Acquisition by Ardonagh Should Proceed Given Attractive Premium to Fair Value

PSC Insurance is an intermediary between small and large companies and insurers, enjoying a high level of recurring revenue given sticky customer relationships and insurance essentially seen as a necessity. Primarily operating in Australia, New Zealand, and the UK, PSC owns broker and underwriting businesses, and runs a network for independent brokers to access the benefits of being part of a larger group. PSC has made modest investment in Hong Kong, with future acquisitions likely if initial investments perform well and management gain better insight and comfort with the businesses. We estimate PSC accounts for around 3% of the intermediated general insurance market in Australia (in terms of gross written premium), much smaller than Steadfast and AUB Group.