Steadfast's continued investment 'impressive'

Ralton acquired a small position in Steadfast Group (ASX:SDF), Australia’s largest general insurance broker – a service provider and equity investor for insurance brokers in Australia, New Zealand and Singapore. One of the key drivers of SDF’s profitability is the position in the insurance premium cycle. SDF has been early in calling that we will see hardening insurance premiums in the Australian market given the lack of profitability in a number of key lines for insurers. Our discussions with other parties also suggest the premium cycle is hardening and this is an attractive point of the cycle to invest in an insurance broker as they take commissions on the rising premiums upfront (as opposed to insurance companies which earn the premium over time). At our recent meeting with management, we walked away impressed by the investment SDF is making in its service offering, and in particular, in its IT systems. The group should also be able to continue down the path of acquiring more insurance broking businesses to further enhance growth. (VIEW LINK)