Total revenue for the life insurance sector declined by more than 50 per cent in the first quarter of 2021, but insurers managed a modest profit over the pandemic year, according to the latest APRA statistics.
The prudential regulator’s data revealed that total revenue for the life insurance industry had shrunk by 57.4 per cent, from $6.2 billion in the 4Q20 to $2.6 billion in the 1Q21.
Net policy revenue remained relatively flat over the quarter, declining 3.3 per cent from $3.5 billion in the three months to December 2020, to $3.4 billion in the three months to March 2021.
However APRA’s annual data presented a stronger picture for the industry, with total revenue increasing by 14 per cent year-on-year to $22.2 billion in the 12 months to March 2021.
Net profit after tax across the industry increased to $1 billion from a $1.8 billion loss the previous year.
APRA called the results “a significant improvement from the previous year”, primarily owing to investment market performance as initial COVID volatility rebounded.
“The life insurance industry is gradually recovering from the economic impacts associated with the pandemic,” the regulator noted.
As a number of APRA’s income protection restrictions came into effect, the industry recorded a significant improvement in profits from individual disability income products, but still reported a loss of $330 million in the 12 months to March 2021 – up from a $1.4 billion loss in the previous year.
However profit results in individual lump-sum products declined significantly, from $387 million in the 12 months to March 2020 to $316 million in the year to March 2021.
Risk products overall reported a combined net loss of $165.7 million for the 12 months to March 2021, APRA said.
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