The $700 million Wesfarmers bid for OAMPS is a “deliberate and purposeful” entry into the broker market, says Bob Buckley, MD of the Perth-based conglomerate’s insurance division.

Responding to industry observers’ comments that Wesfarmers may opt to sell the broking arm once the deal is complete, he told Sunrise Exchange News the group has a clear strategy mapped out for OAMPS as a subsidiary company.

“Wesfarmers holds on to its businesses for a long time,” he said. “We wouldn’t be paying $700 million for a $132 million premium insurance company.” He was referring to Australian International Insurance, which is wholly owned by OAMPS.

Mr Buckley says the decision to buy OAMPS was prompted by the difficulty in making acquisitions in the underwriting end of the industry.

“Everybody has been chasing the same business, but when you look at the industry there are so many other opportunities. So we decided to pursue growth through other avenues.”

He says Wesfarmers clearly understands the need to keep the broking arm separate from the group’s underwriting operations, and it will pursue a growth policy for OAMPS.

“The market rationalisation is continuing, and our plan is to help OAMPS grow organically and by acquisition.”

Wesfarmers increased its stake in OAMPS to 13.74% last week, buying 6.4% at $4.50 a share on September 5 and 7.34% via acceptance agreements with shareholders.

The board of OAMPS has recommended the friendly offer, which will close on October 1.