Broking group Steadfast says it has started the new financial year strongly, as the business gets a boost from the tightening premium rate cycle after recent catastrophes.

Unaudited underlying earnings before interest, tax, depreciation and amortisation (EBITA) for the September quarter are about 24% better than a year earlier and ahead of projections, CEO and MD Robert Kelly said at the annual general meeting last week.

“Since we reported our FY22 results insurers have continued to increase premium rates due to the large number of recent catastrophes and higher claims inflation,” Mr Kelly said, adding the September quarter has performed “slightly ahead of expectations”.

“This together with solid volume growth have been the major contributors to our performance for the first quarter.”

The first quarter has given Steadfast confidence that its earnings for this financial year will come in at the top end of its guidance.

The guidance, provided in August when Steadfast announced its 2021/22 results, projects underlying EBITA of $400-420 million and underlying net profit after tax of $190-202 million. In the last financial year, the business achieved $340.4 million in underlying EBITDA and $169 million in underlying net profit.

Mr Kelly says the broking group is progressing with more acquisitions to bolster its market presence, having signed eight term sheets and commencing due diligence on potential targets representing a further $5.2 million in annualised EBITA.

The eight term sheets are part of Steadfast’s Trapped Capital Project – an initiative that allows the business to increase its equity holdings in its network of brokers through a partial sale.

Mr Kelly says the business has identified 55 other Trapped Capital opportunities that could potentially add $23.6 million in annualised EBITA to Steadfast.