AUB Group has reported its strongest underlying earnings growth for seven years boosted by rising commercial premiums and acquisitions.

Full-year underlying net profit rose to $53.4 million, with the 15.2% increase from the previous corresponding period representing the largest gain since fiscal 2013.

“Despite a challenging external market environment with significant headwinds for our clients and insurance partners, AUB Group’s portfolio has proven to be resilient and defensive,” CEO Mike Emmett said today.

The group’s largest division, Australian broking, reported a 14.6% rise in pre-tax earnings to $62.1 million, assisted by an average 6.3% increase in commercial line premiums.

The result was also boosted by the purchase of a 40% stake in online distribution platform Bizcover, while New Zealand results benefitted from a full-year contribution from the BrokerWeb Risk Services acquisition.

New Zealand profit rose 31.9% to $12.1 million, despite flattening premium rate growth and reduced interest income seen towards the end of the financial year.

Australian underwriting agencies earnings fell 12.2% to $13.6 million, partially due to the impact of COVID-19 on clients in the hospitality industry, as well as ongoing process and pricing challenges in strata.

Health and rehabilitation profit rose to $4.2 million from $1 million on higher revenue, reduced expenses and improvements in the Altius rehabilitation business.

AUB on April 1 sold its interest in Allied Health, in which it purchased a 60% stake in 2015.

Statutory net profit after tax fell 2.3% to $47.3 million, including acquisition costs, profits on the sale of controlled entities, changes to carrying values of associates and other adjustments.

AUB says it will continue to look for complementary “bolt-on” acquisitions, as well as potential strategic investments. At the start of this month it acquired 73.15% of Experien Insurance Services, a specialty life and general insurance brokerage focused on the medical and dental professions.

Mr Emmett says the company exited the earnings period with “strong momentum” and there is evidence of this continuing in the current financial year.

The group expects underlying net profit of $58.5-61 million for the current 12 months, representing growth of 9.5-14.2%.

Assumptions include Australian premium rate increases of 5-6% and that COVID-19 impacts on the economy and on AUB will be about the same as those experienced in the past six months.

“COVID-19 has had only a muted impact on the business, although we have been very sensitive to the effect of the pandemic on our teams and our clients and have taken a variety of actions to assist them wherever possible,” Mr Emmett told a results briefing.

CFO Mark Shanahan says the company had been trialling an arrangement where teams work four days at home and came in for one day to collaborate in the office, in what could become the new default for many.

“We envisage that our physical footprint will continue to reduce providing further opportunities to make investments in people and technology and reduce premises spend,” he said.