APRA releases life insurance statistics for December 2020

The Australian Prudential Regulation Authority (APRA) today released its Quarterly Life Insurance Performance Statistics publication for the December 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 December:

Year to Dec-19 ($bn)

Year to Dec-20 ($bn)

Yearly Change

Net policy revenue

15.8

14.4

-9.3%

Investment revenue

24.6

-2.3

Total revenue

42.7

13.3

-68.9%

Net policy expenses

10.6

9.7

-8.0%

Operating expenses

8.4

7.3

-12.5%

Effective movement in net policy liabilities

22.2

-3.2

Total expenses

41.5

14.1

-66.1%

Net profit after tax

-0.3

-0.1

69.6%

Total assets

202.6

130.3

-35.7%

Key performance statistics for the life insurance industry in the quarter ended 31 December:

Sep 2020 Quarter ($bn)

Dec 2020 Quarter ($bn)

Quarterly change

Net policy revenue

3.9

3.5

-10.4%

Investment revenue

1.6

2.5

50.6%

Total revenue

5.7

6.2

8.9%

Net policy expenses

2.5

2.4

-2.8%

Operating expenses

1.8

1.7

-3.4%

Effective movement in net policy liabilities

1.3

1.1

-17.2%

Total expenses

5.6

5.3

-5.7%

Net profit after tax

0.0

0.4

Total assets

128.9

130.3

1.1%

The life insurance industry’s performance continues to be challenged. The net loss after tax for the industry was $0.1 billion for the year to December 2020, an improvement from the $0.3 billion loss in the previous year. Although this was an improvement, the main driver was a significant release of reserves to offset the investment losses and claims payments made throughout the year.

For the 12 months to December 2020, risk products reported a combined net loss after tax of $492.3 million, which was lower than the prior year’s loss. 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. Individual Lump Sum insurance, while still profitable, showed a deterioration in profit over the year.

Net profit after tax by product for the life insurance industry in the year ended 31 December:

Risk product

Year to Dec 2019 ($m)

Year to Dec 2020 ($m)

Dec 2020 quarter only ($m)

Individual lump sum

653.3

543.7

73.0

Individual disability income insurance

-1,472.8

-739.9

-97.5

Group lump sum

-240.6

-173.5

-7.8

Group disability income insurance

-270.9

-122.5

-108.0

Total

-1,331.0

-492.3

-140.3

Key ratios for the life insurance industry in the year ended 31 December:

Year to Dec 2019

Year to Dec 2020

Yearly Change

Sep 2020 Quarter

Dec 2020 Quarter

Quarterly change

Return on net assets

-1.2%

-0.4%

0.9 percentage points

0.3%

6.6%

6.4 percentage points

Prescribed capital amount coverage ratio

1.66x

1.80x

0.13x

1.78x

1.80x

0.02x

The December 2020 Quarterly Life Insurance Performance Statistics publication is available on APRA’s website at: Quarterly life insurance performance statistics.

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