The life insurance sector’s struggle to maintain viability has been laid bare by the prudential regulator, which says falling investment revenue has slashed profits over the past year.

Key performance statistics released by the Australian Prudential Regulation Authority (APRA) last week reveal overall net profit after tax fell to just $600 million last year from $2.6 billion.

Net policy revenue was up by $2 billion last year compared with 2017. However, a plunge of nearly 90% in investment revenue led to total revenue decreasing by 35.7%.

Net policy expenses and operating expenses increased 6.2% and 9.4% to $10.1 billion and $9.5 billion respectively.

While total expenses dropped to $23.3 billion from $32.3 billion, it wasn’t enough to avoid the 77.2% drop in profit.

APRA attributes the increase in expenses to a write-off of goodwill by one insurer.

Net profit fell across all product lines, with individual lump sum down to $408 million from $1.16 billion. Individual disability income fell to a loss of $473.7 million from a loss of $160.1 million. Group lump sum declined to $101 million profit from $254.3 million, and group disability income plunged to $57 million from $188.8 million.

APRA says an increase in net policy liabilities in individual risk products has exceeded revenue gains.