The Australian Prudential Regulation Authority (APRA) has released its Quarterly General Insurance Performance Statistics and Quarterly General Insurance Institution Level Statistics publications for the March 2020 quarter.
The Quarterly General Insurance Performance Statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios. The publication also includes detailed statistics at a class-of-business level, a breakdown of operating income and expenses, and more granular solvency information.
The industry net profit after tax of $1.5 billion and return on net assets of 5.7 per cent for the year to 31 March 2020 were significantly lower than the prior year. This was due to lower underwriting results from the catastrophic bushfire and storm events in late December/early 2020, and large falls in investment income mainly from the impacts of COVID-19. Another key driver of the decrease in underwriting results was an increase in the value of long tail claims reserves which resulted from sharp falls in bond yields. These were particularly pronounced in the March quarter 2020 due to the impact of COVID-19 on the investment markets.
Investment income fell during the year reflecting lower returns across equities, fixed interest returns and indirect investments, particularly in the March quarter with the adverse impact of COVID-19 on the investment markets.
Despite the impact of COVID-19 on industry profits, the industry maintained its capital position, with the PCA coverage ratio at 1.67x being largely unchanged from the December quarter.
Key performance statistics for the general insurance industry in the year ended 31 March:
March 2019 |
March 2020 |
Change |
|
|---|---|---|---|
Gross claims expense |
$36.9 billion |
$42.3 billion |
+14.8% |
Underwriting result |
$2.8 billion |
$1.5 billion |
-47.0% |
Investment income |
$3.1 billion |
$2.0 billion |
-36.5% |
Net profit after tax |
$3.5 billion |
$1.5 billion |
-56.7% |
Key performance statistics for the general insurance industry in the quarter:
December 2019 |
March 2020 |
Change |
|
|---|---|---|---|
Gross claims expense |
$10.5 billion |
$15.3 billion |
+46.1% |
Underwriting result |
$587 million |
-$991 million |
-269% |
Investment income |
$1 million |
-$81 million |
n/a |
Net profit after tax |
$220 million |
-$997 million |
-533% |
Key ratios for the general insurance industry:
March 2019 |
March 2020 |
Change (annual) |
Change (quarterly) |
|
|---|---|---|---|---|
Net loss ratio |
67% |
71% |
+4pp |
+16pp |
Return on net assets |
13.1% |
5.7% |
-7.4pp |
-17.7pp |
Prescribed capital amount coverage ratio |
1.76x |
1.67x |
-0.09x |
-0.01x |
The Quarterly General Insurance Institution-level Statistics publication contains individual insurer information about financial performance, financial position, capital adequacy and key ratios. The quarterly performance statistics of insurers may be impacted by factors outside of their control, such as natural catastrophe events, as well as those driven by their internal processes, such as the timing of actuarial valuations. Users should take these factors into account when interpreting the statistics.
Copies of the 31 March 2020 quarterly publications are available on APRA's website at: Quarterly general insurance statistics.
