AUB Group CEO Mike Emmett has urged insurers to maintain pricing discipline after the company reported underlying net profit last year rose 12.2% to $224.6 million amid challenging market conditions.

Underlying revenue grew 6.4% to $1.6 billion, supported by gains in all divisions except New Zealand.

Mr Emmett says AUB continued to grow and expand margins in a year featuring geopolitical disruption, interest rate headwinds and subdued premium rates.

“While we are pleased that many clients are benefiting from limited or no premium increases, competitive conditions have softened across several classes,” he told a results briefing.

“We encourage our insurer partners to maintain sustainable pricing and underwriting discipline, particularly in New Zealand and parts of the UK.”

Mr Emmett also called out the Australian strata market, which he says is now irrationally priced.

Australian broking underlying profit before tax rose 10% to $149.1 million; international increased 19.6% to $124.5 million; agencies gained 8.4% to $78 million; and BizCover was up 19.9% to $22.9 million. New Zealand declined 3.9% to $22.3 million.

Mr Emmett says the New Zealand market is too soft and needs remediation, which AUB is hoping will happen in the next six to 12 months. The group has initiated a business “reset” and performance has stabilised over the past few months, he says.

AUB Group overall has shown its ability to grow profits at double-digit levels irrespective of the premium rate cycle, Mr Emmett told analysts.

“I think what we’ve evidenced is, through feast and famine, we’ve been able to do that consecutively for seven or eight years at least now, so for me that’s the key message.”

Earnings reflect organic growth and acquisitions, the company has added to its UK retail operations with the Prestige acquisition, completed in March, and Mr Emmett says it is looking at New Zealand opportunities, given it is an attractive market in the medium term.

He also says 360 Underwriting’s Denis Morrissey had been appointed CEO of the agencies division following the retirement from AUB of Angie Zissis.

“We are now working through a range of changes to simplify and optimise the portfolio,” Mr Emmett said.

On a reported basis, AUB Group net profit fell 47% to $96.05 million, including impairment charges and amortisation.

The business has forecast underlying net profit this year of $245-$265 million.

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