When Steadfast listed in 2013 the general expectation was the broker group would follow the very successful “owner-driver” model of arch-rival Austbrokers.

Two years later it’s obvious that expectation was far removed from the strategic path Steadfast MD and CEO Robert Kelly wanted to take.

Compare where the two companies – which announced their 2014/15 financial results last week – see themselves in the market, and where they’re going. 

Austbrokers is continuing to grow and deliver for its shareholders through a range of acquisitions and expansion into other services that broaden its brokers’ capabilities to thrive in an increasingly complex world.

Last financial year it spent more than $70 million on acquisitions, making major inroads into the New Zealand market to become that country’s third-largest broker after Aon and Crombie Lockwood. It is also seeing growing success through the in-house development of new businesses in its underwriting agency division.

But a significant part of Austbrokers’ acquisition program in the past year was focused on building its new Risk Services division, which MD and CEO Mark Searles says is already helping the group offer “total risk management solutions to clients across the spectrum of physical, people and financial risks”.

Steadfast, by contrast, is embarked on an expansion drive that’s positively frenetic. Last financial year it spent more than $400 million – around $320 million more than Austbrokers – acquiring four brokerages, one reinsurance broker, a New Zealand broker network and 11 underwriting agencies.

It is also expanding its network into Asia, and has $110 million available for future acquisitions.

The pace of growth at Steadfast has been impressive, bringing to mind the halcyon years of QBE under former CEO Frank O’Halloran, who was celebrated for acquiring more than 100 companies during his tenure of more than 14 years.

Mr O’Halloran is now, of course, Chairman of Steadfast, and while his role is not an executive one, his experience is doubtless significant when it comes to strategic direction.

Steadfast has marked up a 72% rise in revenue and 68% rise in net profit over the previous financial year. But like QBE during the O’Halloran years, Steadfast’s rapid growth can make comparing the performance of the company it is now with the company it was a year before somewhat confusing. That’s what happens with rapid growth.

Mr Kelly told insuranceNEWS.com.au last week that without the purchases made in the previous year, the group’s gross written premium (GWP) of $4.4 billion attributed to network brokers would have instead been largely flat, with a 5.5% fall due to premium reductions countered by a 5.2% growth in volume.

Steadfast finished its second financial year right where Mr Kelly has always wanted it to be: at the top. It’s now the largest group of its type, with 304 fully owned, partly owned or aligned but independent brokers and 22 underwriting agencies earning $385 million in GWP.

It would be wrong to see Steadfast as the broker group it was a few years ago. Today it’s a diversified insurance group with direct insurance, life insurance and reinsurance capabilities, its own transaction platform and interests in office services and legal operations. Its underwriting agencies business provides it with many opportunities to bypass commercial insurers.

Austbrokers is similar but different. A sharemarket darling – albeit suffering a few dents in the bodywork early this year – its owner-driver strategy remains firmly in place and it is aiming for a different future from that of Steadfast.

Comparing the two on a like-for-like basis is therefore difficult, and ultimately not useful. Steadfast is larger on many counts, except where it perhaps matters most – the sharemarket.

The past year on the Australian Securities Exchange has been a bit of a rollercoaster for each company, thanks in part to a note from Austbrokers on January 23 revising its profit forecast down by 0-5% due to the rapidly softening market.

Austbrokers’ share value fell off a cliff, from $10.10 to $8.38 in 24 hours. Steadfast fell from $1.50 to $1.39.

The note was legally required, but it nevertheless exasperated Steadfast, with Mr Kelly releasing his own statement saying his company wasn’t expecting anything so dramatic.

The haul back has been a tough one, with a more skittish sharemarket finally bringing Steadfast’s share price back on Friday to where it was before the January fall, at $1.51.

Austbrokers’ share price on Friday was $9.10. Its increased after-tax profit of $36.3 million and its growth strategy – based not on pure commission income but new business opportunities for its more than 50 broker partners – obviously has appeal.

Its diversification program, which will see Austbrokers acquire interests in a range of risk management companies, is well under way. Having already set up owner-driver operations with Procare and Risk Strategies, in January it acquired 60% of major rehabilitation and injury management services company Altius.

Mr Searles says the new Risk Services division is already successful, with one member broker winning a major middle-market deal by collaborating with the services arm to provide a wider range of client services than previously.

“It places us in a good position in the SME and mid-markets,” he told insuranceNEWS.com.au. “It expands our reach into the market because we’re able to provide clients with the services they desperately need.

“We aim to be the leading provider of total risk management services to clients. That’s where the value is.”

Steadfast remains fixed on the SME market and expanding the range of products it offers clients. Austbrokers is doing much the same, but in a different, more finely focused way.

Like the traditional rivalry between Sydney and Melbourne, comparing them is too difficult to be worthwhile – although doubtless that’s exactly what analysts will continue trying to do.

But like the two cities, each has its own character and philosophies that make it unique.