Nicolas Burgess has upgraded to a BUY with target price of $11.60. We believe the worst has now passed in the premium rate cycle and the next two years should see increasing rates as underwriters rebuild profitability. We also believe AUB has invested a substantial amount into the business over the last four years and should be well placed to see upside from premium rates in reported profits. Broker valuations have recently moderated and are now close to market levels for small cap industrials (AUB is trading on an FY17F PE of 15.9x). We believe AUB should outperform regardless of whether the overall equity market moves up or down, given the defensive nature of its core broking business, the opportunities for acquisitions and likely ongoing positive news on the premium rate environment.