The general insurance industry made a net profit after-tax of $1 billion for the year to June 30, according to a regular update from the Australian Prudential Regulation Authority (APRA).

APRA says the 5.4% lift in year-on-year earnings was driven in part by better investment income, which increased 8.9% to $1.6 billion.

Stronger underwriting results, which surged 17.6% to $1.5 billion, were constrained by provisioning for COVID-19 related business interruption (BI) claims and large natural catastrophe claims costs.

“The significant provisioning undertaken for BI claims and catastrophe events (Halloween hail storm and NSW and south-east Queensland flood events) were the main drivers of high gross incurred claims in the year,” APRA said.

“This was partially offset by a reduction in domestic and commercial motor gross claims costs, which resulted from lower levels of vehicle usage due to COVID-19 lockdowns.”

Gross incurred claims during the period reached $42.4 billion, down from $42.8 billion in the prior corresponding year, and the gross loss ratio eased six points to 72%.

Gross earned premium grew 5.9% to $54.3 billion, as the industry reported higher premium in householders, domestic motor, fire & industrial special risk and professional indemnity classes of business.

The APRA data is based on input from 93 insurers.

APRA also provided a snapshot of the industry’s performance for the June quarter.

Net profit after-tax in the April to June period increased sharply to $750 million from $12 million in the preceding March quarter.

APRA says the results were driven by stronger underwriting results, and a recovery in investment income.

Underwriting earnings went up 47.4% to $951 million and investment income rebounded to $669 million from a $245 million loss.

“Stronger underwriting results were reported in the householders and other direct classes of business, and were partially offset by underwriting losses in the public and product liability class,” APRA said.

Gross earned premium rose 2.4% to $13.9 billion and gross incurred claims declined 1.7% to $9.3 billion.

In a separate update, APRA provided individual insurers’ results for the June quarter.

Following are the results of key primary insurers (in alphabetical order):

• AIG Australia recorded gross earned premium of $257 million, gross incurred claims of $190 million and a $23 million profit
• Allianz Australia had $1.28 billion in gross earned premium, gross incurred claims of $772 million and a $93 million net profit
• Hollard Holdings Australia posted $402 million in gross earned premium, $208 million in gross incurred claims and a $17 million net profit
• IAG booked $2.16 billion in gross earned premium, $1.83 billion in gross incurred claims and a $143 million net loss
• QBE Insurance Australia had $1.45 billion in gross earned premium, $1.03 billion in gross incurred claims and a $89 million net profit
• Suncorp-owned AAI recorded gross earned premium of $2.18 billion, gross incurred claims of $1.29 billion and net profit of $265 million.

Click here to access the reports.