In March 2022, London-based insurance broker Tysers came under the scanner of the US and UK authorities. A few insurance brokers, including Tysers, were accused of bribing Ecuador’s government officials to secure clients.
As Tysers dealt with the investigation, in May 2022, Aussie insurance brokers AUB Group (ASX: AUB) acquired it for $880 million.
As of November 2023, Tysers Insurance Brokers has agreed to resolve the ongoing investigation by the U.S. Department of Justice (DOJ), pending the negotiated agreement being entered into the record by the U.S. District Court for the Southern District of Florida. The terms of the Proposed Resolution have been finalised and agreed in principle by the parties.
While the UK was also investigating Tysers, its Serious Fraud Office decided not to take any action against it.
AUB CEO and Managing Director, Mike Emmett, said, “We are pleased to have resolved this legacy matter with the DOJ. Tysers has cooperated fully with authorities and spent considerable time and effort – including investing in a full compliance and control review and uplift – to ensure an effective and best-in-class compliance program is both implemented and maintained.”
The Department of Justice (DOJ) has been conducting an investigation into Integro Insurance Brokers Limited (now known as Tysers) and its employees, agents, and associated individuals regarding their business activities in Ecuador from 2013 to 2017.
As per the proposed resolution, which will become official after a court hearing, Tysers has agreed to pay the DOJ a total of $72.75 million. This agreement will not have any significant effect on AUB’s anticipated net profit after taxes for FY24, as it aligns with contractual protections and amounts outlined in AUB’s Financial Report for the year ending on June 30, 2023.
In FY23, the Company reported an underlying revenue growth of 61.2% to $1.1 billion. Its net profit was $129.1 million, up from FY22’s $74 million. AUB is an insurance broker with multiple divisions besides Tysers, comprising its New Zealand arm, Bizcover, Australian Broking and other agencies. Tysers reported a revenue of $301.6 million in the nine months leading up to the end of FY23.
During his address, Chair of the Board, David Clarke, commented, “Despite a challenging and uncertain macroeconomic environment, our balance sheet remains strong, with the corporate entity being cash generative with $133.2m in operating cashflow and access to $256.8m in cash and debt funding. The Group also successfully completed a $165m equity capital raising in May 2023 to create funding capacity for our pipeline of acquisition opportunities.”
Along with that, as part of its Board succession plan, the Company announced more changes in Q1 FY24. Melanie Laing is set to take on the role of a Non-Executive Director and assume the position of Chair for the Remuneration and People Committee. Robin Low, who has served for nearly a decade, will step down from the Board and as the Chair of the Board Audit and Risk Committee. Following Low’s retirement, Richard Deutsch will assume the role of Chair for the Board Audit and Risk Committee.
The Company noted that Tyser’s resolution will not impact AUB’s financials. It reaffirmed its full-year NPAT guidance for FY24 of $154 to $164 million.
Alinda is a Business Reporter for The Sentiment
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