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PSC Insurance Group Ltd PSI

Morningstar Rating
A$6.05 +0.01 (0.17%)
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Company Report

Acquisition by Ardonagh Should Proceed Given Attractive Premium to Fair Value

PSC Insurance is an intermediary between small and large companies and insurers, enjoying a high level of recurring revenue given sticky customer relationships and insurance essentially seen as a necessity. Primarily operating in Australia, New Zealand, and the UK, PSC owns broker and underwriting businesses, and runs a network for independent brokers to access the benefits of being part of a larger group. PSC has made modest investment in Hong Kong, with future acquisitions likely if initial investments perform well and management gain better insight and comfort with the businesses. We estimate PSC accounts for around 3% of the intermediated general insurance market in Australia (in terms of gross written premium), much smaller than Steadfast and AUB Group.

Price vs Fair Value

PSI is trading within a range we consider fairly valued.
Price
A$6.04
Fair Value
A$3.87
Uncertainty
Medium
1-Star Price
A$8.19
5-Star Price
A$2.23
Economic Moat
Mdbpb
Capital Allocation
Tpvynkl

Bulls Say, Bears Say

Bulls

PSC's customer base and expertise in insurance products and services leave it well placed to benefit from higher insurance pricing. Commissions should increase as more customers seek expertise to navigate rising costs.

Bears

Insurance volumes and prices are closely tied to the insurance cycle and general economic conditions. Downside risk could increase in a recession.

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Trading Information

Previous Close Price
A$6.04
Day Range
A$6.056.06
52-Week Range
A$4.206.09
Bid/Ask
A$6.05 / A$6.06
Market Cap
A$2.20 Bil
Volume/Avg
924,461 / 775,541

Key Statistics

Price/Earnings (Normalized)
29.68
Price/Sales
7.09
Dividend Yield (Trailing)
2.32%
Dividend Yield (Forward)
2.32%
Total Yield
2.32%

Company Profile

PSC Insurance Group is an insurance intermediary which owns broker and underwriting businesses in Australia, New Zealand and the UK. It also runs the third largest broker network in Australia, allowing independent brokers to access support services for a fee. PSC Insurance derives most of its revenue from commissions (from insurers, ultimately paid for by PSC’s customers) based on gross written premium. Broker GWP is split between small to medium enterprises (45%), and corporates (55%). The UK business spans retail and wholesale broking, underwriting agencies, and managing agents which have the authority to underwrite on behalf of insurers.
Sector
Financial Services
Industry
Insurance Brokers
Stock Style Box
Mid Growth
Total Number of Employees

Competitors

Valuation

Metric
PSI
SDF
AUB
Price/Earnings (Normalized)
29.6828.8331.21
Price/Book Value
4.672.882.78
Price/Sales
7.095.703.78
Price/Cash Flow
28.3422.8827.77
Price/Earnings
PSI
SDF
AUB

Financial Strength

Metric
PSI
SDF
AUB
Quick Ratio
1.021.481.12
Current Ratio
1.211.501.14
Interest Coverage
7.895.852.73
Quick Ratio
PSI
SDF
AUB

Profitability

Metric
PSI
SDF
AUB
Return on Assets (Normalized)
7.61%4.40%4.12%
Return on Equity (Normalized)
18.04%10.53%12.91%
Return on Invested Capital (Normalized)
12.05%4.35%9.59%
Return on Assets
PSI
SDF
AUB
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1-Day Chart
Name
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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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