Declining Premiums & Revenues for Life Insurers
The Australian Prudential Regulation Authority (APRA) has released its compilation of data collected from life insurers following the close of the first quarter of 2012. When considered on an annual basis, the latest figures show declines in revenue, net profit and life insurance premiums from results of one year ago. At the same time, some results improved over the previous quarter ending 31 December 2011 and over the equivalent quarter ending 31 March 2011.
Total revenue suffered the sharpest annual decline, falling from $25.7 billion to $19.8 billion, but quarterly revenue increased by more than $5.9 billion over revenue reported for the last quarter of 2011, and by over $5 billion when compared to revenue for the March 2011 quarter.
Much of the revenue drop appears to stem from performance during the third quarter of 2011, when total revenue amounted to an outflow of over $4.32 billion.
Total expenses also showed a significant drop on an annual basis, falling from $21.4 billion to $16.3 billion. Expenses were higher than those of the previous quarter by almost $5.5 billion and higher than those of the March 2011 quarter by a similar amount.
Annual net premiums were marginally lower than a year ago, falling from $43.1 billion to $42.4 billion. Quarterly net premiums declined from approximately $11 billion for the December 2011 and March 2011 quarters to $9.6 billion for the most recent quarter.
Annual net profits, reported on an after-tax basis, dropped 4.1%, falling from $2.69 billion to $2.58 billion. On a quarterly basis, profits rose to $726 million from $723 million for the last quarter of 2011, while falling from the net profit of $771 million reported for the March 2011 quarter.
In addition to reporting on life insurers’ financial performance, APRA publishes statistics on “financial position,” collecting data from insurers’ income statements for performance metrics and from their balance sheets when reporting on the industry’s financial position.
According to those balance sheets, total assets rose 3.9% from December 2011 levels, increasing from $230.2 billion to $239.1 billion. This also represents a 0.9% increase from assets of $237.1 billion in March 2011. Total liabilities showed similar changes, increasing 4.1% from December 2011 and 0.2% from March 2011 to $219.9 billion for the current quarter.
The industry managed an annualised return of 15.3% on net assets for the quarter, which translates into an annualised return of 14% for the year. For the previous year, return on net assets stood at 15.5%. Again, generally steady performance from quarter to quarter was affected by results for September 2011, when return on net assets amounted to only 9.4%.