Pandemic proves no barrier to insurance broker Steadfast

Businesses ensuring they were insured has driven Australia’s largest general insurance brokers Steadfast to double-digit profit growth.

Steadfast chief executive Robert Kelly. Picture: Nikki Short

The last thing a business stops paying is the insurance, and the first thing they buy is coverage, and that is a winning combination according to Steadfast CEO Robert Kelly.

The dual phenomena has delivered Steadfast a strong and growing profit, up 19.3 per cent for the year to $60.4m.

“It’s fair to say we’re returning to normal transmissions,” Mr Kelly said.

“We’ve experienced very little downturn from COVID-19.”

Mr Kelly noted the only part of the business that had been affected were its UK operations.

“Even so all our business through London still happened, it was an inconvenience rather than a game breaker,” he said.

The surprise result for the insurance broker, deeply exposed to the small business market, reveals that despite the empty shops on high streets all around Australia, business is doing far better than was hoped in the darkest days of the pandemic.

Mr Kelly said for some businesses JobKeeper had acted to support payments and ensure continued operation.

“For some businesses yes, (JobKeeper assisted) but that’s peripheral businesses,” he said.

Steadfast subsidiary companies received $1.3m in JobKeeper and Mr Kelly said Steadfast did not intend to pay it back.

“I’m not going to go through the 7-8 brokers to say give us the JobKeeper back because we made money as a corporation,” he said.

Times have been so good that payment arrears from policyholders are running below the level they were before COVID struck.

“If you didn’t know there’d been a pandemic you’d go what’s all the fuss about?” Mr Kelly said.

“It’s insanity, the business sector in Australia is just so powerfully strong.”

Steadfast’s broking business delivered a 7.5 per growth in earnings, driven by organic growth of the business and continued acquisitions.

Steadfast has made a run of acquisitions in recent years, a trend Mr Kelly said was set to continue thanks to almost $100m in dry powder.

He said a recent submission to 154 network brokers revealed 74 were interested in selling at least part of the business to Steadfast.

“Over the next two to three months we’ll have a look at that,” he said.

“If it got to a sum of any magnitude we’d go to the market and tap the market.”

Mr Kelly said the results were a shock after Steadfast pulled its guidance “under abundant caution rules” in March last year.

“We sit back and look at it and go by god what happened,” he said.

An interim dividend of 4.4 cents has been declared, fully franked, representing a total payout of $38.2m