The life industry suffered a 59.3% slump in net profit after tax to $500 million for the year to December, dragged down by investment losses of around $6.6 billion, the Australian Prudential Regulation Authority (APRA) says in its latest industry update.

Realised and unrealised losses on interest-bearing assets affected investment returns during the year, APRA says. A year earlier the industry booked investment revenue of about $3.8 billion.

But risk products performed strongly during the period, with net profit rising to $1.14 billion from $745.6 million a year earlier, APRA says.

The improved profit was predominantly driven by the $1.1 billion profit recorded by individual disability income insurance (DII), one of four product lines covered by the APRA data.

“The increase in individual DII performance can be attributed to movements in bond yields, repricing activities and releases of Covid-19 reserves throughout the year,” the regulator says.

Group lump sum and group DII business reported profits of $33.7 million and $352 million respectively, compared with a $165.9 million loss and $6.6 million profit a year earlier.

APRA says the improved results were due to lower net policy expenses for group lump sum business and reserve releases for group DII.

Individual lump sum was the only risk product in the red, reporting a $329.2 million loss, which can largely be attributed to an increase in net policy expenses, APRA says.