Broker group Steadfast has posted stronger profits amid soft market conditions, and is predicting an improved year ahead as its takeover spree helps to boost earnings.
Steadfast posted a net profit of $42.1 million for the year ending June, representing a 68 per cent increase on last year’s result. Revenues for the firm lifted 63 per cent to $280m over the year.
“Acquisitions transacted during the financial year enabled us to achieve strong growth despite soft market conditions,” CEO Robert Kelly said.
Gross written premium (GWP) placed by the network increased 8 per cent to $4.4 billion and consolidated revenue was up 72 per cent to $298.7 million as more than $400 million was spent on acquisitions.
Kelly said five new brokers joined in the latest half year, and the network now accounts for nearly a third of all gross written premium placed in Australia and that the adviser group is looking to Asia.
“We are starting to build a meaningful presence in Asia with affiliated brokers based in China, Hong Kong, Malaysia, Philippines, Singapore, Thailand and Vietnam,” he said.
Steadfast believes lower rate reductions in the second half point to a flattening market, and says its focus on the less volatile SME sector has protected it from the worst instability.
“We are heading towards a flat market rather than a continually falling market,” Kelly said. “Our SME focus definitely gives us some resilience.”
Gross Written Premium (GWP) placed by Steadfast Underwriting Agencies grew 165 per cent to $385 million, lifted by the Calliden and QBE agency acquisitions.
Kelly says diversification and the growth of the underwriting agencies reduces Steadfast’s reliance on broking and gives “a great spread of risk”.
“The underwriting agencies spread our risk dramatically and when the markets turn we get a different uplift in these sectors,” he said.
Steadfast is expecting net profit after tax and before amortisation growth of between 41 and 46 per cent over the coming year, with cash earnings per share growth of between 10 and 14 per cent.