Steadfast MD and CEO Robert Kelly says Insurance Brokers Network Australia (IBNA) members who move across to Steadfast will receive shares in the listed company and will remain independent, while also having the option of selling down their equity in future.

insuranceNEWS.com.au reported in a Breaking News bulletin this morning that the move by IBNA under a $76 million arrangement ends the 12-year-old AIMS joint venture partnership with Austbrokers.

Mr Kelly says he and IBNA Chairman Gary Gribbin “have known each other for a long time as friends and combatants”, and two years ago he flagged with Mr Gribbin the potential for a discussion on IBNA’s future.

“A few months ago that discussion started to reach fruition,” he told insuranceNEWS.com.au today.

The AIMS partnership is expected to formally end later this year, subject to further finalisation of details and any necessary regulatory approvals.

AUB Group, the parent of Austbrokers, says in a statement issued late this morning that the decision to end the joint venture was due to “diverging requirements across the two member groups on the future direction of the partnership”.

 “We believe the interests of our partners will be better served through increased control and direct collaborative engagement with insurance carriers allowing us to negotiate greater flexibility and innovation in product design,” MD Mike Emmett says.

Mr Kelly says the outcome is a good result for Steadfast and IBNA.

“There are a whole lot of services, not the least being our IT, that will be readily available to the IBNA brokers, and they will now have shares in the Steadfast Group and will receive dividends,” he said.

Mr Gribbin says the move to Steadfast provides operational, financial and strategic benefits for IBNA members.

“Obviously, Steadfast has a strong position of leverage and enjoys good relationships with the insurers we deal with,” he told insuranceNEWS.com.au. “The option of going to Steadfast spoke for itself.”

IBNA, which grew from state-based beginnings in the 1980s to become a national association and then an unlisted public company in the 1990s, will cease to exist after the transition is completed. Currently the network has more than 90 member companies, each of which is independently owned. They handle a combined annual gross written premium of about $1.4 billion.

AIMS was formed in 2007 as a venture between IBNA and the equity-based Austbrokers Australian insurance broking network.

Austbrokers Holdings was rebranded as AUB Group in 2015 to reflect the company’s increasing diversification under then-CEO Mark Searles. Mr Emmett took the reins in March this year.

AUB says the decision is expected to have a neutral impact on its fiscal 2020 results.

“Going forward, the scale, market share and capability of AUB Group will allow the business to negotiate similar or better terms from existing and new carrier partners with an opportunity to enhance run-rate earnings in the future,” the company says in a statement to the ASX.

Steadfast says the initial IBNA consideration of $76 million is subject to adjustment if not all members join the Steadfast network, if Steadfast does not accept the application of any member, or if the figures used in the calculations change.

“The expected future impact on [Steadfast] will be clarified when the final transaction size and timing is more definite,” Steadfast says.