APRA releases general insurance statistics for September 2020

The Australian Prudential Regulation Authority (APRA) has released its Quarterly General Insurance Performance Statistics and Quarterly General Insurance Institution Level Statistics publications for the September 2020 quarter.

The Quarterly General Insurance Performance Statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios. The publication also includes detailed statistics at a class-of-business level, a breakdown of operating income and expenses, and more granular solvency information.

Industry net profit after tax of $0.9 billion and return on net assets of 3.2 per cent were significantly lower during the year ended September 2020.  This was due to lower underwriting results from the catastrophic bushfire and storm events in late December / early 2020, and large falls in investment income mainly from the negative impact of the COVID-19 pandemic on investments markets in the March quarter.

Within the underwriting results, insurers reported increases in gross earned premium in most classes of business. This was particularly evident in the Householders, Fire and ISR, and Professional Indemnity classes as premiums increased in response to rising claims costs.

Industry net profit after tax was $836 million in the September quarter, supported in large part by domestic motor underwriting profits of $514 million, and investment income of $626 million.  Gross incurred claims costs for the domestic motor class continued to decrease in Victoria, but are increasing in other states and territories as social restrictions in response to COVID-19 ease.

Key performance statistics for the general insurance industry in the year ended 30 September:

  September 2019 September 2020 Change (annual)
Gross claims expense $38.8bn $43.2bn +11.4 per cent
Underwriting result $1.9bn $1.6bn -16.4 per cent
Investment income $3.9bn $1.2bn -68.2 per cent
Net profit after tax $3.4bn $0.9bn -73.3 per cent

Key performance statistics for the general insurance industry in the quarter ended 30 September:

  June 2020 September 2020 Change (quarterly)
Gross claims expense $8.4bn $9.0bn 7.7 per cent
Underwriting result $1.0bn $1.1bn 9.0 per cent
Investment income $683m $626m -8.3 per cent
Net profit after tax $860m $836m -2.8 per cent

Key ratios for the general insurance industry:

  September 2019 September 2020 Change

(annual)

Change

(quarterly)

Net loss ratio 70 per cent 70 per cent Unchanged Unchanged
Return on net assets 12.1 per cent 3.2 per cent -8.9 pp -0.8 pp
Prescribed capital amount coverage ratio 1.74x 1.74x Unchanged +0.06x

The Quarterly General Insurance Institution-level Statistics publication contains individual insurer information about financial performance, financial position, capital adequacy and key ratios. The quarterly performance statistics of insurers may be impacted by factors outside of their control, such as natural catastrophe events, as well as those driven by their internal processes, such as the timing of actuarial valuations. Users should take these factors into account when interpreting the statistics.

Copies of the 30 September 2020 quarterly publications are available on APRA’s website.