Austbrokers has lifted its full-year forecast after a bumper six-month period saw net profit after tax rise by 20%.

In the first half of the 2011 financial year the broking cluster banked $10.126 million in net profit after tax, adjusted to $8.695 million after deducting profits from non-controlling interests.

CEO Lachlan McKeough, who placed the company’s full-year guidance at its AGM in November at 5-10% above its 2010 financial year result, says hardening premium rates and an increase in commission and fee income contributed to Austbrokers lifting its outlook to 10-15%.

“Although a number of acquisitions made within the broking network have made some contribution to this growth, the bulk of it has come from increased commission and fee income across the broking network,” he said.

Growth in commission and fee revenue is expected to continue in the second half – historically the most profitable term in the company’s calendar – while premium increases are also expected following a spate of natural disasters.

Revenue from continuing operations for the half year to December 31 2010 rose 8.8% to $53.477 million while borrowing costs remained steady.

Mr McKeough told insuranceNEWS.com.au he doesn’t subscribe to the view that the cream of the brokerages in Australia have already been bought by the major clusters and that growth will be more difficult in future.

“The landscape in broking hasn’t changed that much in the past few years,” he said. “There’s still 700 or so privately owned brokerages operating, and many of their principals are coming up to retirement age.

“Austbrokers is flexible in the way it can buy larger brokerages with a 50/50 ownership model, or bolt on smaller brokerages to existing businesses.”

He says the commercial market in Australia “is still very competitive, but if the reinsurers put the squeeze on, it will have to flow on to premiums”.