APRA releases life insurance statistics for December 2022
The Australian Prudential Regulation Authority (APRA) has released its Quarterly Life Insurance Performance Statistics publication for the December 2022 quarter.
The Quarterly Life Insurance Performance Statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios.
Key performance statistics for the life insurance industry for the year ended 31 December:
| Year ended Dec-21 ($bn) | Year ended Dec-22 ($bn) | Yearly Change |
Net policy revenue | 14.8 | 15.2 | 2.6% |
Investment revenue | 3.8 | -6.6 | - |
Total revenue | 19.5 | 9.6 | -50.7% |
Net policy expenses | 9.2 | 9.4 | 2.5% |
Operating expenses | 7.2 | 6.6 | -8.5% |
Effective movement in net policy liabilities | 1.0 | -6.4 | - |
Total expenses | 17.7 | 9.6 | -45.6% |
Net profit after tax | 1.2 | 0.5 | -59.3% |
Total assets | 132.0 | 123.3 | -6.6% |
Key performance statistics for the life insurance industry for the quarter ended 31 December:
| Sep 2022 Quarter ($bn) | Dec 2022 Quarter ($bn) | Quarterly change |
Net policy revenue | 3.9 | 4.1 | 5.0% |
Investment revenue | -0.5 | 1.7 | - |
Total revenue | 3.7 | 6.1 | 65.5% |
Net policy expenses | 2.3 | 2.6 | 10.4% |
Operating expenses | 1.7 | 2.0 | 15.6% |
Effective movement in net policy liabilities | -0.3 | 0.7 | - |
Total expenses | 3.8 | 5.3 | 37.9% |
Net profit after tax | 50.3m | 517.1m | - |
Total assets | 122.4 | 123.3 | 0.8% |
For the year ended 31 December 2022, the industry reported a net profit after tax of $0.5 billion and a return on net assets of 1.8 per cent, a decrease in comparison to the results from the prior year. The driver of the decrease in performance was an investment loss of $6.6 billion due to realised and unrealised losses on interest bearing investments.
Risk products returned a net profit after tax of $1.1 billion, an increase compared to a $745.6 million net profit recorded in the prior year. The result was predominantly driven by the $1.1 billion profit recorded by Individual Disability Income Insurance (IDII) business. The increase in IDII performance can be attributed to movements in bond yields, repricing activities and releases of COVID-19 reserves throughout the year. Individual lump sum business reported a loss of $329.2 million which can be attributed to an increase in net policy expenses. Group Lump Sum and Group Disability Income Insurance (Group DII) business reported profits of $33.7 million and $352.0 million respectively, an increase from the prior year’s result for both Group products.
The industry prescribed capital coverage ratio increased from 1.99x to 2.04x over the year ended 31 December 2022.
Net profit after tax by product for the life insurance industry for the period ended 31 December:
| Sep 2022 Quarter ($bn) | Dec 2022 Quarter ($bn) | Quarterly change |
Net policy revenue | 3.9 | 4.1 | 5.0% |
Investment revenue | -0.5 | 1.7 | - |
Total revenue | 3.7 | 6.1 | 65.5% |
Net policy expenses | 2.3 | 2.6 | 10.4% |
Operating expenses | 1.7 | 2.0 | 15.6% |
Effective movement in net policy liabilities | -0.3 | 0.7 | - |
Total expenses | 3.8 | 5.3 | 37.9% |
Net profit after tax | 50.3m | 517.1m | - |
Total assets | 122.4 | 123.3 | 0.8% |
Key ratios for the life insurance industry:
| Year ended Dec 2021 | Year ended Dec 2022 | Sep 2022 Quarter | Dec 2022 Quarter |
|---|---|---|---|---|
Return on net assets | 4.4% | 1.8% | 0.8% | 8.1% |
Prescribed capital amount coverage ratio | 1.99x | 2.04x | 2.06x | 2.04x |
The December 2022 Quarterly Life Insurance Performance Statistics publication is available on APRA’s website at: Quarterly life insurance performance statistics.
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The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.