In its Half Yearly Life Insurance Bulletin, APRA surveyed around 30 major insurers and found that for the calendar year ending December 2012, net premiums gathered by the sector fell to $41.8 billion from $43.4 billion the previous year.
Research house DEXX&R, whose data “tells a similar story”, said it is likely due to premium values declining in existing businesses.
“One of the trends we are noticing is that while gross new business continues to increase, net new business is in fact falling...which means the premium value of the discontinued business is increasing,” DEXX&R managing director Mark Kachor told InvestorDaily.
In terms of revenue in the sector, total assets hit $246.0 billion, up from $230.8 billion on the previous period, with investment linked funds (47 percent), massively outperforming non-investment linked funds (12 percent).
Mr Kachor pointed out that this is likely due to the good performance of the stock market in 2011 to 2012 as “a substantial proportion of total life companies’ assets now are held in market linked securities”.
In terms of overall profitability, the sector generated a healthy $2.6 billion dollars worth of post-tax profits. This was a marginal jump of around $100 million on the previous year.
“It is a very robust sector. There is a lot of investment business that goes through the statutory funds of life insurance companies that is sourced outside life insurance policy,” Mr Kachor said. “That is always going to be profitable.”
