The general insurance industry incurred underwriting losses in the December quarter and last year, squeezed by revised provisions for pandemic-related business interruption (BI) claims and the growing financial toll from natural catastrophes, the prudential regulator says in a new statistical report.

Filings to the Australian Prudential Regulation Authority (APRA) show the industry made an underwriting loss of $78 million last year, compared with a $2.3 billion profit in 2019. Net profit after-tax fell sharply, declining by 98.9% to $35 million.

For the December quarter, the industry made an underwriting loss of $1.1 billion. It had an underwriting profit of $1.1 billion in the preceding September quarter. The December quarter also produced a net loss of $649 million, versus an $836 million profit for the September quarter.

“The result was driven by natural catastrophe claims costs, provisions for BI claims, and falls in investment income,” APRA says of last year’s results in its latest industry update.

“Gross incurred claims costs were significantly higher during the year with the recognition of COVID-19 related BI provisions.

“Claims costs from catastrophic bushfires and storm events, and a large strengthening of long tail claims reserves, were also major drivers.”

APRA says the December losses stemmed predominantly from increased provisions for COVID-related BI claims. Other significant contributing factors in the quarter were increased short-tail property claims costs from a southeast Queensland hailstorm event, and claims reserve strengthening across several classes of business including mortgage and public and products liability.

Gross earned premium increased 5% to $52.6 billion last year but gross incurred claims rose at a faster pace, going up 23.7% to $47.2 billion. The trend was played out in the December quarter as well. Gross earned premium grew 3.3% to $13.6 billion while gross incurred claims advanced 59.7% to $14.4 billion.

Investment income last year fell 48.8% to $1.7 billion, and 19% to 507 million for the December quarter.

The APRA data is based on input from 93 insurers.

In a separate report, APRA provided individual insurers’ earnings for the December quarter.

Following are the results of key primary insurers (in alphabetical order):

AIG Australia recorded gross earned premium of $248 million, gross incurred claims of $158 million and $33 million in net profit

Allianz Australia had $1.27 billion in gross earned premium, gross incurred claims of $1.34 billion and a $178 million net loss

Hollard Holdings Australia posted $373 million in gross earned premium, $354 million in gross incurred claims and a $51 million net loss

IAG booked $2.2 billion in gross earned premium, $3.55 billion in gross incurred claims and a $818 million net loss

QBE Insurance Australia had $1.42 billion in gross earned premium, $1.49 billion in gross incurred claims and a $62 million net loss

Suncorp-owned AAI recorded gross earned premium of $2.11 billion, gross incurred claims of $1.93 billion and net profit of $95 million.

The results of selected reinsurers:

Munich Re had gross earned premium of $407 million, gross incurred claims of $293 million and net profit of $130 million

Swiss Re made gross earned premium of $92 million, gross incurred claims of $122 million and zero profit.

Click here for the APRA statistics.