Nat Cat, BI, low investment income hit 2020 results

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

Industry reported a net profit after tax of AUD35 million and return on net assets of 0.1 per cent during the year ended 31 December 2020. The result was driven by natural catastrophe claims costs, provisions for business interruption (BI) claims, and falls in investment income.

The industry reported a loss of AUD649 million for the December quarter (predominantly due to increased provisions for COVID related BI claims, alongside storm events and long tail reserve strengthening), following profits of AUD836 million in the September quarter and AUD860 million in the June quarter (aided by underwriting profits in domestic motor), and a March quarter loss of AUD1.0 billion (impacted by natural catastrophe events and investment losses).

The industry PCA coverage ratio decreased during the December quarter to 1.70x predominantly due to falls in capital levels from the increased BI provisions. These falls were partly offset by capital raisings/injections by the insurers impacted by BI provisions.

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.