Centrepoint Alliance’s premium funding operations made an after-tax profit of $1.64 million for the year to June 30, while the parent reported a loss due to its wealth management business.

Premium funding operations more than doubled profit from last year’s $558,000, while the advisory services arm made a $9.62 million loss and financial products a $1.1 million profit.

MD Tony Robinson says an improved trading performance means Centrepoint’s premium funding business has negotiated with National Australia Bank improved lending margins, reduced covenant obligations and a variable limit to match the seasonal nature of the business.

“The insurance premium funding division is expected to continue its strong performance in the coming year,” he said.

The Centrepoint Alliance group made a $17.3 million loss, mostly related to issues with the investment advisory business Professional Investment Services (PIS), acquired in December 2010.

Revenue was up 6% to $62.09 million.

Centrepoint made a $13.1 million loss last year, which it blamed on legacy issues from PIS.

It says this year’s loss reflects writedowns and costs from an enforceable undertaking with the Australian Securities and Investments Commission (ASIC) relating to PIS.

The undertaking, made in December 2010, was completed in March and the independent expert’s report and response from PIS were presented to the regulator in April.

“A formal response has yet to be issued by ASIC and there is still a risk it may impose operating conditions or potentially suspend or withdraw PIS’s Australian financial services licence, which would mean it would not be able to continue its operations,” the company said.

Centrepoint has increased its provision for client claims on PIS by $11 million to $22.08 million after appointing an independent actuary to provision for reported and unreported claims.

It paid $11 million of claims during the year.

PIS has been renamed Centrepoint Wealth and the company says legacy claims relate to advice given before 2008.

“Trading results pre the major legacy costs show a materially different and relatively positive position,” the company says. “The premium funding business continues to show its capabilities as it regrows profit and market share.”

Mr Robinson says considerable progress has been made across the group “and particularly in the Centrepoint Wealth division” to organise, reposition and strengthen core business operations.