Revenue drops 70% for life insurers
Life insurers' total revenue has dropped by more than 72 per cent in the past year – largely impacted by negative investments, according to APRA data.
In APRA's Quarterly Life Insurance Performance report, total revenue for life insurers was $15.4 billion in the year that ended March 2016, while the March quarter saw $2.3 billion.
The quarterly outcome was largely impacted by negative investment revenue of -$2.2 billion, compared to the December 2015 quarter which saw $7.2 billion in investments.
This, however, did not affect net profit after tax, which was $3 billion for the year, up 16.9 per cent on the previous 12 months. Non-investment linked businesses contributed $2.2 billion while investment-linked businesses contributed $654 million to the total.
As for the March quarter, net profit after tax was $653 million compared to the $806 million in the December 2015 quarter.
The report also shows expenses were $12.9 billion for the year, down 74.1 per cent compared to the previous 12 months.
"Total expenses for the year ended March 2016 included effective movement in net policy liabilities of -$3.4 billion, operating expenses of $8.2 billion and net policy expenses of $8.1 billion," the report states.
"Operating expenses were relatively stable in the year ended March 2016 with a modest 0.4 per cent decline.
Maintenance costs accounted for 57.6 per cent and acquisition costs accounted for 31.6 per cent of the operating expenses in the year ended March 2016."
Meanwhile, life insurers' total assets were $293.3 billion as at 31 March 2015, down 1.8 per cent compared to the December 2015 quarter.
"The quarterly decline was largely driven by movements in equities, which fell from $149.3 billion in the December quarter 2015 to $142. Billion in the March quarter 2016," the report said.
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