Australia’s leading general insurance broker network, Steadfast Group Limited (ASX: SDF) is primarily focused on the small-to-medium enterprise (SME) market. The SME market is advice-driven which means that client relationships are key to Steadfast Network brokers and Underwriting Agencies. These relationships mean that the SME market is more stable than the corporate market.
The Steadfast Network is the largest general insurance broker network in Australasia. As per 2018 Annual report, the Steadfast Network is made up of 377 brokers with around 1,900 offices, who receive superior market access and exclusive products and services backed by the scale of Steadfast Group. This allows them to focus on servicing their clients’ insurance and risk management needs. Steadfast Group holds equity stakes in 64 Network brokers and receives a corresponding share of dividends from each business.
The company is expecting its FY19 Underlying EBITA to be in between $190 Mn - $200 Mn. In an update released on 1 May 2019, the company has confirmed FY19 guidance range Underlying EBITA of $190 million - $200 million and Underlying NPAT of $85 million - $90 million.
While providing the update on the company’s Client Trading Platform, the company informed that the automated contestable market place is creating improved competition and coverage for clients. In FY 2019, the company is expecting around ~$500m of GWP to be transacted through the platform. More than 300 brokerages have used the SCTP. Further, the Positive feedback from brokers on platform efficiency with full market view and data analytics creating further opportunities for brokers to advise their clients.
Steadfast Network brokers are key advisors to their clients and are supported by the products and services offered by Steadfast to deliver the best outcomes. This expertise and support is particularly important when clients need us most.
While providing an update on Steadfast Group investment activity in FY 2019, the company informed that till now in FY19, the company has invested in 10 new equity holdings (including 3 ‘greenfield’ start ups), 9 equity ‘step-ups’ in existing holdings and 2 ‘hubbings’.
While the company is primarily focused on its Australian and New Zealand markets, the company is also growing its international presence to create geographically diverse revenue streams. The company is doing so with a low-risk ‘capital-light’ strategy where it either build revenue streams to self-fund expansion or potentially take an equity stake in an existing global network (unisonSteadfast). The company is having a 40% equity holding, with a dedicated senior resource managing the relationship with unisonSteadfast. unisonSteadfast does not operate either as a buying group with insurers or offer the products and services that the Steadfast Network does.
The company is planning to roll out products and services for unisonSteadfast including proprietary Steadfast technology (such as INSIGHT and SCTP). Currently, the company is having Unutilised debt facility of ~$85 million.
At the time of writing, i.e., on 1 May 2019, the stock of the company was trading at a price of A$3.425, up 0.44% during the day’s trade with the market capitalisation of ~A$2.7 Bn.
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