Financial services giants keep struggling on the life insurance front, with higher level of claims significantly impacting the result for National Australia Bank’s (NAB’s) Wealth division for the last year.
NAB Wealth reported a 5 per cent decrease in cash earnings before interest on retained earnings, but its investment and private wealth areas performed well.
However, this was more than offset by the challenging conditions in the insurance industry, the bank said.
“The business reported deteriorating claims experience during the year,” NAB said in an announcement published on the Australian Stock Exchange. “Insurance reserves have been strengthened at September 2013, reflecting a change in actuarial assumptions, which has affected the result by $57 million (pre-tax).”
Insurance net operating income decreased by $196 million – or 40.7 per cent – mainly due to higher levels of claims, the strengthening of insurance reserves and lower earnings on the assets backing the insurance policy liabilities.
“These were partially offset by an increase in average inforce premiums and improvement in lapse experience as a result of a number of retention initiatives implemented in the second half,” the bank said.
NAB otherwise reported a strong result, with a 33.6 per cent increase in overall net profit attributable to owners on the September 2012 full year to $5.45 billion.
“The group’s full year results show an improved performance across most business units, combined with solid progress against our simplification and digitisation agenda,” said NAB chief executive officer, Cameron Clyne.
