Steadfast Group says the business has made a “tremendous start” to the new financial year, with underlying earnings before interest, tax and amortisation (EBITA) in the first quarter about 20.7% ahead of the same period a year earlier.

The performance in the September quarter has lifted Steadfast’s confidence as the business announced at last week’s AGM a revision of its earnings forecast for the year to June 30.

Underlying EBITA is now projected at $245-255 million, up from $235-245 million previously, while the guidance for underlying net profit after tax has been raised to $120-127 million from $115-122 million.

The previous earnings targets were unveiled in August when Steadfast released its results for the last financial year, with underlying EBITA coming in at $223.5 million and underlying net profit after tax at $108.7 million.

CEO and MD Robert Kelly told shareholders the “excellent quarter” puts the business in a position to perform better than previously expected.

“This is a tremendous start to [the 2020/21 financial year],” Mr Kelly said. “Insurers have continued to increase premium rates and volumes have held firm.”

He says Steadfast Underwriting Agencies, which increased its gross written premium by 13.1% to $1.33 billion in the last financial year, continues to outperform with strong organic growth.

While there remains “considerable uncertainty prevailing in the global economy” because of the pandemic disruption, Mr Kelly says the trading conditions experienced in the last six months “provide confidence as to the resilience of our insurance broking and underwriting agency business”.

Morningstar analyst Nathan Zaia told insuranceNEWS.com.au the revised guidance “reinforces both the resiliency in earnings and the competitive strengths” of the Steadfast business model.

“Unlike insurers which face risks around natural hazard events and claims – both frequency and costs – the insurance broking business carries no such risk,” Mr Zaia said.

“Insurers are also being hurt by lower returns on investment portfolios and higher reinsurance costs. In fact, the headwinds for the insurers are leading to premium increases, premiums which the commission paid to a Steadfast broker is based on.”

Mr Zaia says following the revision from Steadfast, he has increased his underlying net profit after-tax forecast for the business by 2.5% to $125 million on account of a “slightly more optimistic outlook for premium increases”.