Suncorp’s Asteron life insurance business has reported a 50% slump in after-tax profit to $34 million for the year to June 30.

Inforce annual premium was static at $806 million for the year.

Most annual premium comes through Asteron’s adviser networks, with the total flat at $653 million for the financial year. Direct premium grew 6.3% to $66 million.

The drop in profit is attributed to the run-off of the closed group life book, while new business volumes were affected by industry disruption and heightened regulatory scrutiny.

New business premium fell 19.4% to $62 million in the year.

Suncorp Group CFO Steve Johnston says the fall in after-tax profit is due to poor investment returns and volatility in lump sum payments, with elevated claims for income protection.

Investment income fell 14.3% to a negative return of $21 million.

Mr Johnston says increased bond yields had a significant impact on investment returns.

The life insurance business remains under review, and selling the unit still seems to be on the cards.

“We remain committed to improving the profitability of the life business through a comprehensive optimisation program,” Mr Johnston said. “We are confident this will lead to an improvement in claims outcomes, reduced costs and a more sustainable business.

“We are also seeing the need across the industry to review pricing of income protection, given the recent industry claims experience.”

He says the optimisation program runs alongside the strategic review of the business. This includes examining additional reinsurance, partnerships or full divestment.

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