Auckland-based credit surety and financial risk insurer CBL Corp said first half revenue growth was encouraging, despite the 36 per cent drop in operating profit due to increasing its insurance reserves.
Last week, the company flagged its $16.5 million increase in CBL Insurance's reserves to cover future claims, leading operating profit to fall to $22.4 million from $35.1 million in the same period a year earlier, some $17.5 million below expectations. CBL had previously projected annual earnings of between $89.9 million and $93 million for calendar 2017.
Today it said net profit fell 32 per cent to $12.6 million in the six months ended June 30, while gross written premium climbed 29 per cent to $204.5 million.
CBL won't meet previous annual guidance for underlying operating profit growth between 18-and-22 per cent as operating profit is below expectations in the first half, though "a resurgence is targeted for FY18". Still, it maintained previous revenue guidance of between 12-and-15 per cent growth.
"Whilst it was disappointing that our performance was tainted by the requirement to take an adjustment covering up to a 20-year span all in the half year, the board took the prudent decision to do so and based on independent actuarial advice," managing director Peter Harris said. "Moreover, it strengthens the company against unexpected claim activity."
