the cards if they fit with the strategy.

“We are not usually a divestor of business, but it was just one of those things that suited everybody. The strategy is key to me. We’ll make acquisitions if they fit with the strategy but we’re not going to use acquisitions as the core driver of growth.”