The Steadfast Group Ltd (ASX: SDF) share price is on watch after the Aussie insurer reported a strong underlying result last night.
Image Source: Getty Images
What does Steadfast do?
Steadfast is Australia's largest general insurance broker with growing operations in Asia and Europe.
The insurer boasts a network of more than 458 general insurance brokerages in Australasia.
Why is the Steadfast share price on watch?
The statutory numbers were soft as Steadfast reported a $55.2 million net profit after tax (NPAT) loss due to acquisition and impairment costs.
However, on an underlying basis, Steadfast enjoyed a healthy period of growth in the year ended 30 June 2020 (FY20).
The insurer reported a 15.5% increase in earnings before interest, tax and adjustments (EBITA) to $193.3 million. That was on the back of a 21.4% jump in underlying revenue to $688.3 million with underlying NPAT rocketing 19.0% to $89.2 million.
The Steadfast share price is on watch this morning after yesterday's result which was underpinned by 36% growth in network gross written premiums (GWP) to $8.3 billion. That included 6.3% of organic growth before including Authorised Representatives and IBNA contributions.
The insurer reported record organic GWP growth in its Steadfast Underwriting Agencies business. Segment GWP jumped 13.1% to $1.33 billion with underlying EBITA up 14.7% to $105.8 million.
Steadfast's insurTech segment also posted strong growth figures. GWO transacted through the Steadfast Client Trading Platform (SCTP) jumped 45% to $638 million in FY20.
Free cash flow jumped 27.2% to $70.6 million driven by strong operating cash flow figures.
Steadfast remains conservatively geared at 21.5%, well below its 30% maximum gearing ratio, with $323 million of borrowings.
Dividends
Steadfast reported a 13.2% increase in its final dividend to 6.0 cents per share (cps), fully franked.
Combined with its 3.6 cps interim dividend, the group's final dividend is 9.6 cps up 12.9% on its FY19 payout.
Based on yesterday's closing Steadfast share price that translates to a 2.7% dividend yield per annum.
FY21 outlook
The Steadfast share price will be one to watch as investors process the insurer's FY21 guidance.
Steadfast is projecting underlying EBITA of $235 million to $245 million, compared to $193.3 million in FY20.
Underlying NPAT is forecast to increase from $89.2 million to between $115 million and $122 million this financial year.
The coronavirus pandemic has created 'significant uncertainty' but Steadfast sees trading conditions similar to those seen in Q4 2020.
