Soft market conditions are likely to improve this year, Assetinsure says in its 2011 annual report.

The company reported a 12% fall in profit to $4.3 million last year, a result the management describes as “creditable” given the year’s disasters.

COO Gregor Pfitzer told insuranceNEWS.com.au there are signs of some commercial lines turning after a highly competitive market last year, although liability has yet to move much.

He says the company ended last year with higher solvency and without “mortgaging our future” by claiming on its catastrophe reinsurance.

Assetinsure incurred $10.1 million in additional claims from the year’s catastrophes, or $2.5 million after reinsurance. But the annual report says it provides limited flood cover, and none of the events caused enough loss to trigger a claim on its catastrophe reinsurance program.

Revenue rose 15% to $98 million.

Gross written premium (GWP) from direct insurance and inward reinsurance fell 11% to $50.9 million, with the company saying it had quit a motor business line that generated $10 million in gross premium but was unprofitable.

When gross premium from the underwriting agency business was included, GWP rose 8% to $90.6 million.

Directors say the underwriting agency accounted for most growth, earning $46.9 million GWP for insurers, up 44%. Assetinsure’s reinsurance premium income from agency business increased 22% to $7 million.

Agency fees, cost recovery and other fee income rose 42% to $9.4 million, reflecting growth in the underwriting agency and expansion of the IT business.

The report says the operating company has no debt and the holding company has $5 million in subordinated debt, which is partially allowable as equity for solvency purposes.

“Consequently, the company can continue to expand its direct insurance business in the coming years without the need for additional capital input.”

Mr Pfitzer says the company is likely to continue to grow organically rather than by acquisition.