AUB says Ecuador issue to have ‘no material’ net profit impact
AUB Group says a $US46.589 million ($73.38 million) Tysers payment to the US Department of Justice (DOJ) resulting from an investigation into business conduct in Ecuador will have no material impact on expected net profit this financial year.
Terms of the proposed resolution involving Tysers subsidiary Integro Insurance Brokers have been agreed in principle, pending a court hearing to complete the process.
“We are pleased to have resolved this legacy matter with the DOJ,” AUB CEO Mike Emmett said.
“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.”
AUB had previously advised that its Tysers acquisition had exposed the group to risk in relation to the investigation into the conduct of Integro and/or its employees, agents and associated people between 2013 and 2017.
AUB said in its annual report that it had obtained contractual protections in the Tysers transaction documents, including indemnification for the recovery of potential losses, fines and penalties that may become payable in connection with the investigations, and it had recognised a provision and related recoveries.
The DOJ investigation related to suspicions of bribery and corruption and possible associated money laundering.
AUB provided an update on the Ecuador investigation and reaffirmed its financial year earnings guidance at the annual general meeting held in Sydney on Thursday.
Mr Emmett said strong momentum from last year had continued into the first quarter, with “particularly pleasing performance” in Agencies and New Zealand.
The company anticipates underlying net profit of $154-164 million, representing growth of 19.3-27%.
AUB also announced the appointment of Melanie Laing as a Director and Chair of the Remuneration and People Committee, with Robin Low retiring after almost 10 years on the board.