Church and heritage insurer Ecclesiastical says its Australian Ansvar business posted a £1.3 million ($2.2 million) first-half underwriting loss after interest rates weakened, despite consistent performance in the underlying operations.

The loss – compared with a profit of about £139,000 ($170,000) in the first half last year – was mostly driven by a fall in discount rates applied to claims reserves held for long-tail risks, the company says.

Ansvar CEO Warren Hutcheon says the underwriting result was also affected by the east coast low storms in June.

“Market conditions are competitive,” he told insuranceNEWS.com.au. “However, our retention rates remain strong and we are seeing some improvement in pricing, particularly for commercial property accounts. We expect to see property pricing increase further [into next year].”

Gross written premium (GWP) fell to £18 million ($30.6 million) in the half from £19.7 million ($33.5 million), while in local currency terms GWP declined 9%.

A decision was taken not to renew one large, poorly performing account as part of ongoing portfolio remediation and a focus on profit over growth, the company says.

“New business and rate increases are in line with our expectations,” it said.

UK-based Ecclesiastical’s group profit before tax fell to £15.2 million ($25.8 million) from £35.3 million ($60 million), while GWP eased to £151.8 million ($258.1 million) from £153.9 million ($261.7 million).

The combined operating ratio in the first half blew out to 94.8% from 85.8%.

CEO Mark Hews says Ecclesiastical has delivered a strong financial performance, despite the Fort McMurray wildfires in Alberta pushing the Canadian branch to a net loss.

More widely, the company says general insurance markets remain competitive.

“Soft market prices are continuing, while low interest rates and an absence of significant natural catastrophes are increasing the competitive pressures in many areas, particularly commercial property insurance in all our territories.”