Calliden has revealed plans to enter niche personal lines, after profit soared during its transition from underwriting only to a managing general agency-niche insurer model.

CEO Nick Kirk says the company is investing in technology to connect to broker platforms and plans to link to the Steadfast Virtual Underwriter in the second half of the year.

He told Friday’s profit briefing the “newly corporatised” broking industry is looking for a greater choice of carriers and greater efficiency. Insurers will use Calliden for access to broker distribution at a variable cost and because it offers the strength of a licensed insurer, he says.

The company increased profit to $6.15 million the year to December 31, up from $1.09 million.

Mr Kirk has forecast a profit of $7.5-$9.5 million this year.

The agency business almost trebled gross written premium (GWP) to $151 million, while commission and fee revenue increased 109% to $39.2 million, reflecting a full year of agency commission and the introduction of fees on major lines.

The division’s profit grew to $8.2 million from $1.1 million.

The insurance division’s GWP fell 40% to $93.6 million as Calliden quit business pack, farm and strata underwriting. It made an insurance profit of $2.6 million, down from $5.5 million in 2012.

The profit came despite $4.2 million of builders’ warranty claims, with the slowdown in the building industry leading to increased insolvency, and claims from business in run-off.

The combined operating ratio was 102.5%, compared with 99.6% in 2012. Mr Kirk says the company is aiming for 95-100% this year.

Joint venture strata agency QUS grew GWP by 53% to $29.2 million, and Calliden’s share of profit doubled to $600,000 as business increased following the transfer of underwriting to WR Berkley in January last year.

Calliden will launch the new personal lines joint venture in the second half, which will be underwritten by its insurance arm.

Mr Kirk would not provide further details but told insuranceNEWS.com.au the large market shares held by major insurers provide an opportunity for niche players.

“Margins in personal lines are pretty good at the moment,” he said, noting that rate growth is flattening.

There are signs of commercial rates softening, “but in the sectors we are in it is not as pronounced as has been commented on elsewhere. There is scope to increase the breadth of our offering to brokers by introducing new products and new carriers.”