The Victorian Managed Insurance Authority (VMIA) has reported a $244 million operating profit for the year to June 30, driven by surging investment income and a drop in claims and expenses.

It follows a $319.92 million loss the previous year, when the authority incurred investment and flood losses and took on Department of Health liabilities.

The State Government risk manager and insurer earned gross written premium of $309.5 million in the year, up 7%. It insured $144 billion of assets across 4500 public sector entities.

VMIA has also reported an underwriting profit of $17.76 million, compared with a loss of $382.8 million the previous year.

Claims and expenses fell to $318.06 million from $708.05 million thanks to releases from expected claims liabilities, some of which related to lower-than-expected asbestos claims.

Investment income grew to $226 million from $62.9 million.

CEO Warren Hutcheon says major claims relate to natural disasters and class actions concerning floods and bushfires. “Professional indemnity is emerging as a growing driver of claims.”

Medical indemnity accounts for more than 60% of claims liabilities, but there are favourable trends in the portfolio.

Performance from insurance operations, a measure VMIA uses to reflect elements of profit it can control, was $47.5 million, up 30%.

Chairman John Peberdy says the funding ratio was 95% at June 30, up from 80% due to improved investment returns and revaluation of long-term claims liabilities.

“VMIA is in a solid financial position to recover to 100% funding ratio within five years,” he said.