TAL has bucked the trend in the life industry of weaker earnings results to report a growth in underlying profit to the year ending 31 March 2013.
Results released by TAL’s ultimate Japanese parent, Dai-ichi Life, show that TAL’s underlying profit increased by 14% to $123m, after removing the effect of non-cash items such as amortisation and changes in discount rates.
The business’s annual net profit after tax result was $91m. This figure was down slightly from $93m in the year to 31 March 2012, due largely to non-cash changes in discount rates.
TAL’s embedded value grew by 10% to $1.762b, while its in-force premiums rose 13.4% to $1.579b.
TAL Group CEO and Managing Director Jim Minto said the result showed TAL’s resilience in a market where competitors have reported lower life insurance profits than had been assumed and also flagged other challenges.
“The life insurance industry continues to suffer strong headwinds and TAL certainly saw higher claims levels flowing through in disability lines especially,” Mr Minto said. “Total claims paid and provided for were $1,098m up 25% on the previous year. We also saw consumer pressure around affordability but I am pleased TAL has continued to grow its underlying profit and revenue year on year.”
“The ongoing economic uncertainty is causing Australians to reduce costs and save more. This is impacting the life industry across the board, as highlighted in recent reporting by some large institutions.”
Mr Minto said the challenge for the industry is to reduce the incidence of consumers letting go of their valuable policies or cutting them back, especially at these times when they most need cover as claims continue to trend higher.
Recent independent claims analysis (Risk Store) showed total life claims paid in Australia for 2012 broke the $4b figure for the first time, an increase of 10.7% over the previous year.
“TAL has performed favourably in this current market but we need to keep innovating and adapting to the needs of our customers and to streamline our business and operating costs to stay ahead,” Mr Minto said.
“Our importance to Dai-ichi Life, a top 10 global life insurance business, is growing and the relationship brings strong benefits to both organisations which are completely focussed on deepening the value they give their customers.”
