The purchase of New Zealand broker cluster Allied Insurance Group last week by Steadfast won’t end competition between the major broker companies to add independently owned brokers to their stables.

Gallagher Pacific MD Steve Lockwood says it’s “unreasonable to expect that the [Allied] membership is the exclusive domain of Steadfast”.

Steadfast announced on Friday that it has acquired Allied, an association of 31 independently owned small brokerages. The price was not disclosed.

Allied is the second-largest broker cluster in New Zealand after Brokerweb, with annual earnings before interest, tax and amortisation of about $NZ300,000 ($280,000) for the year to March 31.

Its members have 40 offices across New Zealand and generated $NZ172 million ($160.6 million) of gross written premium in the last financial year.

Mr Lockwood told insuranceNEWS.com.au Gallagher “will always be interested in quality businesses, and it doesn't matter who they are associated with”.

“We find cluster group [members] are loyal to the affiliate entities until they wish to sell, and then they make their own decision based on what is good for their staff and clients.

“That is as it should be, and we will continue to position ourselves to provide the best alternative to vendor companies.”

Allied CEO Bruce Oughton, who will remain in the role under the new ownership, told insuranceNEWS.com.au the acquisition gives Sydney-based Steadfast a greater foothold in the New Zealand market. It already owns 30% of the fourth-largest New Zealand broker, Rothbury.

“For us it’s all about access to a terrific range of support services,” Mr Oughton said. “It will also give us more strength in dealing with insurers.”

“Steadfast NZ will become a natural acquirer of our businesses should our brokers want to sell equity stakes.”

But Mr Lockwood says Steadfast members in Australia who chose not to participate in the company’s public float last year “have turned Steadfast down”, and are not tied exclusively to the company.

“The same situation will apply for Allied,” he said.

One of the founders of Allied, Lower Hutt broker Alan Jecks, told insuranceNEWS.com.au the cluster group’s members believe joining with Steadfast “is the only way to match the larger internationals. We have to be big in our own right.”

Mr Jecks, who founded the association in Wellington with Tom Cook about seven years ago, says Allied has grown quickly, and he expects more independent brokers will be drawn to the group now it is part of Steadfast.

“There aren’t that many independent brokers over here any more.”

Mr Oughton says only about 12-15 members of the Insurance Brokers Association of New Zealand “are not attached”.

It’s likely further consolidation of the market will see the independently owned brokerages’ values rise if companies like Gallagher and Austbrokers partner Insurance Advisernet compete for them.