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PSC Insurance Group Ltd

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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation

PSC Insurance Earnings: Soft UK Result but Organic Growth Elsewhere and Acquisitions Carry Earnings

PSC Insurance reported a solid first-half fiscal 2024 result and modestly increased full-year guidance. While 12% EBITDA growth is strong, premium rate increases and acquisitions help mask weakness in the United Kingdom. It has been all one-way with premiums for several years, but softer market conditions in cyber and mergers and acquisitions insurance lines kept UK earnings relatively flat. Encouragingly, management noted signs of a recovery with the recent decline reflective of market activity. Less demand results in premium rates falling, and operating leverage for an insurance broking business hurts on the way down. Narrow-moat PSC being diverse across regions and products helps offset weakness and, in particular, the insurance line. There could be a silver lining in the fact that more challenging times bring a renewed focus on discipline, both in chasing new customers and servicing existing customers.

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