Wesfarmers’ insurance operation delivered a record performance in its final year under the group’s ownership, according to divisional MD Anthony Gianotti.

A 7% increase in earnings before interest and tax (EBIT) to $220 million contains only 11 months of profit from the broking operations and includes a $45 million top-up for reserve estimates from the February 2011 Christchurch earthquake.

Wesfarmers finalised the sale of its underwriting business to IAG on June 30 and its broking business to Arthur J Gallagher on June 16, but says insurance earnings grew because of sales through Coles, improved loss ratios and fewer claims.

Mr Gianotti told the Wesfarmers group results briefing that Coles had more than 350,000 policies in force at June 30, compared with 200,000 a year earlier.

The insurance division grew revenue by 4% to $2.17 billion, with underwriting EBIT rising 24% to $168 million and 11 months of broking and premium funding delivering a 24% drop to $65 million – or a 10% increase on a like-for-like basis.

The combined operating ratio, excluding the earthquake provision, improved to 90.4% from 95.3%.

Gross written premium gained 7% to $1.76 billion despite falling rates in commercial classes, mostly due to Coles, the Australian rural portfolio, New Zealand operations and favourable currency movements.

New Zealand reported strong growth, while challenging conditions for SMEs and soft rates constrained growth in Australia.

Mr Gianotti says the average rate increase across the Australian portfolio was 3.2%, while the New Zealand portfolio achieved 2.5%.

Wesfarmers made a $939 million post-tax gain on the sale of its insurance operations.