PSC Australia sale to insurance broker Marsh ‘appears unlikely’

PSC Insurance owns an insurance underwriting agency in Australia.

A new business deal struck between PSC Australia and The Ardonagh Group has led some to conclude a purchase of the $2bn insurance broker by Marsh appears unlikely.

PSC Australia has been working with Goldman Sachs to find a buyer, and speculation emerged that Marsh had been running the ruler over the business of late.

Earlier, there were suggestions that Arthur J. Gallagher & Co could be looking, as could The Ardonagh Group, based in London.

Some had thought it would be odd timing for Marsh to embark on such a deal, given it was still absorbing the acquisition of Honan Insurance for between $500m and $1bn last year, although it had the funding capacity and provide local market critical mass.

Arthur J. Gallagher & Co was known to be no longer around the hoop because the opportunity was too expensive, and some believe that Ardonagh had the most to gain from an acquisition because PSC generated a lot of revenue from London where Ardonagh, a trader, operates.

PSC Insurance owns an insurance underwriting agency in Australia, and now, DataRoom has learned that the unit has exited its agreement with its existing broker, Lloyds-backed Miller Insurance, and instead has reached a deal with Ardonagh.

Some believe that based on this, it’s a signal that a sale to rival Marsh would appear more unlikely.

PSC Insurance announced on March 13 that it had received multiple strategic approaches and was in discussions which may or may not lead to a takeover offer for the company.

The company outlined recent discussions were subject to due diligence and negotiation and remain incomplete, with any potential outcome highly uncertain.

In February, PSC Insurance upgraded its full year guidance to $125m to $130m from $122m to $127m previously.

Net profit guidance was $83m to $87m compared to $82m to $86m previously.

The key driver was strong organic growth and several smaller acquisitions during the half.