Steadfast says it is on track to deliver full-year earnings at the top of its guidance range based on a stronger first-half trading result and acquisitions.

CEO Robert Kelly says Steadfast’s model has proved resilient amid the challenges of the COVID-19 pandemic and the broking sector overall has demonstrated it is robust and sustainable.

“Throughout the whole of 2020 our business thrived and we are pleased to report the position we are in today,” he told a first-half results briefing with analysts.

Underlying net profit rose 19.3% to $60.4 million in the six months to December 31, while earnings before interest, tax and amortisation (EBITA) gained by the same percentage to $125.4 million. Revenue increased 6.6% to $437.8 million as premiums strengthened.

Mr Kelly says the pandemic has accelerated robotics automation to boost efficiency in routine tasks in underwriting agencies, while costs will likely remain lower as the pandemic and technology “shatters” previous ideas about the level of travel required for business.

Premium rates are expected to continue rising given pressures on insurers to improve loss ratios in a number of lines of business, while compulsory third party is also not “the money spinner” it has been in the past, Mr Kelly says.

“I think we should stop talking about the hard market,” he says. “It is the market.”

Mr Kelly says he hasn’t seen any weakness in the Australian or international markets, apart from some easing in some areas in New Zealand, while ramifications for business interruption from COVID-19 are still unclear as coverage questions remain.

Broking underlying EBITA rose 22.9% to $106.7 million in the half, with Steadfast Network gross written premium (GWP) growing 13.9% to $4.5 billion.

Premium funder IQumulate saw an improvement in arrears during the half despite COVID-19 pressures.

Steadfast Underwriting Agencies EBITA increased 15.6% to $56.8 million and GWP rose 8.9% to $733 million on rate rises and higher volume in existing operations.

Mr Kelly says Steadfast has not opposed the proposed Aon and Willis Towers Watson merger, which the Australian Competition and Consumer Commission and international regulators are examining.

Globally, concentration in reinsurance broking could see regulators requiring a divestment for the transaction to go ahead, while locally the deal could open doors for other participants, he says.

“I think out of the merger some opportunities will exist for the next string of brokers that come in that have expertise,” he said.

Steadfast has recently entered a partnership with UK-based Howden, which is expanding in Australia.

The company reaffirmed full-year guidance for underlying net profit of $120-127 million and EBITA of $245-255 million, while highlighting the result will likely be at the top end of the range, subject to uncertainty around the economy and COVID-19 impacts.

Steadfast employees are returning to working in the office three days a week from this month as companies look to transition from having most of their staff working remotely.

Statutory net profit was $73.4 million for the first-half compared to a year-earlier loss of $71.9 million, which included accounting actions related to an acquisition and rebate offer.