The fundamentals of the Australian life insurance industry were strong last year, and they are likely to stay strong for most of this year, according to the latest Standard & Poor’s (S&P) report.

“Favourable investment performance in 2004, coupled with tighter expense management… has enabled Australian life insurers to report stronger earnings for 2004,” credit analyst Carolyn Rajaratnam said.

She says the financial strength of the key participants is mostly stable, and is expected to remain that way in the short to medium term, “in part because the fundamentals of the Australian life insurance industry are strong”.

The report shows life insurers have benefitted from managements implementing revised corporate strategies and re-energising their product suite and distribution models.

“This strategic refocus is especially important given that industry and regulatory dynamics are changing the competitor landscape for superannuation and risk insurance products,” Ms Rajaratnam said.