The challenges currently facing life/risk companies in Australia have been laid bare, with the latest data released by the Australian Prudential Regulation Authority (APRA) revealing a significant decline in total industry profitability.
The data, covering the June quarter, revealed a 46 per cent decrease in net profit between the March and June quarters this year.
It found that the industry’s net profit after tax was $2.6 billion in the June quarter, a decrease of 6.5 per cent from the previous year’s profit of $2.7 billion, while the June 2013 quarter profit was $391 million compared with the March 2013 quarter profit of $723 million (representing a 46 per cent decrease) and the June 2012 quarter profit of $850 million.
The APRA data said total industry expenses were $40.3 billion compared with the previous year’s expenses of $16.5 billion, with the June quarter expenses being $7.2 billion compared with the March 2013 quarter expenses of $11.5 billion and the June 2012 quarter expenses of $1.8 billion.
The particular issue with group risk was also indicated by the APRA data which found that net profit after tax was $27 million, with individual risk products contributing $176 million and group risk products contributing minus $148 million.
The results of all the major banks and AMP posted on the Australian Securities Exchange (ASX) have confirmed the challenge currently being presented in the life/risk arena, with the most recent being National Australian Bank (NAB) which yesterday pointed to an “unfavourable experience” in group and lump sum.
