AUB Group earnings have surged with the Tysers acquisition performing above expectations and increased revenues and margin expansion reported across existing broking and agencies divisions.

Underlying net profit for the year to June 30 rose 74.4% to $129.1 million from $74 million, while revenue increased 61.2% to $1.11 billion.

Group CEO Michael Emmett says early indicators suggest estimates of potential synergies and efficiencies from the acquisition of UK-based Tysers were conservative, and AUB has upgraded medium term margin targets for four of its five divisions.

“All of our teams, new and old and across multiple businesses and geographies, have delivered exceptionally,” he said today. “Particularly pleasing is the continued growth of agencies and the significant turnaround in New Zealand.”

Mr Emmett says in future AUB expects to coordinate its business across three global divisions, encompassing retail broking, wholesale broking and agencies, and will seek to appoint key leaders to each of those roles over the coming 12-18 months.

Tysers CEO Clive Buesnel will step down at the end of this month following progress on the transition to AUB ownership. Mr Emmett will take up the role on an interim basis, subject to regulatory approval, ahead of the appointment this fiscal year of a global head of wholesale broking based in the UK.

In its first nine months since acquisition Tysers delivered an underlying pre-tax contribution of $76.9 million, with revenues 5.4% above initial forecast.

Australian broking pre-tax profit rose 21.6% to $104.8 million, BizCover profit rose 18.9% to $12.5 million and New Zealand profit jumped 59.4% to $14.3 million.

“In Australia a plethora of portfolio optimisation activities has allowed us to refine the portfolio and enable improved performance,” Mr Emmett told the results briefing.

Agencies profit rose 53.9% to $35.1 million, with the acquisition of Strata Unit Underwriters (SUU) taking effect from September.

Mr Emmett noted that in early fiscal 2021 the company said it aimed to build the agency division to $1 billion of premium within five years, spread across general commercial, specialty and strata.

“Less than three years into this journey and the agency premium has very nearly reached this goal already, exceeding $900 million,” he said.

The group’s reported net profit fell to $65.3 million from $80.8 million on factors including amortisation of broking registers and increased contingent consideration related to acquisitions, debt raising and other acquisition-related expenses.

Mr Emmett says strong growth is anticipated for the current financial year and underlying net profit is expected to rise to $154-164 million, representing an increase of 19.3-27%.

The company raised its medium-term target margin for Australian broking to 40% from 38% and boosted the BizCover target to 50% from 40% as it looks for continued revenue growth to deliver scale, particularly in New Zealand.

The New Zealand broking margin target was increased to 42% from 40% and for Tysers it was upgraded to 32% from 30%. The agencies target margin remains at 45%.