According to a report in the Australian Financial Review, QBE Insurance (ASX: QBE) has grabbed a 2% stake in broker Steadfast Group (ASX: SDF) during the recent share market float. QBE is no stranger to Steadfast given the insurer writes a lot of business through the broker. It's also not uncommon for insurers to take positions in broking firms — QBE also has a 13.5% shareholding in listed broker Austbrokers (ASX: AUB). Austbrokers also counts insurer Allianz as a substantial shareholder with 9%.
QBE and other shareholders in Steadfast will certainly be pleased that they took part in the initial public offering (IPO). The broker has had a stellar performance since listing with its share price trading up as high as $1.50, well above the IPO price of $1.15. Joint lead managers for the float JP Morgan and Macquarie Group (ASX: MQG) will no doubt be breathing a sigh of relief, particularly in light of the poor performance of some other recent IPOs.
The insurance sector is looking appealing on a number of fronts. With fewer extreme weather events and a hardening pricing environment the insurance sector appears well positioned, countering this however is a lower interest rate environment which will put further pressure on investment returns.
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Motley Fool contributor Tim McArthur owns shares in QBE Insurance.
