The general insurance industry posted significantly higher net profit for the year to June 30, increasing fivefold to $4.6 billion from $900 million a year earlier, Australian Prudential Regulation Authority (APRA) figures released today show.

APRA says the increase in net profit after tax was driven by a “strong” recovery in investment returns, which came in at about $3 billion compared with a year-earlier deficit of $2.8 billion.

The investment turnaround came mostly from unrealised gains from interest-earning investments, the prudential regulator says.

However underwriting profit declined 6.3% to $5.7 billion from a year earlier as net incurred claims rose significantly by 16.1% to $30.3 billion.

APRA says the jump in net incurred claims was largely due to a reduction in reinsurance revenue across almost all lines of business.

Despite the weaker underwriting performance APRA says the results “remained relatively strong, driven by insurers raising premiums in response to recent higher claims costs”.

Gross incurred claims fell 2.3% to $44.1 billion, driven by large reductions in both householders and fire/industrial special risk as claims stabilised after high expenses from last year’s south-east Queensland/NSW flood catastrophe.

The APRA industry update also showed the industry was spending more on reinsurance. General insurers forked out about $19.5 billion in outwards reinsurance expense, up from $18.2 billion a year earlier.

For the June quarter industry net profit improved 9.6% to $1.2 billion and underwriting profit came in $2.6 billion after a $100 million loss in the prior quarter.

In a separate update APRA says it will suspend the next September quarterly statistical publication that is usually released in late November.

APRA is suspending the publication because it has made significant changes to the regulator’s capital and reporting framework for insurance with effect from last month.

“The September 2023 returns will be the first entity reporting period impacted by the capital and reporting framework changes,” APRA says.

“Due to the changes in the reporting framework, data items traditionally contained within the quarterly insurance statistical publications cannot be calculated until the December 2023 reporting period.”