PSC Insurance Group’s latest acquisition, Reliance, is the focus of an ongoing legal battle.

As revealed in a Breaking News bulletin from insuranceNEWS.com.au on January 17, PSC has entered into conditional agreements to acquire the Australian Reliance corporate broking business and Reliance Partners insurance adviser network.

It has agreed to pay an unadjusted purchase price of $31.57 million.

But according to WA media reports, Reliance parent company Vantage and two licensed broking subsidiaries have launched legal action in the WA Supreme Court, alleging misuse of funds by Reliance licensees and founders Andrew Donnelly and Kim Hanson.

In a statement to the Australian Securities Exchange the recently listed PSC says it is “well aware” of the concerns.

“PSC has not contracted to acquire the licensee entities and, on that basis, will not inherit any failure by them to comply with their obligations as a licensee.”

PSC MD Paul Dwyer did not return calls from insuranceNEWS.com.au.

Australian Reliance has branches in Perth, Melbourne, Sydney and Brisbane, while most of the national Reliance Partners business is held under various franchise arrangements.

PSC says the current Reliance management’s interests in the businesses will be maintained.

PSC director John Dwyer will become CEO of the Reliance Group and Dougald Elmer will become CFO.

The acquisition will be funded from cash reserves and by accessing the company’s debt facility.
 
The transaction agreements document the following acquisitions: 100% of the business of Reliance Franchise Partners; 50-100% of the shares of 33 franchisee entities operating in the Reliance Partners franchise network; 66% of Reliance Insurance Brokers, the Melbourne business; 60% of Australian Reliance, the Brisbane business; 70% of AR (WA), the Perth business; 100% of AR Portfolio (NSW) and Australian Reliance (NSW), the Sydney business.
 
PSC believes the acquisition “will provide significant value for clients, staff and shareholders and additionally provides a material step up in gross written premium, which helps in… dealings with insurers both in Australia and the UK through the PSC UK business”.