Steadfast has set a higher earnings target after the business performed according to its pre-virus guidance for the 2019/20 financial year.

CEO and MD Robert Kelly, whose tenure has been extended until after the AGM in October 2023, says the June quarter data showed the business is on “reasonably solid ground” and is confident of another good showing for the current financial year.

“I can tell you I have no idea what’s going to happen in the second half of FY21 financial year,” Mr Kelly said last week in a post-earnings conference call. “What I can tell you is…we put out what we think we can actually achieve regardless of the impact of what is occurring out in the market.

“And I rely on our track record over the last seven years for you to say, ‘can we believe these people or not’?”

The business recorded a 15.5% rise in underlying earnings before interest, tax and amortisation (EBITA) to $223.5 million, which is at the top tier of its pre-virus $215-225 million forecast.

Steadfast cancelled the underlying EBITA forecast after the pandemic erupted in late March but subsequent updates showed trading conditions remained strong, placing the business in a good position to meet the targets.

For this financial year Steadfast has flagged underlying EBITA of $235-245 million and underlying net profit after-tax of $115-122 million, which if achieved, would exceed the $108.7 million earned in 2019/20.

As previously flagged the business recorded a statutory net loss of $55.2 million, impacted partly by the requirement to expense the $72.7 million acquisition cost last year of Insurance Brokers Network Australia (IBNA).

IBNA has provided an immediate boost to the Steadfast Network, which achieved a 34.8% jump in gross written premium to a record $8.3 billion. IBNA chipped in 21.6% of the division’s GWP growth increase.

Steadfast Underwriting Agencies increased its GWP by 13.1% to $1.33 billion, buoyed by hardening rates and organic growth.

On the hardening rate landscape, Mr Kelly says the directors’ and officers’ market remains a “you take what you can get” situation.

Overall the financial lines segment has seen tripling and even quadrupling of rates at renewals, and he says some sections of the professional indemnity line “are moving quite dramatically”.

Morningstar analyst Nathan Zaia, who covers Steadfast, told insuranceNEWS.com.au the business “should benefit” from rising premium rates.

He says Mr Kelly’s decision to extend his tenure by several months, having previously committed to only staying until the end of 2022, is a positive for the business.

“He has done a great job building the business, so he is probably the best person to guide it at the moment,” Mr Zaia said. “He knows the sector inside out.”