NAB’s operating income from insurance fell 1.2% to $481 million in the year to September because of increased lapses and unfavourable changes in the profile of the retail insurance book.

Its results released last week who these factors were partly offset by a 4.1% increase in inforce premium to $1.49 billion and lower claims compared with the previous year.

Net operating income from investments rose 3.5% to $1.03 billion, giving the NAB Wealth business – which includes insurance – total operating income of $1.51 billion, up 2%.

The integration of NAB’s Aviva life insurance business, including its investment and business superannuation platforms, was completed during the year at a cost of $38 million. 

Gross income from insurance was up 3.3% to $1.61 billion, while volume-related expenses – largely commissions – increased 5.3% to $1.13 billion.

Operating expenses of $241 million and tax of $72 million pushed net cash earnings down to $169 million.

When the bank’s discounting formula was applied to insurance earnings the bottom line figure was a $6 million loss, compared with a $14 million profit the previous year.

A provision of $168 million has been made against payment protection policies sold by UK subsidiaries, where claims are higher than expected and the market has been shaken by a mis-selling scandal.

New business premium grew 10% on the previous year to $314.7 million. Of total inforce premium, individual policies made up $1.16 billion, while superannuation-related group premiums were $301.1 million.

At June 30 NAB says it ranked second in the individual risk market, with 17.3% of individual inforce premium, and was sixth for group risk, with 9%. In the new business market it ranked third for individual with 15.2% and fifth for group with 6.6%.

The efficiency of the life insurance business remains static, with the insurance cost to average inforce premium at 16%, the same as last year.

NAB’s financial adviser numbers increased by 34 to 1898, with the growth experienced in aligned channels. Salaried adviser numbers fell by 48 to 802.