Westpac says its strategy of cross-selling wealth and insurance products is starting to reap rewards, although its BT Financial Group reported a 10% fall in profit to $653 million for the year to September 30.

The bank says BT increased earnings by 17% in the second half, primarily due to its insurance arm benefitting from higher premiums and lower claims. But the year was affected by lower markets, a fall in the equities business and the de-risking of the lenders mortgage insurance (LMI) business.

BT’s operating expenses rose 13% for the year to $1.13 billion.

Cash earnings – after tax and expenses – from insurance rose 11% to $220 million. This included a 14% rise in life insurance to $138 million, general insurance earnings growth from $5 million to $36 million and a 37% drop in LMI earnings to $46 million.

The rise in insurance earnings offset a 22% fall in funds management profits to $357 million.

Life insurance sales rose 43% to $173 million while gross written premium from general insurance rose 16% to $356 million.

Westpac CEO Gail Kelly says BT led the market in net market flows of funds into its platforms “and continued its strong insurance cross-sell”.

The underlying performance was supported by growth in the planner network and the strong insurance profits.

Westpac says expansion into the independent and aligned planner network has led to solid growth of life insurance inforce premiums and new business.

LMI premiums dropped after Westpac cut business on loans with a loan-to-valuation ratio higher than 90%.

Westpac Group’s annual profit fell 15% to $5.97 billion.