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Insurance profits steady despite revenue slump
Total revenue for the insurance industry was $20.7 billion for the financial year to June 2012, compared to $31.5 billion for last financial year, according to the Australian Prudential Regulation Authority's quarterly life insurance performance report.
Despite the difference, net profit after tax declined only slightly from $2.8 billion last year to $2.7 billion in June 2012.
Total revenue comprised investment revenue of $6.9 billion compared to $18.7 billion last year, while the non-investment component of total revenue for 2012 was $11.4 billion net policy revenue, including $2.3 billion in management service fees.
Risk products gathered total revenue of $2.9 billion for the quarter, with individual risk products contributing $1.9 billion and group risk products, $965 million.
Annuity products posted total revenue of $536 million, $262 million from annuities with longevity risk and $274 from annuities without longevity risk.
Participating business recorded revenue of $721 million, with $648 million coming from conventional products.
Non-participating business posted negative revenue of -$1.8 billion for the June quarter on the back of a -$2.2 billion loss from investment linked products.
Total assets in the insurance industry increased 0.7 per cent to $237.5 billion for the quarter to June 2012, with 45.1 per cent invested in equities, 30.6 per cent in debt securities, 7.3 per cent in investment properties, 12 per cent in cash and deposits, and $11.9 billion in other assets.
Total liabilities for the industry were $217.8 billion - a 0.9 per cent decrease since the March quarter. Of total liabilities, 93.2 per cent was gross policy liabilities, 1.1 per cent policy owner retained profits, and 5.7 per cent other liabilities.
The industry's capital requirement increased from $3.1 billion in June 2011 to $3.3 billion in June 2012, while the prudential capital coverage was 1.70 this quarter compared to 1.83 in June 2011.
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