APRA: life insurance industry lost $1.6

The Australian Prudential Regulation Authority has published its report on the life insurance industry, with a significant net loss after tax of $1.6 billion ($0.4 billion profit June 2019) reported, with a return on net assets of -6.4 per cent (1.8 per cent June 2019).

The losses were caused by poor performance of risk business - a $1.4 billion loss during the year. There were also significant investment revenues lost, due to pandemic-driven market volatility in the March 2020 quarter.

Individual lump sum is the only category that reported a profit in the 12 months to June 2020 within risk products. Disability income insurance made a loss of $1.2 billion across the year, driven by reserve strengthening with adverse claims experiences persisting. Lump sum and individual disability insurance reported $353 million and $249 million respective losses.

AMP Life transferred a large portion of investment-linked business from its life company to other managed investments schemes in preparation of the sale of AMP Life, resulting in total assets falling by 35 per cent across the year. The sale took place on 30 June 2020.

The industry reported a profit of $423 million in the June quarter, a great improvement on the previous two quarters. Investment volatility lessened, with favourable performance of the individual lump-sum business.

Read the full Quarterly Life Insurance Performance Statistics report (PDF)