Steadfast sees strong growth from Sure acquisition
Steadfast plans to roll out the Sure Insurance offering to other parts of Australia, as the business that it today announced it is acquiring continues to grow strongly in its core market in regional Queensland.
As reported in a Breaking News earlier today, Steadfast said it will acquire a 70% equity interest in Sure Insurance for a deal including an upfront cash payment of $148.8 million.
Sure has expanded rapidly since starting operations in 2019 in a part of the country where other insurers have been reluctant to offer capacity due to natural catastrophe risks.
Steadfast CEO Robert Kelly says a highly experienced Sure management team has driven growth in the business and it has become a recognised brand, 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 today.
“It is a rapidly growing underwriting agency for home and contents in an area where no-one wanted to write, which was regional Queensland.”
Sure, which has also expanded its 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.
The acquisition terms also involve 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 via a scrip transaction.
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.
Sure is binding over 52,000 policies has about an 85% retention rate and has an increasing market share in Queensland, Steadfast says. The state has a growing population and increasing number of dwellings, while underinsurance is an issue in parts of the market.
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.”
Steadfast today also announced a $280 million fully underwritten institutional placement and upgraded its earnings guidance to reflect current positive trading results, the acquisition of Sure and the equity raising.