Why the PSC Insurance (ASX:PSI) share price is on the rise

The PSC Insurance Group share price is up 4% in morning trade. We take closer a look at the company's acquisition announcement.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published March 3, 2021 11:45 am AEDT

The PSC Insurance Group Ltd (ASX: PSI) share price is on the rise, up 3.6% in morning trade. This comes after the company reported it has entered into agreements to acquire 2 commercial broking businesses based in the United Kingdom. At the time of writing, the PSC Insurance share price has retreated slightly to $3.35, up 2.1%.

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What did PSC Insurance report on its UK acquisitions?

The PSC Insurance share price is gaining in morning trade after it reported it had entered into an agreement to acquire 100% of the share capital of Trust Insurance Services Ltd. Exclusive of net assets, the base consideration for the acquisition is around 15.5 million pounds (AU$28 million).

The base consideration for PSC's second acquisition, 100% of the share capital of Abaco Insurance Brokers Ltd, is 21 million pounds (AU$38 million). That figure is also exclusive of net assets.

Management commentary

Commenting on the 2 acquisitions, PSC's Managing Director, Tony Robinson said:

These acquisitions are consistent with our goal of building a significant presence in the commercial broking market outside of London. It is an area we understand and believe we can help drive growth. Both businesses are excellent inclusions into PSC bringing both great people into the Group and generating strong returns…

Both businesses have strong expertise in particular areas that we believe we can help grow and that will benefit the wider PSC Group.

PSC forecasts that the 2 acquisitions together will deliver roughly 4.0 million pounds (AU$7.2 million) in earnings before interest, taxes, depreciation and amortisation (EBITDA) annually.

Share price snapshot

PSC's shares lost 36% during the wider COVID-fuelled market selloff last February and March. Since the 15 March lows, shares have rebounded 56%. Over the past 12 months, the PSC Insurance share price is up 8%. That is right in line with the 8% gain on the All Ordinaries Index (ASX: XAO).

So far in 2021, the PSC Insurance share price is up 13%.

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