Revenue and profits down for life insurers

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12 December 2011

Total revenue for Australian life insurers has fallen from $23 billion in the year ending September 30 last year to $15.4 billion in the corresponding period this year.

The latest figures from the Australian Prudential Regulation Authority (APRA) show the drop in revenue also hit insurers’ profits.

After-tax profits for the year ending September 30 this year were down 12.3% to $2.5 billion, compared to $2.8 billion in the corresponding period last year.

Net premiums to September 30 were $27.7 billion compared to $27.3 billion in the corresponding 12 months last year, and net policy payments were $30.7 billion this year compared to $26 billion.

Volatile global investment markets have also dramatically reduced this source of income for life insurers.

In the year ending September 30 last year, investment income was $11 billion, but this has fallen to $2.4 billion in the most recent period.

The life insurance industry had total assets of $228 billion at September 30, compared to $234 billion 12 months previously.

The fall in investment income and assets can be attributed to insurers holding 46% of their portfolios in equities and 33% in debt securities on September 30 this year.

In addition, 9% of portfolios were held in cash and deposits with 7.3% in investment properties.

Total expenses for life insurers in the 12 months ending September this year were $11.8 billion, compared to $11.1 billion in the corresponding 2010 period.

Commission on winning new business in the year ending September 30 were $1.47 billion, while trails for the period were $1.9 billion. The figures were similar in the 2010 period, with new business commissions at $1.4 billon and trails at $1.7 billion.