The Australian Prudential Regulation Authority (APRA) today released its Half Yearly General Insurance Bulletin which is compiled from audited annual returns from APRA-regulated general insurance companies for their financial years ending in the period 1 July 2007 to 30 June 2008.
Of most note is the sustained profitability of the industry even allowing for the increase in incurred claims and the decrease in investment income that have occurred during the period.
Insurers reported gross premium revenue of $30.8 billion, an increase of $1.3 billion on the previous year. Gross incurred claims were $23.0 billion. This is an increase of $3.0 billion on the previous year and is largely due to a continuing series of severe weather events in the 2007 and 2008 calendar years.
The industry reported a net profit after tax of $3.4 billion, down 32.2 per cent on the previous twelve months. Industry total assets increased by 3.5 per cent to $91.1 billion. Liabilities increased by 4.7 per cent to $65.6 billion. This resulted in the industry’s capital coverage reducing to 1.91 times the minimal capital requirement from 2.06 at 30 June 2007 and 2.04 at 31 December 2007.
APRA Member John Trowbridge said the industry has endured the difficult financial conditions well, but underwriting profits have begun to show the effects of the series of weather events suffered in the last two years.
‘The Australian general insurance industry has to date negotiated the global financial turbulence without any material adverse impacts. This is primarily due to strong levels of capitalisation, a conservative approach to investments and a generally close matching of assets and liabilities to mitigate effects of changes in interest rates on balance sheets.’
Copies of the Bulletin are available on APRA’s website.