Life insurance profits up 65 per cent in December
Life insurance industry profit jumped 65 per cent from $433 million to $714 million in the December quarter, according to the latest quarterly life insurance report from the Australian Prudential Regulation Authority (APRA).
However, total industry revenue dropped from $23,515 to $14,815 million, due mainly to a jump in realised/unrealised losses from $322 million in 2010 to $12,541 million in 2011.
Operating and net policy expenses comprised the largest expenditure for total expenses, with $6,995 million and $6,152 million respectively.
Further expenses included change in policy owner retained profits at $59 million, other expenses $179 million, while effective movement in net policy liabilities recorded a negative $1,897 million for the year.
The largest difference in expenses since the previous year derived from effective movement in net policy expenses, which recorded a staggering $6,277 million, change in policy owner retained profits $290 million, and other expenses which were $115 million.
APRA found that total assets increased 0.8 per cent since the September 2011 quarter and decreased 2.7 per cent since the same period last year.
Of those total assets, 46.1 per cent were invested in equities, 33.2 per cent in debt securities, 7.4 per cent in investment properties, 8.4 per cent in cash and deposits, with 3 per cent in other assets.
Total liabilities increased by 0.8 per cent compared with the September 2011 quarter, and decreased 3.5 per cent since the same period last year.
Gross policy liabilities represented 93.7 per cent of total liabilities for the year, with 1.1 per cent lost to policy owner retained profits and 5.2 per cent to other liabilities, including borrowings, creditors, provisions, premiums in advance and approved subordinated debts.
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Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
