New Australian Prudential Regulation Authority (APRA) data has starkly revealed the challenges being face by Australian life insurers with net profit down significantly due to the poor performance of risk products, particularly disability insurance.
APRA’s June quarter Life Insurance Performance statistics revealed what the regulator called a significant reduction in profit from $535 million in the previous quarter to just $272 million in June.
It said total assets decreased by $31.5 billion to $200.5 billion, predominantly due to OnePath Life Limited conducting a on-off transfer of assets and liabilities from the life insurance company to its superannuation.
ANZ’s OnePath pensions and investments business is currently the subject of an ongoing transaction with IOOF involving oversight by APRA, while the OnePath Life business was sold to Zurich.
The APRA analysis said that net profit after tax for the 12 months to June was also well down, standing at half a billion dollars compared to $2.1 billion for the previous corresponding period with the deterioration primarily caused by poor performance of risk business.
The regulator said risk products recorded a combined loss of $208 million for the quarter with individual disability insurance recording a $349 million loss, with group disability insurance recording a $36 million loss.
The only real bright spot for the sector was that individual lump sum showed a $199 million profit while group lump sum recorded a comparatively modest $23 million loss.