Steadfast eyes Asia as acquisitions drive growth
Broker group Steadfast is looking to Asia after acquisitions pushed net profit up 68% to $42.1 million for the year to June 30.
Gross written premium (GWP) placed by the network increased 8% to $4.4 billion and consolidated revenue was up 72% to $298.7 million as more than $400 million was spent on acquisitions.
MD and CEO Robert Kelly says Asia will be a key focus in the next year, with the foundations of a “meaningful presence” already in place.
“We are building a network of brokers across Asia, not so much in India but in China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam,” he told insuranceNEWS.com.au.
“We have formal agreements with them to help Steadfast brokers place business in Asia, and vice versa. About 17 attended our conference in Adelaide.
“We have somebody on the ground in Singapore and we own an insurance broker there.
“There is no doubt we would look very strongly at anything else that comes up in Singapore.
“It is well regulated, and Lloyd’s is over there. It’s the sort of market we want to be involved in.”
Acquisitions enabled strong growth in the year to June 30, despite prevailing soft market conditions. Without the purchases GWP would have been largely flat, with a 5.5% fall due to price reductions mitigated by a 5.2% growth in volume.
Steadfast believes lower rate reductions in the second half point to a flattening market, and says its focus on the less volatile SME sector has protected it from the worst instability.
“We are heading towards a flat market rather than a continually falling market,” Mr Kelly said. “Our SME focus definitely gives us some resilience.”
GWP placed by Steadfast Underwriting Agencies grew 165% to $385 million, lifted by the Calliden and QBE agency acquisitions.
Mr Kelly says diversification and the growth of the underwriting agencies reduces Steadfast’s reliance on broking and gives “a great spread of risk”.
“The underwriting agencies spread our risk dramatically and when the markets turn we get a different uplift in these sectors,” he said.
While rival broker group Austbrokers has pushed into the services business, this is not necessarily a priority for Steadfast.
“There are some services offerings that are out there, and we’d always look at them,” Mr Kelly said. “But if you are going to buy then I prefer to see this organisation buy long-standing businesses with renewable clients.
“That doesn’t mean I’m right and others are wrong – it’s just the way we have decided to go.”
Steadfast believes its offering is enhanced by the introduction of challenger brand Steadfast Direct and the strategic partnership with MetLife to distribute SME life insurance products.
Significant progress has also been made in New Zealand.
Mr Kelly says further home-turf acquisitions are in the pipeline, but he is more than happy to walk away if expectations are not met.
“We don’t get deal fever,” he told insuranceNEWS.com.au. “If in our minds it doesn’t stack up, then we don’t get too worried about it, we just walk away.”