Centrepoint Alliance’s insurance premium funding arm suffered a 15% drop in underlying pre-tax profit to $1.4 million for the six months to December 31, dragged down by lower commercial rates.

Revenue earned in the first-half of the financial year fell 10% to $8.6 million, and interest income fell to $7.7 million from $8.5 million in the corresponding period of 2014.

Expenses declined 8% to $7.2 million as borrowing costs decreased.

Business continued to be affected by weakness in the commercial market and volume declines in WA, the company says.

Premium-funded loan volume was down 1% to $212 million, while the number of active brokers increased 6% to 389.

On the positive side, premiums funded in the eastern states enjoyed strong organic growth of 12%, and the business wrote a record 15,000 loans during the period.

“From an economic perspective, our portfolio change towards the east coast has been positive and has reduced the concentration risk we had with mining and resource industry borrowers,” Premium Funding CEO Bob Dodd told insuranceNEWS.com.au.

“We see an upward trend in the number of brokers supporting us, and a record number of loan transactions.”

Premiums appear to have stabilised late last year and there is growing confidence rates may increase at the end of this year, Centrepoint Alliance says.

The half-year report card is a reflection of “current industry trends in the commercial insurance premium funding market… [and a] continued challenging market environment for premium funding”.

The company says it has about a 9% share of the $4.6 billion insurance premium funding market, which is estimated to have shrunk by 7% last year due to premium cuts.

At the group level, Centrepoint Alliance’s overall revenue fell 8% to $24 million and underlying pre-tax profit slid 26% to $3.2 million.

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