Calliden is on course to hit this year’s target of $10 million net profit as it manages the transition from pure underwriter to hybrid managing general agent.

CEO Nick Kirk set the target at last year’s AGM, to show shareholders what the new strategy could deliver.

“If there was a reason for us not to hit the $10 million, then we would have had to say something to the market,” Mr Kirk told insuranceNEWS.com.au last week.

The target is split between Calliden Agency Services (45%), Calliden Insurance (45%) and joint ventures (10%).

Lower-than-estimated premium and policy numbers are the biggest potential obstacles to the agency business hitting it.

On the insurance side, natural catastrophes, increased non-catastrophe claims costs and worse-than-expected claims development are threats.

The transition to the new model is almost complete, Mr Kirk says. He predicts 80% of the target sum will be made in the second half of the year.

“Most of the heavy lifting has been done. We are gradually moving portfolios over. Most of it is in place and the rest is lined up and on schedule.

“So far it has gone as smoothly as can be expected. There are always challenges when you make wholesale changes but it has gone remarkably well.”

Mr Kirk will not give a profit target for next year but says he predicts another rise and expects to make a 12.5% return on equity in a few years.

“As our equity is about $100 million, that would equate to a $12.5 million profit.”