Steadfast CEO Robert Kelly says the acquisition of privately owned ISU Group, a U.S. insurance network, is the company’s biggest in terms of potential. Steadfast is Australasia’s largest general insurance broker network.
Steadfast has paid $55 million (USD) to fully acquire privately owned ISU Group, which is based in South Carolina and has network members located across more than 40 states.
“In terms of cost, we’ve done four or five-times bigger transactions, so in terms of deploying capital it’s nowhere near the biggest. In terms of potential, it’s the biggest because it gives us a footprint in the biggest insurance market,” Mr Kelly told insuranceNEWS.com.au today.
ISU, which started as a franchise more than 40 years ago, has become one of the largest agency networks in the U.S., with about 220 members and partnerships with over 75 insurance carriers and wholesalers.
Mr. Kelly says Steadfast, before it listed and introduced its trapped capital equity acquisition program, faced members sometimes looking to leave because of a lack of a buyer, and ISU today is in a similar position because of the lack of a succession program.
“We’ll be able to provide that now to that network, and we’ll also have the ability to look at bringing our software into the U.S. market via our own network,” he said.
“It’s a toe in the water for us, and allows us to not bet the farm on what we’re doing, and gives us the opportunity to prove that what we are doing will be very fruitful, in terms of rolling out a lot of the services and things that have made Steadfast great, through a successful network in North America.”
ISU doesn’t have managing general agencies, its broking members operate independently in their local markets with network support, and there’s no equity ownership.
Part of Steadfast’s work on U.S. opportunities over the past few years has involved looking at the potential to monetise its software system in larger markets.
Mr. Kelly is currently Chairman of the US-based insurance data standards body the Association for Cooperative Operations Research and Development (ACORD) and says he has built up knowledge of the U.S. market over the past 14 years.
Steadfast has been investigating options to expand in the U.S. over the past five years, with a more concerted effort over the past 18 months, the company said today.
“We looked at a whole range of potential acquisitions, we’ve looked at acquiring a slice of a major business over there, and we looked at another five business and we chose to go down the ISU route,” Mr. Kelly said.
Steadfast says the U.S. has a network model that is operationally and culturally aligned with its Australasian model and there’s potential for Steadfast to enhance and extend ISU’s product and service offering to members.
“ISU is an excellent fit for us,” Mr. Kelly said. “They bring a stellar management team and existing scale, and we share complementary values with our people and clients. This was an essential consideration for us.”
The transaction was completed today.