APRA releases life insurance statistics for March 2020
The Australian Prudential Regulation Authority (APRA) has released its Quarterly Life Insurance Performance Statistics publication for the March 2020 quarter.
The Quarterly Life Insurance Performance Statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios.
Key performance statistics for the life insurance industry in the year ended 31 March:
| Year to March 2019 ($bn) | Year to March 2020 ($bn) | Change |
|---|---|---|---|
Net policy revenue | 17.4 | 15.6 | -10.4% |
Investment revenue | 15.4 | 1.8 | -88.4% |
Total revenue | 36.7 | 19.5 | -46.9% |
Net policy expenses | 10.2 | 10.6 | 4.3% |
Operating expenses | 9.5 | 8.3 | -12.0% |
Effective movement in | 14.6 | 3.2 | -78.1% |
Total expenses | 34.8 | 22.5 | -35.5% |
Net profit after tax | 0.8 | -1.8 | -339.4% |
Total assets | 231.9 | 185.3 | -20.1% |
Key performance statistics for the life insurance industry in the quarter ended 31 March:
| December 2019 Quarter ($bn) | March 2020 Quarter ($bn) | Change |
|---|---|---|---|
Net policy revenue | 3.8 | 3.6 | -3.8% |
Investment revenue | 1.5 | -10.4 | -798.7% |
Total revenue | 5.7 | -6.3 | -209.9% |
Net policy expenses | 2.6 | 2.5 | -3.6% |
Operating expenses | 1.9 | 2.0 | 7.8% |
Effective movement | 2.5 | -8.5 | -438.9% |
Total expenses | 7.1 | -3.8 | -154.0% |
Net profit after tax | -1.1 | -1.0 | -6.7% |
Total assets | 203.3 | 185.3 | -8.9% |
The life insurance industry’s performance continues to worsen. Net loss after tax was $1.8 billion for the year to March 2020, a significant reduction from $759 million profit in the previous year. This deterioration was caused by poor results in both the December and March quarters, driven by the poor performance of risk business (see below) and a substantial collapse in investment revenue owing to the COVID-19 related volatility in investment markets. This was somewhat offset by the release of reserves, which fell by 78.1% in the 12 months to March 2020.
For the 12 months to March 2020, risk products reported a combined after-tax loss of $1.6 billion. All risk products deteriorated with the only exception being the Individual Lump Sum product. In particular, Individual Disability Income Insurance (also known as Income Protection Insurance) reported a substantial loss, primarily driven by loss recognition as adverse claims experience persists.
Risk product net profit after tax for the life insurance industry in the year ended 31 March:
Risk product | Year to March 2019 ($m) | Year to March 2020 ($m) | March 2020 quarter only ($m) |
|---|---|---|---|
Individual lump sum | 653.3 | 360.4 | 39.7 |
Individual disability income insurance | -782.0 | -1,395.1 | -141.4 |
Group lump sum | 100.0 | -369.8 | -69.7 |
Group disability income insurance | -66.2 | -240.4 | -19.9 |
Total | -94.9 | -1,644.9 | -191.3 |
Key ratios for the life insurance industry in the year ended 31 March:
| Year to March 2019 | Year to March 2020 | Yearly Change | December 2019 Quarter | March 2020 Quarter | Quarterly change |
|---|---|---|---|---|---|---|
Return on net assets | 3.0% | -7.3% | -10.3% | -16.7% | -15.5% | 1.2% |
Prescribed capital amount coverage ratio | 1.79x | 1.76x | -0.03x | 1.66x | 1.76x | 0.10x |
The March 2020 Quarterly Life Insurance Performance Statistics publication is available on APRA’s website at: Quarterly life insurance performance statistics.
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The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.