Investment income slumps by almost 50%

Investment income slumps by almost 50%

Investment income slumps by almost 50% Investment income for the industry for the year ended 31 March 2014 was $3bn, down 41.8% from the previous year, when it was $5.2bn, according to statistics released by APRA.

The dramatic fall was largely due a decrease in investment income arising from unrealised gains/losses from change in net market value which was a loss of $0.3bn in the year ended 31 March 2014, down from a gain of $0.7bn in the previous year. The decreased investment income arising from unrealised gains/losses from change in net market value was mainly due to an increase in government bond yields in the year ended 31 March 2014 compared to a decrease in the previous year.
However, investment income for the quarter ended March 2014 was up from $681m to $770m.

In better news, net earned premium for the industry was up 6.1% to $31bn. Direct insurers wrote $29.6bn of this and reinsurers wrote $1/.4bn. The increase is attributed was primarily driven by domestic motor vehicle and home insurance. Net earned premium for domestic motor was $6.4bn, up 7.3%. Net earned premium for the home owners was $5.4bn, up 12.5% from the previous year.

The net loss ratio for the industry was down 64%. The industry underwriting expense ratio was 26%, down 27%; and the total industry underwriting expense increased 0.7% to $8bn.
Gross incurred claims climbed 5.1% to $25.7bn, mainly due to increases in gross incurred claims for reinsurance business.

Net incurred claims, however, were down slightly by 1.1% to $18.4bn. Although gross incurred claims were higher for the year, this was offset by increased reinsurance recoveries revenue. Reinsurance recoveries revenue was $5bn, up 37.3% from the previous year.