The life industry suffered an 87% contraction in net profit to $200 million for the 12 months to September as unrealised losses on interest-bearing assets hit investment returns, latest Australian Prudential Regulation Authority (APRA) data shows.

APRA-regulated life insurers made a collective investment loss of $7.5 billion, deteriorating from a year earlier when their portfolios netted $5.4 billion in revenue.

Among risk products, individual disability income insurance (DII) performed best with profit rising to $1.1 billion from $117.6 million a year earlier.

“The increase in individual DII performance can be attributed to repricing activities as well as reserve releases as a result of increases in bond yields over the past 12 months,” APRA says.

Individual lump sum was the only loss-making business out of the four risks products covered in the APRA data, losing $207 million compared with a $430.1 million profit 12 months ago.

Group lump sum rebounded to post a $7.6 million profit after losses of $97.5 million and group DII also recovered, making $96.8 million following a $14.4 million loss.

“For both products, this is an improvement in performance in comparison to the prior year and was driven by lower net policy expenses from group lump sum and reserve releases for group DII,” APRA says.

The four risk products improved their collective profit to $977 million from $435.7 million.

“The result was predominantly driven by the $1.1 billion profit recorded by individual disability income insurance,” APRA says.