Life Insurance Financial Results: November 2017 | KPMG | AU

Life Insurance Financial Results: November 2017 reporting season

Life Insurance Financial Results: November 2017

The November reporting season shows that operating earnings across the listed life risk insurers remains subdued with some volatility arising from adverse claims experience and income protection (IP) loss recognition. M&A activity within the life sector continues with ongoing consolidation resulting from poor profitability in recent years.

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Key insights

  • CBA recently announced the sale of CommInsure to AIA for $3.8b. The sale agreement also includes a 20-year partnership with AIA for the sale of life insurance products in Australia and New Zealand. AMP also announced another reinsurance transaction which is expected to release circa $500m of capital across its life risk book.
  • Planned profit margins have been stable from the previous reporting period noting a drop for AMP due to implementation of its 2016 reinsurance treaty with Munich. ClearView planned margins remain comparably high noting a downward trend due to changes in business mix.
  • Actual profit margins remain relatively low compared to the previous 3 year period, with many insurers reporting a decrease from the prior reporting period. AMP actual margins were higher noting significant loss recognition on IP taken up in the previous period with recent experience broadly in line with assumptions. CBA results were also impacted by IP loss recognition with $143m taken up over 2017 compared with $65m over the prior year.
  • Growth in annual inforce premium remains varied amongst individual insurers and has been low overall with Clearview remaining a stand out marking Year-on-Year (YOY) total inforce premium growth of 26 percent.

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