Life insurers recorded weaker earnings in the 12 months to March, with the industry posting a 4.9% decline in net profit after-tax to $1 billion from a year earlier, latest Australian Prudential Regulation Authority (APRA) data shows. 

Total revenue increased 6.6% to $17.8 billion, which reflected increases in both net policy revenue and investment revenue with the latter benefiting from the effect of lower bond yields on asset valuations in recent quarters. 

The regular APRA update on industry performance also includes four key risk products – individual lump sum, individual disability income insurance (DII), group DII and group lump sum. 

The four products fared worse during the year, returning a decline in net profit to $872.4 million from $973.3 million. 

APRA says individual lump sum and individual DII were affected by an increase in net policy expenses and lower reserve releases respectively. 

Individual lump sum net profit fell to $238.4 million from $430.5 million and individual DII to $523.9 million from $713.2 million including a $96.4 million loss in the March quarter. 

Group lump sum and group DII reported an improvement in performance during the year, the result of higher investment revenue and reserve releases respectively. 

Group lump sum narrowed its losses to $59.3 million from $198.6 million and group DII increased its net profit to $169.4 million from $28.1 million. 

For the March quarter the life industry posted a net profit after tax of $652.3 million, up 44.4% from the December quarter. 

APRA says the improvement in net profit was driven by higher investment revenue and was partly offset by effective movement in policy liabilities, which reflected the effect of lower bond yields in the quarter. 

Investment revenue more than doubled to $3.8 billion in the March quarter from the prior October-December period. 

The four risk products combined for a net profit of $250.4 million in the March quarter. Individual lump sum was the only profitable product during the period, making a net profit of $545 million. 

Individual DII lost $96.4 million, group lump sum $121.8 million and group DII $76.4 million.