PBS Holdings (PBSH) is set for major expansion after signing a landmark £500m binding authority deal with AXA and Royal & SunAlliance (R&SA).

The deal, which is thought to be the largest of its kind, will span three years with £120m gross written premiums being produced in the first year.

PBSH chief executive Jonathan Davey said: "We see it as the springboard for further strong business expansion, continued recruitment, the opening of additional offices and the broadening of our product portfolio."

Under the agreement, AXA will supply 62% of the capacity, while R&SA will supply 34%. A further 4% will be supplied by Primary Insurance Company. The deal comes a year after the company struck a £20m delegated authority deal with AXA (News, 26 May 2005).

Davey said PBSH would push for organic growth of its subsidiaries. The opening of regional offices would be partly steered by a recruitment drive. He would not be drawn on the locations, as this depended on where the group could recruit.

Last year, PBS revealed it planned to open four offices across the South in 2006 in Bristol, Maidstone, Southampton and Exeter.

There are also plans to introduce a range of new products to its commercial and agricultural businesses later this year, said Davey.

Growth is also expected across the company's SME operations where it has increased total sum insured capacity for any one location to £25m.

Brendan McManus, R&SA commercial director, said: "We decided we wanted to be involved and to participate in the future of what is clearly a rapidly expanding business."

AXA distribution director Mark Cliff said: "Having started to do business with PBSH last year and found our partnership very productive, it was a natural step to renew our agreement and plan for the increased business volumes that PBSH is equipped to deliver."

The agreement also means the binding authority deals held separately by PBSH companies, Primary Broker Services (PBS), Rural Insurance, ATD General, Online Underwriting and Europea, will come under one master agreement.