AUB Group CEO Michael Emmett says the broking sector is well placed amid geopolitical challenges and high levels of global natural disasters.

Despite questions around soft market impacts, premium rates generally continue to rise and risk and uncertainty are key drivers for retail and wholesale brokers, he told an earnings briefing.

“The worst thing for us, the biggest risk is not rate – it’s if commercial endeavours slow down, if businesses go out of business, if the world becomes a really happy, friendly place with no weather problems or wars etc,” he said.

“From where I sit looking out, it looks like it’s more likely to get worse than better, unfortunately. As a human being I feed bad saying that; as a CEO of a big global insurance services business, I’m quietly smiling.”

Mr Emmett says there has been some rate softening in a few classes to which AUB is not too exposed. But broadly, rises of about 5%-10% are likely over the longer term.  

AUB’s first-half underlying earnings rose 13% to $79.3 million, lifted by UK and Australian acquisitions and growth in existing businesses.

Australian broking revenues grew 10.1% to $302.6 million, while profit before tax increased 11.5% to $65.9 million in the half. New Zealand broking revenues gained 18.7% to $48.5 million and profit rose 11.6% to $48.5 million.

Australian broking average commission and fee income per client grew 9.2%.

Mr Emmett says commissions and fees are adjusted through the market cycle and impacts were suppressed in the recent high premium rate environment.

“We’re not seeing premium rate adjustments slowing across the board, we’re seeing them in certain risk classes.

“In those risk classes, we’ve chosen to ... slightly increase our commission earn, retention, as well as to increase the fee piece.”

AUB says new business lifted New Zealand revenue and the company will seek further growth in the market.

Mr Emmett says the group has hired more brokers and gained business as some of its larger competitors in that market experienced changes in leadership and structures.

“All of that obviously presents an opportunity for us and so we’ve seen an opportunity to increase our broking teams.”

New Zealand brokers and agencies are on the acquisition radar as the company looks across its global business divisions for areas to build.

“We do still see opportunities to expand our broking footprint in New Zealand,” Mr Emmett said. “I’d love to expand some agency capability and scale in New Zealand. That’s a difficult one, but that’s definitely a gap.”

The group sees opportunities in the UK for bolt-on retail broking acquisitions in specialty areas such as marine and the general commercial agency space.

Mr Emmett says the UK-based Tysers wholesale broking business, which it acquired in 2022, is bringing significant benefits to the Australian agencies, and AUB has added scale to its British retail network.

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