Broker group Austbrokers is confident of a stronger full-year profit after recording an after-tax net profit of $12.8 million in the first half.

CEO Mark Searles blames lower interest income and a weaker contribution from acquisitions for the result, but says income from five acquisitions worth $14 million, including InterRisk and Procare, will flow into the second-half results.

The $12.8 million profit for the first six months was largely achieved through organic growth, with broker profits up 3.5%. This compares with a $24.5 million profit in the previous corresponding period, although that result included a number of extraordinary items. With those items excluded, the result would have been $14.6 million, a 6% increase.

Underwriting agency arm Austagencies continued its strong growth during the period, with its profit contribution 20.5% higher than the previous corresponding period.

Mr Searles says Austagencies’ strategy of holding a “top three’ position in market segments is still important, and growth will continue. However. “the softening of premium rates may impact some classes of business”.

He told insuranceNEWS.com.au the acquisition of Procare is an indication of Austbrokers’ willingness to acquire service organisations that can help brokers to diversify their offering to clients.

The costs involved in the building of a new layer of management and increased technology capabilities have been absorbed by the company.

“As a holding company we’re small with only 50-60 people, so these developments are a strategic investment that will underpin our future success,” he said.

Austbrokers has forecast further growth and development in the underwriting agency business “with continued investment in capability in specific market segments”.

The company predicts flat rates over the rest of the financial year, with Mr Searles saying competition is restraining the extent of increases.

Although moderate economic growth is forecast, he says the patchy economic outlook may have an impact on SME businesses.

The company continues to look for direct acquisitions or portfolio or bolt-on opportunities.

“Insurance broking industry consolidation will continue to present acquisition opportunities,” said Mr Searles.

The group reported a 12% increase in broker revenue to $147.43 million and a 6% increase in brokers and agencies profit to $26.61 million.

Company revenue rose 14% to $92.18 million and expenses rose 20% to $70.55 million.

Income from premium funding rose 8% to $12.53 million and life insurance incomes was up 5% to $6.34 million.