Westpac’s wealth management and insurance business BT Financial Group Australia (BT) has posted a 12% decline in full year net profit as the business weathered torrid investment markets and higher insurance claims.

Net profit was $389 million for the year ending September 30.

Westpac CEO Gail Kelly says the group’s general insurance division also experienced an increase in severe weather claim events of $13 million, and an increase in lenders mortgage insurance claims to $10 million, up from $7 million in the prior year.

She says the group’s insurance result “reflects the impact of the adverse economic environment”.

Expenses increased 12%, with $4 million due to increased volumes, higher claims costs and an increase in cross-selling initiatives and distribution.

Despite its high claims, the insurance business delivered cash earnings of $147 million for the year ending September 30, an increase of 6% compared to the previous year.

Net operating income for the year increased by 8% to $295 million, driven by growth in life insurance from increased sales, including new sales made through the BT funds platform.

General insurance net operating income increased by 1% to $131 million due to growth in home and contents business.