Wesfarmers says the performance of its insurance underwriting business “remains sound” following a strong half-year result, while earnings in the broking business have been affected by challenging conditions in Australia and higher costs.

Overall the insurance market is “getting better” in the absence of significant claims, Wesfarmers MD Richard Goyder says.

“We would expect continued improvement in that business,” he told a strategy briefing last week.

Coles Insurance is showing strong growth, claims from natural perils are in line with internal allowances and reinsurance rates are expected to be stable on renewal at July 1.

Premium rate rises continued at a “more modest” rate into the second half of the financial year.

But lower interest rates are affecting investment returns, Wesfarmers warns.

And challenging conditions for small and medium-sized enterprises and broking system upgrade costs are affecting broking earnings.

Wesfarmers says it will continue to consider “bolt-on” broking acquisitions.

In February the division reported an operating profit of $110 million for the six months to December 31, up from $23 million in the previous corresponding period.

Earnings before interest, tax and amortisation from underwriting were $72 million, while earnings before interest, taxes, depreciation and amortisation in the OAMPS and Crombie Lockwood broking business were $38 million.

Anthony Gianotti remains Acting MD of Wesfarmers Insurance after Rob Scott left the role in February to become Finance Director for Coles Supermarkets.

The company is still seeking a permanent replacement. A spokesman told insuranceNEWS.com.au it will consider external and internal candidates, with no timeframe for a decision.