Hailstorms in Sydney and Gympie in Queensland cost Youi a combined $17 million in the December half.

The storm bill hit Youi’s Australian business, as operating profit fell 9.8% to $46 million and normalised earnings dropped 11.1% to $32 million.

The claims ratio worsened to 56.2% from 55.4% and the combined operating ratio moved to 86.9% from 84.9%.

Gross written premium (GWP) grew 2.9% to $351 million, while net earned premium was flat at $310 million.

Increased expenses in the first half took the cost-to-income ratio to 30.7% from 29.5%.

Parent group Outsurance Holdings says the expenses involved large investments in support infrastructure, call centre capacity and marketing capacity to drive new business.

Regulatory compliance expenses also contributed to the jump in cost-to-income ratio.

Youi’s New Zealand arm returned to the black with a $500,000 operating profit, following a $1 million loss in the corresponding period of 2017.

GWP fell 8.3% to $11 million, but net earned premium remained at $3 million.

The claims ratio improved to 46.6% from 53.7%.