Jim Minto
Australia’s leading specialist life insurer, TAL, has increased its premium and other revenue by 15% to $1.1 billion in the six months ending 30 September 2013, compared to the prior comparative period.
Results released by TAL’s ultimate Japanese parent, Dai-ichi Life, show new business growing 33% compared to prior comparative period to $261 million while total in-force premium grew 16% to $1.76 billion.
TAL’s embedded value grew by $132 million to $1.894 billion in the period.
The business’s annual net profit after tax result was $29 million. This figure was down from $68 million in the previous period, due largely to changes in discount rates and deterioration of claims experience.
TAL’s underlying profit for the six months to end September was $46 million, down from $70 million in the previous corresponding period, after removing the effect of non-cash items such as amortisation and changes in discount rates. This fall is due to negative claims experience this year against favourable claims experience in the prior year.
TAL Group CEO and Managing Director Jim Minto said that negative claims experience had affected the entire life insurance industry, and he expected a period of adjustment while the industry worked through a series of steps to improve the outlook.
“The reporting season has revealed a higher level of claims and lapses than insurers had expected. While TAL has also seen larger effects from claims, we have, partly as a result of price adjustments, been able to continue to grow TAL to become Australia’s second largest life insurer as measured by in-force premiums.”
The company experienced a higher level of claims on living insurance products – disability, income protection and trauma cover – and as a result has had to make higher provisions for claims which also reduce earnings.
“The really good news is people are accessing and getting major benefit from their life insurance in this period of higher claims,” Mr Minto said.
“While there has been publicity about price increases for life insurance within superannuation, the availability of life cover in super has resulted in many people getting access to cover they might not otherwise have obtained. We believe major schemes will adjust cover design and benefit amounts to improve affordability and sustainability of these covers. This will help to maintain the enormous benefits Australians receive from having this life insurance in superannuation.”
Mr Minto said efforts were continuing to help reduce lapses which are running at higher than planned levels across the industry. A key element was to better inform and educate customers about the high value of life insurance which can forestall a financial crisis when an income suddenly stops, permanently or for an extended period.
“Family budget pressures and price shopping behaviour have also had a big impact due to the ongoing economic uncertainty as Australians continue to reduce costs and save more. The concern is that people do not maintain adequate cover and it is only at claim time that customers realise the major consequences of that decision to cut back or lapse.”
|
Six months ended Sep 2012 |
Six months ended Sep 2013 |
Change |
|
| In-force premium |
1,522 |
1,761 |
+16% |
| Premium and other income |
962 |
1,102 |
+15% |
| Net Profit After Tax |
68 |
29 |
-57% |
| Underlying Profit After Tax |
70 |
46 |
-34% |
Million of $AUD