Calliden Group expects to report an after-tax profit in the order of $10 million when it releases its full-year result on February 24, turning around a loss of $400,000 in 2009.

The listed company says the result will include the cost of weather events across Australia in December, which it has estimated at $3.5 million, with a net cost after reinsurance recoveries of $2.1 million.

Calliden has so far received gross claims of $14 million from the Lockyer Valley and Brisbane floods, but says its net exposure is capped at $2 million.

Exposure to the regional Victorian floods is estimated at $1.1 million. Reported claims from the Victorian storms over February 5 and 6 stand at $1.8 million, with a maximum exposure of $2 million under the group’s reinsurance arrangements.

CEO Nick Kirk told insuranceNEWS.com.au today that Calliden decided to give the profit guidance because it needed to inform the market about its flood exposure.

He says the strong improvement in the profit reflects premium rate increases and underwriting enhancements which have driven improved underlying claims ratios.

The stronger profit and cashflow enabled the group the pay down its bank loan from $25 million to $5 million during the second half.

Although the result will include the recovery from Calliden’s court case over its purchase of Australian Unity’s general insurance business, this will be more than offset by a liability adequacy test expense in the second half, lower than expected rates of return on investments and some restructuring costs.

Calliden says its exposure to Cyclone Yasi and the Western Australian bushfires is likely to be limited.