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Revenue up, profitability down at Wesfarmers Insurance

Improved revenues from the Wesfarmers Insurance division have contributed to a 46% increase in parent company half-year net profit of $879 million.

In a report issued this morning, the Wesfarmers group says its insurance operations – Lumley, Wesfarmers Federated Insurance, OAMPS and Crombie Lockwood – generated $864 million in revenue during the half-year to December 31, up 8.1% from the previous corresponding period.

Gross written premium climbed 10% to $679 million, while broking revenue edged 1% forward to $104 million.

Gross profit from insurance operations climbed almost 5% to $67 million.

Rising claims have combined to drag profitability with the combined ratio deteriorating from 98.1% to 99.4%.

The company says claims from the Victoria bushfires are expected to impact Wesfarmers Insurance profits by $13 million. Reduced interest rates are also expected to dampen investments, which are mostly held in bank bills and term deposits.

Improved underwriting performance is expected to help offset those trends as markets harden.