“I opened the batting, I said, ‘My name is Robert Kelly and I’m a commissioned insurance salesman and that’s what I do.”
During his firm’s recent Convention in Brisbane, the Steadfast CEO (pictured above) explained to Insurance Business how his executive team approached a series of recent town halls in the United States.
It was October and Steadfast had just completed an agreement to acquire the US firm ISU Group for US$55 million. A Steadfast release described this firm as “one of the largest privately owned independent insurance agency networks in the United States of America”
Kelly said the basic rationale was explaining that Steadfast was a group of commissioned insurance salesmen who have teamed up together to leverage what they do and “make sure we survive.”
“And that went down,” he said.
When IB asked Kelly and COO Nigel Fitzgerald (pictured immediately below) what stood out as their firm’s biggest achievement during the last year, this major expansion into the US was a front runner.
So was an acquisition in Queensland.
“ISU and creating our first opportunity to build a network in the US - I think that’s probably one of the most exciting long-term initiatives that we achieved,” said Fitzgerald. “Also, the acquisition of our North Queensland business Sure [Sure Insurance, an underwriting firm],” he said.
“It’s got a value proposition that’s not just unique to North Queensland and we’re excited about how we can take that more Australia-wide over time,” said Kelly. “Sure represents a real opportunity for us in terms of it being what I would call an ‘insurance company light’,” said Kelly.
He said the firm has “all that you need to run an insurance company” but in a very low cost infrastructure with a team of about 40 people. Among those assets he included the expertise for underwriting and claims, the actuarial skills, the algorithm to do the rating structure and also external capital to run the business.
Steadfast’s job now, Kelly said, “is to make sure, as they do, that they do a return for external capital.”
Kelly and Fitzgerald plan to use this new capacity around Australia and across a range of insurance sectors, including to help coverages for properties impacted by nat cats.
The CEO was particularly excited by these distribution possibilities.
“We could put it on the client training platform, we could open it up to all the Steadfast brokers exclusively, or we could put it into the open market as well,” said Kelly. “It really is an incredibly exciting time for the potentiality of developing that business far, far beyond what it is today,” said Kelly.
The Steadfast leader said ISU, his new US insurance business, apart from having generally bigger brokerages, is “very similar” to his own firm back in the mid-1990s.
“They’re the type of people we want to be in business with, folksy almost, some of them,” said Kelly. “Our job at the moment is not to go in and sack people, not to go in and change everything.”
He described ISU as a successful business, operating in over 40 states, consisting of roughly 240 independent insurance agencies.
“They only leverage basically about 25% of their turnover through combining themselves together,” said Kelly. “Our job is to show what we’ve done in Australia to the carriers and to our network of brokers and work alongside the existing people - who are very good – and move its turnover more and more under the combined operating structure of ISU.”
He said ISU’s EBITA [Earnings Before Interest, Taxes, and Amortization] “can be tripled reasonably quickly over the next, maybe, two or three years.”
After the deal was announced Steadfast staged five town halls across the United States, starting in Los Angeles and ending in New York.
“We were very well received,” said Kelly.
During the Steadfast Convention, Patrick Tiernan, the Lloyd’s chief of markets, gave one of the keynote speeches. He said the current global risk situation was unprecedented.
“Right now, from our perspective, everything is in flux concurrently,” said Tiernan. “That’s never happened before in the 335-year history of Lloyd’s.”
He said politics, geopolitics, economics, demographics, climate and conflict are all bringing huge challenges at the same time.
Are you an insurance business in Australia looking to expand in the US? What do you see as your biggest challenge?
