Suncorp Life reduced its Tier 1 capital by $297 million in the year to June 30, taking it to $455 million.

However, the business added $100 million of Tier 2 capital during the year.

CEO Geoff Summerhayes says Suncorp Life wanted to improve capital efficiency, which it did by renegotiating increased levels of reinsurance.

Life reinsurance costs increased to $512 million, from $445 million in the previous year.

As a result, $535 million of capital was released to parent Suncorp Group.

Suncorp Life had a common-equity Tier 1 coverage ratio of 1.57 at June 30, compared with 2.81 a year earlier.

Underlying profit fell 30% to $84 million in the year, although after-tax profit gained 53% to $92 million.

Annual inforce premiums totalled $911 million, compared with $840 million the previous year.

New business via advisers fell to $61 million from $68 million, while direct new business sales were static at $34 million.

Annual inforce premiums in the life and total and permanent disability business grew 8% to $419 million, while trauma premiums increased 8.4% to $167 million.

Income protection annual inforce premiums gained 8.3% to $235 million.

Claims liabilities grew to $260 million from $206 million. The insurer says disability experiences drove claims through financial advisers and group life.

Lapses are currently about 1.5% below Suncorp Life’s expectations, but the insurer revised its figures during the financial year. It says lapses are driven by affordability issues due to historic pricing structures.

Lapses in the year to June 30 totalled $26 million, with lapse rates in the adviser-driven business getting worse.

Suncorp forecasts the life business’ planned profit margin will be $25-$35 million lower in the current reporting year. This would lead to an after-tax profit of $90-$100 million.