Steadfast’s first-half underlying net profit rose 20.9% to $128.1 million as it achieved growth in a moderating market. 

“We continued to make accretive acquisitions, grow our businesses organically, optimise subsidiary performance, identify opportunities to hub our equity brokers and focus on margins and expense discipline,” CEO Robert Kelly said today.

Underlying earnings before interest, tax and amortisation (EBITA) increased 14.6% to $262.4 million, with organic growth accounting for 9.1% and acquisitions contributing 5.5%.

Australasian network brokers delivered a gross written premium increase of 7.9% to $6.5 billion and underwriting agencies GWP rose 11.7% to $1.22 billion.

Steadfast says there is more competition in the mid to corporate commercial insurance market, but personal lines and small commercial business remain stable, while premium rate increases are moderating to mid single digits overall.

Mr Kelly says pricing variation is not consistent across classes and the company has seen gains of 13% in motor fleet, 10% in household and more than 7% in business pack, while cyber is “a bit in the pits”.

“We’ve been using the word moderation and levelling over the past probably 12 months,” he said. “I don’t think you’re going to see, apart from the odd policy type, where there’ll be a collapse.”

Steadfast says its international business, which includes ISU, UK operations and UnisonSteadfast, performed ahead of expectations.  

The company acquired HW Wood and HWI France late last year, with Steadfast Placements to rebrand to HWS Specialty and come under the management of HWS in London. 

International CEO Samantha Hollman says Steadfast has visited more than 50 ISU members in recent months and has outlined opportunities from “trapped capital” deals that allow an owner to partially sell their business.

Ms Hollman says Steadfast looked at taking its Insight back office system and the Steadfast Client Trading Platform to the ISU network, but it found other tech platforms are available in the US that it can use as a base to “jump start” tech development by at least a few years.

Steadfast is looking at an adjunct system, to add to an existing white label quote and bind system, to improve data collection and assist in carrier negotiations and product development, she says.

“There is still a desperate cry out for a more advanced AMS [agency management system], but we believe building on existing systems that already exist and tailoring it for the specific needs of the US market and the US network is the more strategic position that we will run with,” she said.

Mr Kelly says an internal strata review found no evidence of channelling of incentives between Steadfast-related entities or deliberate non-compliance, and the company is expanding internal audit and governance functions while NSW legislative reforms focus on strata managers and communication with body corporates.

“The allegations that we controlled and manipulated markets were 100% wrong,” he said. “I think our discussions on strata are complete and finished.”

Steadfast has affirmed underlying full-year net profit guidance of $290-$300 million, while EBITA guidance has eased to $585-$595 million from $590-$600 million due to “step-up” acquisition accounting.

The guidance assumes premium rate increases of mid single digits in the second half and full-year acquisitions of $300 million.  

CFO Stephen Humphrys says a moderation was expected when guidance was issued last August. That guidance assumed premium rate increases of 7%-9% for the year.

“There was some moderation in the pricing as we know in the December quarter, but we actually had plenty of other revenue uplifts or expense-saving initiatives throughout the group to counter that,” he said. “Our bottom-line results were actually slightly ahead of our internal budgets.”

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