, fresh from revealing it is to be acquired by Steadfast, has reported that agency profit more than doubled in the six months ended 30 June to $4.4.m, from $2m in the previous corresponding period.
attributed this to the benefits of transitioning the business to a managing general agency model.
Net profit after tax also increased, from $2m to $2.8m. Nick Kirk, Calliden
’s CEO and managing director attributed to the profit increase to the growth of the agency revenue. He attributed the agency revenue growth to strong growth in some of the portfolios and the fact Calliden
had a full six months of implementing fees across all of the agency portfolios.
Insurance profit took a dive, falling from $2.9m in 2013 to $0.8m. Calliden
said this was “consistent with the shift away from underwriting risk through Calliden
Kirk explained that as the agency profit had increased, the insurance profit had fallen and this was expected as Calliden
had reduced revenue in the insurer and increased revenue in the agency business.
“On top of that, although we’ve had very good natural catastrophe experience in the first six months, we still had some adverse experience in the run-off portfolios. The underwritten builders warranty was about $1.1m worse than expected and then we had an unexpected blast from the past claim [with an estimated value of between $700,000 and $800,000]. That and the movement in the discount rate meant that it was about $400,000 adverse to what we’d expected in total in the insurer.”
Gross written premium also fell 8% to $49.4m, reflecting the transfer of further scheme portfolios to an agency basis and withdrawing from Victorian builders’ warranty and the construction portfolio. But GWP underwritten by third party insurers increased by 135% compared to HY13. Over half Calliden
Group’s GWP is now underwritten by three third party insurers – GLA, SI Corp and ACE Insurance.
Concluding, Kirk said: “The strong growth in agency profit underscores our confidence that our strategy is delivering and supporting a more consistent and reliable pattern of earnings growth. Calliden
Insurance is a more focused underwriter accounting for a reduced but still important proportion of the group’s profitability over time.”
He added: “The result shows solid progress with the transition in the business model we announced 2.5 years ago and is solid progress in the direction that we set.”
See tomorrow’s newsletter in which Nick Kirk discusses the Steadfast and Calliden
to read Steadfast CEO and managing director Robert Kelly
discuss the deal.