Rising insurance premiums have flowed through to the Australian Reinsurance Pool Corporation, which made an operating profit of $83.49 million for the 12 months to June 30, up 36% on the previous year.

Gross written premium (GWP) rose 10.8% to $124.71 million, its annual report shows.

The pool was established under the Terrorism Insurance Act in 2003 after the September 11 2001 attacks on the US, when terrorism insurance was withdrawn from global markets, forcing governments to provide cover to insurers.

It was established as a temporary measure until the market could respond but CEO David Matcham says that nine years on, “the need for the scheme has not diminished. What was set up as a temporary solution to market failure clearly has a long life to run.”

In this year’s budget the Federal Government took a $175 million dividend from the scheme – the first part of a $400 million payment to be made over four years from January.

Accounting for the dividend reduced the reserve for claims to $338.4 million from $665.85 million.

The pool has retrocession cover of $2.76 billion and a Commonwealth Government guarantee for $10 billion. Retrocession costs fell 3% to $81.6 million. This, plus higher GWP, reduced the net expense ratio to 14.56% from 20.49%.