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Individual DII snaps loss streak as risk products make 'notable improvements'

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The troubled individual disability income insurance (DII) product is finally in the black, posting an after-tax profit of $124 million in the 12-month period to September 30 after losing $1.41 billion a year earlier, according to latest statistics from the Australian Prudential Regulation Authority (APRA).

Individual DII and three other risk products – individual lump sum, group lump sum and group DII – achieved $439.1 million in overall net profit, compared with a $1.6 billion loss in the preceding period.

For the September quarter, the four products made a $235.6 million profit. In the previous June quarter, they reported a $168.7 million profit.

“Notable improvements were experienced within risk products, with all four products returning an improved result for the 12 months ended September 2021 in comparison to the previous year’s results,” APRA says in its quarterly update.

The improved individual DII results follow moves taken by APRA to shore up the product line after massive losses in recent years, due to product design and pricing issues.

APRA actions include capital measures in the form of upfront penalties for providers who fail to improve the sustainability of DII products.

The APRA update says the life industry achieved $1.4 billion in net profit after-tax during the period, reversing its year-earlier loss of $1.6 billion.

The result was primarily driven by an increase in investment revenue of $8.7 billion over the past 12 months, the regulator says.

Investment revenue reached $5.4 billion during the period, versus a year-earlier $3.3 billion deficit.

“The overall performance of the life insurance industry is improving,” APRA says.

For the September quarter, the industry’s profit declined 8.1% to $375.2 million from the preceding quarter.