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Industry profit falls in December quarter

The general insurance industry collectively earned after-tax profit of $639 million in the December 2011 quarter, down from $1.1 billion in the December 2010 quarter, according to the latest statistics from the Australian Prudential Regulation Authority (APRA).

Profit for the full year was $3 billion, a 10% return on assets, the regulator says in its Quarterly General Insurance Performance report. It collects the data from 124 general insurers, including 12 reinsurers.

The insurers’ net underwriting combined ratio was 101% for the year, or 98% for the December quarter. The reinsurers’ combined ratio was 114% for the year, or 92% for the quarter.

The industry’s combined net earned premium rose to $7.1 billion in the quarter, up from $6.7 billion in December 2010, and premium for the year was $26.6 billion.

Insurers wrote $9.3 billion of gross earned premium in the quarter, with insurers writing $8.7 billion and reinsurers the remaining $500 million.

The industry incurred net claims of $5 billion for the quarter, compared with $3.9 billion, and for the year had net claims of $19.9 billion.

Gross incurred claims rose to $8.2 billion from $6 billion, mostly due to Victoria’s Christmas Day hailstorms. Gross claims for the year were $38.6 billion.

Reinsurance recoveries for the quarter were $2.5 billion, up from $1.6 billion and again mostly due to the Victorian storms. Reinsurance recoveries for the year were $16 billion.

The industry’s loss ratio for the quarter was 71% compared with 58% in December 2010.

APRA has added more information to the publication, saying the inclusion of operating income and expenses, solvency and class of business data will be available quarterly.

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