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Disasters bite into Wesfarmers’ insurance profit

30 January 2012

Wesfarmers Insurance Division has warned it will suffer a 75% fall in net profit in the first half of the financial year.

The division – which includes insurers Lumley, WFI and Coles Insurance – expects to record earnings before interest, tax and amortisation of $17 million for the six months to December 2011, well short of the $70 million it posted in the same period last year.

Wesfarmers Insurance CEO Rob Scott says bushfires in WA, the Christchurch earthquakes and the Melbourne Christmas Day hailstorm have contributed to a $28 million blowout in the allowances for the six-month period.

He says the higher reinsurance costs that kicked in from July last year are affecting underwriting margins.

However, the underwriting operations in Australia and New Zealand have achieved what Mr Scott says are “solid” premium rate increases in both property and farm-related classes.

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