Steadfast has reported a strong increase in earnings as its broking and agency businesses benefited from pricing conditions and acquisitions contributed to revenues.
Net profit was $143 million compared to a loss of $55.2 million a year earlier, when expenses related to the IBNA acquisition were included. On an underlying basis earnings increased 20.2% to $130.7 million.
Broking gross written premium (GWP) rose 18% to $9.8 billion, with the firm continuing to see increased revenues as a result of the premium rate cycle.
Underlying earnings before interest, tax, depreciation and amortisation (EBITA) in the broking business rose 21.5% to $218.2 million.
CEO Robert Kelly says insurers are putting through rate increases as a result of catastrophe and claim impacts, increased operating costs and reinsurance requirements.
“Whilst those factors continue to impact the insurers’ bottom line profit, and they will for some considerable time, the hard market is here and it is staying,” he told a briefing today.
Insurers’ labour costs are “going through the roof”, they are facing increased attritional and claim costs and need to boost spending on their technology, he said.
Underwriting agencies gross written premium rose 11.5% to $1.5 billion, while EBITA rose 13% to $119.5 million.
The company says it completed $172 million of earnings per share accretive acquisitions last financial year and is continuing with a “trapped capital” initiative where it increases equity in network brokers.
Steadfast forecast underlying net profit after tax in this financial year of $159-166 million, including pricing increases, the benefit of its Coverforce acquisition (see other story) and further purchases under the “trapped capital” initiative.
Mr Kelly says the business has continued to perform well and has not seen “major headwinds” from the continuing COVID-19 pandemic and government lockdowns.
“This industry is amazingly resilient to COVID,” he told insuranceNEWS.com.au. “The new BAU (business as usual) isn’t easy to cope with, but we’ve been out of the office for our eighth week and nothing has changed.”