Life insurance statistics released today by the Australian Prudential Regulation Authority (APRA) suggest that changes in the asset test exemption for complying annuities introduced in September 2004 have led to significant one-off annuity sales, contributing to the $10.9 billion in life office premiums received for the quarter. This was an increase of 28 per cent on the September 2003 quarter.

In releasing the latest statistics, APRA Member Steve Somogyi said that “overall, the industry continues to provide strong capital backing to policyholder benefits and, with improved investment markets, should be providing policyholders and shareholders with good returns. The industry continues to evolve as it responds to consumer demand and market rationalisation, particularly as part of the wealth management sector”.

Total life office statutory fund assets backing Australian policyholder liabilities stood at $194.7 billion at end September 2004, an increase of 6.7 per cent over the past twelve months.

Premiums increased by 5.2 per cent to $35.8 billion over the same period.

Superannuation assets of $168.8 billion as at end September 2004 represented 86.7 per cent of the total assets in life office statutory funds. However, life offices accounted for only 26.0 per cent of all superannuation assets in Australia, down from a high of 44.3 per cent in June 1992.

Superannuation business accounted for $9.3 billion in premiums for the quarter, an increase of 25.1 per cent over the quarter. For the year to 30 September 2004, superannuation premiums amounted to $31.0 billion, an increase of 2.8 per cent over the previous 12 months. Superannuation business in life offices provided 85.4 per cent of total life office premiums received during the quarter.

Ordinary business premiums were $1.6 billion for the quarter, an increase of 39.5 per cent over the quarter. For the year to 30 September 2004, ordinary business premiums amounted to $4.8 billion, an increase of 23.9 per cent over the previous 12 months. Ordinary premium business represented 14.6 per cent of total life office premiums received during the quarter.

Net premium flows for the September 2004 quarter were $1.0 billion.

A copy of the latest edition of Life Insurance Trends is available on APRA’s website at:

http://www.apra.gov.au/Statistics/Life-Insurers-Statistics.cfm

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry.APRA is funded largely by the industries that it supervises. It was established on 1 July 1998.APRA currently supervises institutions holding approximately $2.0 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.