Steadfast buys Sure Insurance, completes $280 million share placement
Steadfast has purchased a 70% stake in Queensland regional underwriting agency specialist Sure Insurance and has completed a $280 million share placement to fund upfront and future acquisition costs.
Group CEO Robert Kelly says Sure has a highly experienced management team and it has become a recognised brand since starting operations in 2019, with profitable risk selection underpinned by a sophisticated algorithm.
“It is scalable, highly efficient, it is data driven and it delivers excellence in claims management and customer experience,” Mr Kelly told an analyst briefing.
“It is a rapidly growing underwriting agency for home and contents in an area where no-one wanted to write, which was regional Queensland.”
The acquisition involves an upfront cash payment of $148.8 million and potential future incremental payments of $28.8 million and $102.5 million, contingent on Sure’s fiscal 2024 and 2025 normalised earnings before interest, tax and amortisation performance.
A “put and call option agreement” is also in place, with an exercise date between September and October 2026, for Steadfast to acquire a further 20% equity stake via a scrip transaction.
Steadfast on Friday completed a $280 million institutional share placement, priced at $5.14 per share, while it will also raise up to $30 million through a share purchase plan.
“The institutional placement was well supported by both existing and new investors and priced at a premium to the underwritten floor price,” Mr Kelly said. “Since listing, Steadfast has continued to demonstrate and deliver on its strong track record of successfully completing earnings accretive acquisitions.”
Sure, which has expanded its home and contents property offering into residential strata, has capacity from Liberty Specialty Markets, Pacific International and the New India Assurance Co, according to its website. Distribution is both direct and through brokers.
Mr Kelly says there is interest from four additional underwriters in providing capacity for Sure and it’s expecting distribution can be expanded to other regions around Australia through the Steadfast Client Trading Platform.
Completion of the Sure Insurance acquisition is scheduled to occur by the end of this month.
“We are delighted to be working with Steadfast Group, an organisation aligned with our philosophy at Sure Insurance,” Sure MD Bradley Heath said. “We are particularly excited by the potential opportunities Steadfast can provide to support our growth and expansion.”