The life insurance sector recorded a profit drop in the June quarter of more than 50% compared to the same time last year, according to APRA industry-level statistics.

The $263 million profit decline comes as total industry revenue decreased to $11.36 billion in the second quarter, compared to $16.92 billion in the first quarter.

Net premium dropped as well from $8.02 billion to $7.69 billion. However, total expenses dropped from $15.2 billion to $10.52 billion.

Net profit over FY2019 was $466 million, compared to $2.11 billion in the 2018 financial year.

Total expenses rose by only $433 million over the financial year, but net premium dropped to $34.96 billion from $42.28 billion in FY2018. The profit deterioration was primarily caused by poor risk business performance, the report says.

Over the June quarter individual disability income recorded a $349 million loss, driven by persistent negative claims experience and a reduction in discount rates.

Group individual disability income recorded a $36 million loss, and group lump sum a $23 million loss. Only individual lump sum recorded a $199 million profit, down by $133 million over the quarter. Overall risk products recorded a $208 million loss for the quarter.

Returns on assets also dropped to 1.9%, compared to 8.3% a year earlier.