Wesfarmers Insurance has reported a major profit turnaround after a year of premium increases and fewer natural disasters.

MD Anthony Gianotti says the rewards of underwriting discipline and rate rises are starting to show, producing a result that is “pleasing, and heading in the right direction”.

The insurance arm posted earnings before interest and tax of $205 million in the year to June 30, up from $5 million the previous year, which was affected by the Canterbury earthquakes. Revenue grew 9% to $2.08 billion.

Coles Insurance posted a strong result, with “substantial increases” in sales of motor and home products and more than 200,000 policies in force at June 30. It expects continued growth this year and will extend its intensive “little red quote” motor insurance campaign to home cover.

Wesfarmers Insurance underwriting operations posted earnings before interest, tax and amortisation (EBITA) of $136 million, recovering from a $58 million loss previously.

Gross written premium grew 9% to $1.64 billion and the combined ratio improved to 95.3% from 111.2%.

“Australian and New Zealand business posted a significant improvement in profitability,” Mr Gianotti told insuranceNEWS.com.au.

Property rate growth is expected to slow across Australia and New Zealand after a couple of years of significant increases, he says.

Broking EBITA grew 9% to $86 million on strong revenue and the contribution from New Zealand, but tougher conditions for Australian small and medium enterprises constrained OAMPs.

Mr Gianotti expects this trend to continue, although further investment in broking systems will limit profit growth this year.

The broking arm continues to pursue bolt-on acquisitions, particularly in Australia, while focusing on integrating Crombie Lockwood, FMR and ACM Ahlers in New Zealand.

Mr Gianotti says the Steadfast float caused some uncertainty among brokers considering succession. Now it is complete, more owners will be ready to make a decision.

He says the Wesfarmers brand is an attraction, and there is a “value proposition” in terms of culture and training. “We provide a far more holistic approach to the people we bring into the business.”

Mr Gianotti told insuranceNEWS.com.au Wesfarmers has no plans to sell any parts of the insurance business.