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STEADFAST GROUP LIMITED — Investor Presentation 2016
Jun 15, 2016
65758_rns_2016-06-15_df4947cb-51fb-4117-bf9b-b0aae5c2906c.pdf
Investor Presentation
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16 June 2016
Market Announcements Office ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000
Dear Sir
INVESTOR DAY PRESENTATION
Please see attached the Investor Day slides being presented today in Melbourne and tomorrow in Sydney.
Yours faithfully
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Linda Ellis
Group Company Secretary & Corporate Counsel
Steadfast Group Limited ABN: 98 073 659 677 ACN: 073 659 677 Level 3, 99 Bathurst Street, Sydney NSW 2000 t 02 9495 6500 f 02 9495 6565 www.steadfast.com.au
STRENGTH WHEN YOU NEED IT
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Gaining Insight Investor Day
16 June 2016 – Melbourne
17 June 2016 – Sydney
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Important notice
This presentation has been prepared by Steadfast Group Limited (“Steadfast”).
This presentation contains general information in summary form which is current as at 16 June 2016. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offered by Steadfast or its subsidiaries and associates. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). It should be read in conjunction with Steadfast’s other continuous and periodic disclosure announcements filed with the Australian Securities Exchange, ASX Limited, and in particular the Steadfast 2016 Half Year Financial Report. These disclosures are also available on Steadfast’s website at investor.steadfast.com.au.
To the maximum extent permitted by law, Steadfast, its subsidiaries and associates and their respective directors, employees and agents disclaim all liability for any direct or indirect loss which may be suffered by any recipient through use of or reliance on anything contained in or omitted from this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of Steadfast, including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition of securities.
The information in this presentation remains subject to change without notice. Steadfast assumes no obligation to provide any recipient of this presentation with any access to any additional information or to notify any recipient or any other person of any other matter arising or coming to its notice after the date of this presentation.
To the extent that certain statements contained in this presentation may constitute “forward-looking statements” or statements about “future matters”, the information reflects Steadfast’s intent, belief or expectations at the date of this presentation. Steadfast may update this information over time. Any forward-looking statements, including projections or guidance on future revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside Steadfast’s control and may cause Steadfast’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Neither Steadfast, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance. Possible factors that could cause results or performance to differ materially from those expressed in forward looking statements include the key risks on pages 26-27 of Steadfast’s 2015 Annual Report.
Certain non-IFRS financial information has been included within this presentation to assist in making appropriate comparisons with prior periods and to assess the operating performance of the business. Steadfast uses these measures to assess the performance of the business and believes that the information is useful to investors. Non-IFRS information, including underlying P&L items, pro-forma P&L items, EBITA, NPATA and Cash EPS (NPATA per share), have not been subject to review by the auditors. All references to Aggregate refer to the 100% aggregation of all investees’ results regardless of Steadfast’s ownership interest.
This presentation does not constitute an offer to issue or sell securities or other financial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law. Any recipient of this presentation outside Australia must seek advice on and observe any such restrictions. This presentation may not be reproduced or published, in whole or in part, for any purpose without the prior written permission of Steadfast.
Local currencies have been used where possible. Prevailing current exchange rates have been used to convert local currency amounts into Australian dollars, where appropriate. All references starting with “FY” refer to the financial year ended 30 June. All references starting with “1H FY” refer to the financial half year ended 31 December.
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© 2016 Steadfast Group Limited | 2
Agenda
| Time | Topic | Presenter |
|---|---|---|
| 9.00am – 9.10am | Introduction, Steadfast Technologies | Robert Kelly |
| 9.10am – 9.30am | Virtual Underwriter (including demo*) | Vibul Imtarnasan |
| 9.30am – 9.45am | INSIGHT (including demo*) | Lisa Woodley |
| 9.45am – 10.00am | UnderwriterCENTRAL | Niels Laaper |
| 10.00am – 10.10am | Group reporting systems | Stephen Humphrys |
| 10.10am – 10.15am | Technology wrap up | Robert Kelly |
| 10.15am – 10.30am | Q&A | |
| 10.30am – 10.45am | Morning tea | |
| 10.45am – 10.55am | Steadfast Underwriting Agencies | Robert Kelly |
| 10.55am – 11.10am | Steadfast Underwriting Agencies | Simon Lightbody |
| 11.10am – 11.25am | UAA update | Michael Murphy |
| 11.25am – 11.40am | CHU update | Bobby Lehane |
| 11.40am - noon | Q&A | |
| Noon – 1.00pm | Lunch |
- Demos facilitated by Orlando Trujillo-Ramirez
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© 2016 Steadfast Group Limited | 3
Introduction
-
2015 Investor Day introduced our senior management team
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2016 Investor Day to introduce our technology and underwriting agency leadership teams
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Steadfast Investor Days are focused on strategic initiatives (not on numbers, not on market pricing commentary)
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Revolutionary developments in technology, especially with the recent launch of our broking system INSIGHT and the purchase of our underwriting agency system UnderwriterCENTRAL
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Value being created at Steadfast Underwriting Agencies and from our two largest acquisitions – UAA and CHU
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Robert Kelly, Managing Director & CEO, agreed not to terminate his employment contract before 31 December 2020, an additional 3 more years
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© 2016 Steadfast Group Limited | 4
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Steadfast Technologies Robert Kelly – Managing Director & CEO
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IT is core to our business
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Built our own IT systems – third parties controlling our destiny or our data is not in our DNA
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IT is a key competitive advantage
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Steadfast Technologies provides IT to the Group and to the market generally
-
Team of 50+ people, split into 3 business units, headed up by experienced, industry savvy, market leading professionals:
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Vibul Imtarnasan, EGM – Technology Solutions
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Lisa Woodley, EGM – Broker Technology Services
-
Niels Laaper, EGM – Underwriting Agency Technology Services
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© 2016 Steadfast Group Limited | 6
Steadfast IT world
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Insurers Steadfast Brokers & Agencies Steadfast Head Office
Broking systems GWP data
Monthly for equity brokers,
semi annually for other
network brokers
• WinBEAT
• CBS
• eGlobal
• iBAIS
• others
Accounting
Month end
systems
reporting Group
• MYOB (equity brokers Portal reporting
• & agencies)
Quick Books salesforce systems
• XERO
• SAP SAP etc.
Non-Steadfast • others
insurance exchange
platforms
GWP data
Agency systems
Monthly
• Ebix
• iBAIS
• others
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© 2016 Steadfast Group Limited | 7
IT systems @ Steadfast
Easy access and scalability due to web-based, cloud-based, .NET platform
-
broker quoting, bind and placement solution, also known as SVU
-
full cycle policy management with only one data input
-
available to Steadfast brokers only
(formerly known as eClipse)
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broker back office system
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99% considering switching[1] , 140 brokers have already requested scheduling
-
intuitive-based work platform
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underwriting agency back office system, purchased by Steadfast in April 2016
-
used by Steadfast Underwriting Agencies and the open market
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market leader in design & innovation, participant in Lloyd’s ‘Project Tomorrow’
1 Based on a survey of Steadfast Network Broker Principals at the April 2016 Steadfast Convention
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© 2016 Steadfast Group Limited | 8
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Steadfast Technologies Vibul Imtarnasan, EGM – Technology Solutions
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IT as a competitive advantage
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IT often seen as a commodity for businesses, especially in the insurance industry
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At Steadfast, we see IT as a value proposition that enables a competitive advantage for our network brokers and underwriting agencies
-
Proven global technology leader in insurance broking market
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Ownership, management and innovation of these systems are paramount to our success
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© 2016 Steadfast Group Limited | 10
Insurance is a flow of information
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Underwriting
Brokers Insurers Re-insurers
agencies
AJ Gallaghers
Aon
AUB Group
Consumer
IBNA
SURA
JLT
Non-affiliated
Marsh agencies
Willis
Non-affiliated
brokers
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© 2016 Steadfast Group Limited | 11
How to enable our competitive advantage
Compared to other industry solutions, we want to:
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CAPTURE more data
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ANALYSE more data
-
DELIVER more data FASTER
-
Do it more COST EFFECTIVELY and CONSISTENTLY
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© 2016 Steadfast Group Limited | 12
Steadfast technology solutions
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Underwriting
Brokers Insurers Re-insurers
Agencies
Consumer
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© 2016 Steadfast Group Limited | 13
A virtual marketplace for brokers and insurers
Other options for brokers managing policies with insurers:
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Connects brokers with underwriting agencies / insurers’ products
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Quotes and manages policies more efficiently than other industry solutions
-
Email
-
Insurer’s web portal
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Sunrise Exchange
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Available to Steadfast brokers and their strategic partners
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© 2016 Steadfast Group Limited | 14
Virtual Underwriter benefits
Other industry solutions: you need to enter data for each quote Virtual Underwriter: you only need to enter data once
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© 2016 Steadfast Group Limited | 15
Virtual Underwriter demonstration
Simple, three step process:
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1) broker enters data once; multiple auto-rated quotes from multiple insurers are returned within seconds
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2) policies are issued in real time
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3) full policy life cycle management in real time
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© 2016 Steadfast Group Limited | 16
Virtual Underwriter – strategic advantages
Key advantages of Virtual Underwriter:
-
1) no re-keying required to re-market renewals
-
access to ALL data
-
2)
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3) reducing third party vendor costs in the value chain
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© 2016 Steadfast Group Limited | 17
Virtual Underwriter – cost competitive
How are we more cost effective than the competition?
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1) we have a proven track record in building Insurance B2B Exchanges
-
2) we use cloud services (security, economies of scale)
-
3) we use quality offshore resources (managed from Sydney)
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© 2016 Steadfast Group Limited | 18
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Steadfast Technologies Lisa Woodley, EGM – Broker Technology Services
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A next generation broking platform
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broking platform for Gen-Y
-
intuitive, real time, accessible anywhere from any device
Existing market systems are ageing and limited.
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© 2016 Steadfast Group Limited | 20
INSIGHT – everything you’d expect and more
What you’d expect…
…and more
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full cycle policy management and trust account management
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integrated with Virtual Underwriter, other underwriting and banking systems
-
performance dashboards
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powerful search engine
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disaster recovery and industrial strength cyber protection
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custom templates, schedules and reporting
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control over location, branch, team, authorised representatives, contractors and individual users
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freedom to integrate to any CRM, any accounting package, any software
-
control of your data and the ability to analyse and report on it
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cost savings as price is based on user, not transaction
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© 2016 Steadfast Group Limited | 21
INSIGHT demonstration
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© 2016 Steadfast Group Limited | 22
INSIGHT – strategic advantages
Key advantages of INSIGHT:
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1) platform to introduce more innovative features
-
2) ability to control our destiny and our data
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3) facilitates further back office cost savings initiatives
-
4) ease of training for staff
-
5) automated data recovery and backup
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© 2016 Steadfast Group Limited | 23
INSIGHT – cost competitive
How are we more cost effective than the competition?
-
1) economies of scale and portability across jurisdictions
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310 Australian brokers
-
33 NZ brokers
-
growth into Asia
-
use of cloud-based services
-
2)
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© 2016 Steadfast Group Limited | 24
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Steadfast Technologies Niels Laaper, EGM – Underwriting Agency Technology Services
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What IT systems do underwriting agencies need?
Same systems as insurers but:
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must be delivered at a much lower cost
-
1)
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2) must be agile to support the pace of change in agency business 3) must align with insurers’ reporting protocols
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© 2016 Steadfast Group Limited | 26
What back office systems are in the market?
Limited choice and features available across most current systems:
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1) limited number of agency systems vendors in the Australian market – Ebix, iBAIS and a number of bespoke solutions
-
2) most systems are over 10 years old, some are still character based
Most underwriting agencies are dependent on third party providers for their systems.
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© 2016 Steadfast Group Limited | 27
A next generation underwriting agency platform
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UnderwriterCENTRAL’s differentiator:
-
turnkey solutions for:
-
acquired in April 2016 to provide best-inclass for Steadfast agencies
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first agency system to interface with Lloyd’s (through Project Tomorrow)
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client, policy and claims administration
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supports multiple auto-rated insurance products
-
document management
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cost savings expected from economies of scale and elimination of third party costs
-
ready to integrate with the Virtual Underwriter
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eCommerce portal
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configure (not code) for rapid cost-effective product delivery
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open interface using ACORD industry standards
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© 2016 Steadfast Group Limited | 28
UnderwriterCENTRAL – strategic initiatives
Strategic initiatives include:
-
standardising UnderwriterCENTRAL across Steadfast agencies
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achieving straight through processing
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- creating business intelligence through data mining
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© 2016 Steadfast Group Limited | 29
UnderwriterCENTRAL – strategic advantages
Key advantages of UnderwriterCENTRAL:
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1) ability to control our destiny and our data
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2) a platform for innovation
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3) paves the way for greater efficiency 4) reduces the cost of doing business
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© 2016 Steadfast Group Limited | 30
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Group reporting systems – Stephen Humphrys Chief Financial Officer
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Steadfast IT world
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Insurers Steadfast Brokers & Agencies Steadfast Head Office
Broking systems GWP data
Monthly for equity brokers,
semi annually for other
network brokers
• WinBEAT
• CBS
• eGlobal
• iBAIS
• others
Accounting
Month end
systems
reporting Group
• MYOB (equity brokers Portal reporting
• & agencies)
Quick Books salesforce systems
• XERO
• SAP SAP etc.
Non-Steadfast • others
insurance exchange
platforms
GWP data
Agency systems
Monthly
• Ebix
• iBAIS
• others
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© 2016 Steadfast Group Limited | 32
One view, many parts
Steadfast’s group reporting systems enables management to monitor the performance of the group
Corporate Office
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Equity brokers Agencies Complementary
businesses
54 22
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© 2016 Steadfast Group Limited | 33
Current group reporting systems
Timely trend analysis and insight into actual performance
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COLLECT
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from any general
ledger / CRM
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KPI REPORTS
COLLATE ANALYSE for management /
the Board
GWP, fees & by broker / agency,
commissions, bottom class, size, cash flow, BENCHMARK
line profits, full vs prior year, vs
REPORTS
financials budget/forecast
for the Network
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© 2016 Steadfast Group Limited | 34
Next steps
Continue to extract synergies and capitalise on opportunities to better service clients
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•
CENTRALISE DATA Common platforms – e.g. INSIGHT
and underwriterCENTRAL for CRM,
CENTRALISE SYSTEM
SAP for general ledger
EXTRACT DATA • Further automate
PROCESSING • Common processing methodology
EFFICIENCIES • Offshore non-automated functions
ENHANCE DATA •
Innovate and retrieve data analytics
ANALYTICS tools
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© 2016 Steadfast Group Limited | 35
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Questions
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Steadfast Underwriting Agencies Robert Kelly – Managing Director & CEO
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Steadfast Underwriting Agencies
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Underwriting agencies are complementary to general insurance brokers and help diversify our operating model
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Since our ASX listing in August 2013, we have grown from 2 agencies with annual GWP of $114m to 22 agencies with annual GWP of $765m
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All specialise in different niche market segments and have their unique brand
What is an agency?
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Agencies act on behalf of general insurers to design, develop and provide specialised insurance products and services for specific market segments
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In consultation with the underwriters, they determine the risk price and risk coverage and manage the underwriting process
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Around 50% of our agencies sell through non-Steadfast brokers
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Most of their products are sold through insurance brokers
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They do not take on any underwriting risk or capital risk
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© 2016 Steadfast Group Limited | 38
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Steadfast Underwriting Agencies Simon Lightbody – CEO of Steadfast Underwriting Agencies
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Steadfast Investor Presentation – June 2016 Michael Murphy – Chief Executive Officer
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5+ years as CEO of UAA (appointed CEO in January 2011)
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Expertise in strategic planning, analytical skills and client relationship management
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35 years in the financial services sector, including:
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10 years at Citigroup, including Head of Sales and Distribution (Australia & New Zealand)
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25 years’ experience in third party distribution (Brokers)
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Founded in 1972 in Newcastle, NSW
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Transformed into an underwriting agency in 1988
-
Specialises in mobile plant protection
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1 July 2008, purchased by QBE due to its specialist skills but remained as an independent operating underwriting agency which maintained its brand and ability to be nimble and productive
-
1 April 2015, purchased by Steadfast Group
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10 year distribution agreement signed with QBE (Australia & New Zealand)
-
Steadfast sold 10% to the UAA management team
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• Market leading insurance specialists in mobile plant and equipment (cranes, heavy equipment, machinery, etc.)
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Products underwritten by QBE
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Distribution through insurance brokers and =TBA
-
other intermediaries
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52 staff in offices in Newcastle (head office), Sydney, Brisbane, Perth, Melbourne, Adelaide & New Zealand
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UAA operations in Australia, New Zealand and Singapore
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QBE branded products supported by UAA’s IP - Chile, Hong Kong & Macau, Brazil, Mexico, Colombia, Ecuador and PNG
-
Expansion opportunities in Indonesia, Malaysia & Philippines (all UAA branded)
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Clean and smooth transition from QBE to Steadfast
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Increase in distribution from non-Steadfast brokers
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Policy count up 7%
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Staff morale at an all time high
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Non- Steadfast
Steadfast brokers
GWP
brokers 40%
distribution
60%
split
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-
UAA Queensland named ‘Underwriting Agency of the Year’ by the Council of Queensland Insurance Brokers (CQIB) eight years in a row
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Increased utilisation of QBE Group Shared Services Centre (GSSC) in Manilla for claims processing and back office functions
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Successful launch into New Zealand
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Established Underwriting Agencies of Asia Pte Ltd to roll out Asian expansion
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CHU Underwriting Agencies
Steadfast Investor Presentation – June 2016 Bobby Lehane – Chief Executive Officer
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Appointed CEO of CHU on 1 April 2015, upon Steadfast acquiring the agency from QBE
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Previously Executive General Manager of SME and Commercial Insurance at Zurich Financial Services Australia
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7 years at Zurich, including roles as CIO for Asia Pacific & Middle East and COO of APAC General Insurance
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12 years in technology-related roles at Multiplex, Commonwealth Bank and Lehman Brothers in London and Tokyo
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-
Founded in 1978
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Market leading strata insurance specialist, underwriting more than 100,000 schemes across Australia (residential and commercial)
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Five offices across Australia
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Underwritten by QBE (10 year distribution agreement signed with Steadfast on 1 April 2015)
What is strata?
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Strata title allows individual ownership of part of a property, combined with shared ownership in the remainder through a legal entity called the owners corporation — or body corporate, strata company or community association
-
The concept came into being 50 years ago and there are now more than 270,000 such schemes, encompassing more than two million individual lots across Australia
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Opportunities
-
Strong brand reputation within strata niche
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Very loyal authorised representative network
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Skilled people
-
Underlying growth in the Australian retail and commercial strata markets due to population growth and increased complexity of strata titles
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Threats
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Business shrinking (i.e. policy count) due to inflexible pricing model
-
Influx of new competitors gaining market share with lower prices
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Low staff morale
-
Ineffective IT infrastructure
-
Inefficient claims management
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Under-represented by the broker channel
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Direct
6%
Non- Steadfast
brokers Strata
25% managers
GWP
55%
distribution
split
Steadfast
brokers
14%
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-
Stopped the decline in GWP and started policy count growth by re-engaging the market
-
Greater autonomy as part of Steadfast to respond to pricing, etc
-
More customer centric/sales-focused
-
Re-engaged staff with united vision and sense of purpose
-
Transitioned off QBE’s IT infrastructure
-
Accelerated delivery of integration synergies and expense management
-
Increased use of brokers as distributors of product
Direct 5%
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Non-Steadfast
Strata
brokers
managers
28% GWP
43%
distribution
split
Steadfast
brokers
24%
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Initiated claims remediation
-
Expanded into far north Queensland and the Northern Territory
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Fix It allows you to quickly and easily submit a claim without the need to fill out lengthy forms
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Snap a few photos or upload them from your gallery
-
GPS finds your exact location, or you can enter a new one
-
Submit your report from anywhere at anytime
-
Get notified of updates on your claims as they happen
-
Pay It : make a policy payment quickly and easily online
-
Check It : instantly request a certificate of currency
-
Agent/Broker Log In : registered agents and brokers can log in for quotes, claims history, etc.
-
CHU 24 Hour Assist : reach CHU’s 24 hour assistance line for urgent repairs
-
CHU Locations : contact one of CHU’s offices using a full list of phone numbers and email addresses
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My Reports : view your saved and sent ‘Fix It’ reports
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Extend product Extend digital range footprint
Complete claims remediation
Deepen relationships with key intermediaries
Extend Streamline Reclaim lost geographic claims direct business footprint & UW functions
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Key takeaways Robert Kelly – Managing Director & CEO
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Key takeaways
-
Steadfast owns a market leading technology business that is core to our value proposition
-
Steadfast Underwriting Agencies London Binder is expected to create significant growth opportunities for all parties involved
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UAA & CHU are both performing ahead of expectations due to strong leadership, a productive partnership with QBE and a focus on growth opportunities
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Re-affirm FY16 guidance (underlying cash EPS growth guidance range of 10%14% and underlying NPATA guidance range of $80m-$83m, up 41-46%)[1]
-
FY16 results to be released on 24 August 2016
1 Key assumptions include flat market conditions and no material acquisitions. Also refer to the key risks on pages 26-27 of Steadfast’s 2015 Annual Report.
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© 2016 Steadfast Group Limited | 53
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Questions
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