Local insurer Assetinsure recorded net profit of $4.86 million in 2012 – a rise of 11.7% on the previous year – despite a slump in the construction industry that cost the firm more than $4 million.

The company’s annual report details “another consistent performance” and says it has “carved out a niche as the specialist insurance group in the Australian insurance sector”.

It predicts the market will harden this year in response to the catastrophes of 2011 and early 2013, and adds that Assetinsure “is well positioned to benefit from this global trend”.

The company’s solvency remains strong and “well above the level maintained by many peers”.

Gross written premium (GWP) from direct insurance or inward reinsurance was $56.5 million, up from $50.7 million in 2011.

Including the agency business – the fastest-growing part of the company – GWP stood at $103.2 million, compared to $90.6 million the previous year.

The company’s investment activities generated $6.38 million compared to 2011’s figure of $6.63 million.

Claims paid totalled $36.34 million, up from $34.94 million, and recorded revenue was $76.67 million, down from $98.05 million.

A major factor in the revenue fall was 2011’s catastrophe losses that generated substantial reinsurance recovery revenue not repeated in the relatively benign climate of 2012.

Assetinsure CEO Gregor Pfitzer told insuranceNEWS.com.au the company’s results are in part due to the emphasis it places on “the art of underwriting”.

“We have gathered a lot of experience that helps us assess and price exposures prudently,” he said.

He also believes the business model based on diversification across portfolios is now bearing fruit, and that non-volatile income streams – such as agency commission income and providing IT services to third parties – are providing additional earnings stability.