Calliden is on track to deliver a full year profit of $1-$3 million this year, due to higher reinsurance and the costs of moving to a managing agency model.

CEO Nick Kirk told last week’s AGM that 2012 was always going to be a transition year and it will take time for the benefits of the group’s transformation to flow through to profits.

He says the transition to half the business coming from agency earnings has been slower than he would like, but the company will proceed with agency deals as they make financial sense.

Mr Kirk says home, strata and farm insurance have all experienced double-digit increases in premium this year although business pack sales have been more mixed in a fiercely competitive market.

The company has decreased commission expenses by one percentage point over 2011.

Mr Kirk says Calliden is limiting growth in some geographic areas to reduce its exposure to catastrophes, given the higher cost of reinsurance. It will discontinue its landlords home insurance product from mid-year.

Strategies to manage expenses and exposure mean gross written premium this year could be flat or reduced slightly.

“I would expect the transition to be finished during 2013,” he told shareholders at the AGM. “It is a long road back to profitability, but I believe the future beyond that will be good for shareholders and it is the best option from here to make that transition.”