Gross written premium (GWP) placed by Steadfast network brokers grew 12.7% to $2.46 billion in the six months to December 31, as signs emerge of rising rates in the SME sector.

Australia’s largest broking company says the insurance cycle is starting to harden after pricing pressure in recent years.

“We are seeing the first signs of underwriters taking action to improve results and, although early days, both the network and underwriting agencies benefitted from a small degree of price improvement across our primarily SME customer base,” MD and CEO Robert Kelly said last week.

While Steadfast’s net profit declined 3% to $37.93 million on lower non-trading gains in the six months, underlying earnings gained 12.7% to $30 million.

The broking operations posted underlying earnings before interest, tax and amortisation (EBITA) of $49.1 million, up 27.7% as volumes, acquisitions and cost savings helped boost the result. The average policy price for brokers grew 1.7%.

During the period five brokers joined the Steadfast network, which now accounts for 28% of GWP placed in Australia, the company says.

Underwriting agencies’ EBITA grew 0.3% to $29.3 million, with investment into start-up markets and the London “super” binder reducing margins. GWP placed by the division was up 2% to $386 million, with about half going through non-Steadfast brokers

Premium funding EBITA declined 21.8% to $3.8 million.

Mr Kelly says there is a strong pipeline of broker acquisition opportunities and the company continues to consider opportunities to expand its business in New Zealand and Asia.

The company also continues to roll out the Virtual Underwriter and Insight IT systems, which are part of the Steadfast Technologies business.

It has reaffirmed its guidance for the full year: underlying EBITA is forecast at $140-150 million and underlying net profit at $63-68 million.