General insurers more than tripled their combined underwriting earnings to $6.1 billion for the year to September 30 but suffered investment losses of $3 billion, causing industry-wide net profit to decline 0.8% to $960 million, latest prudential data shows.

The Australian Prudential Regulation Authority (APRA) says the investment loss – compared with a $1.2 billion profit a year earlier – was due to the increase in bond yields over the 12-month period, resulting in unrealised losses on interest bearing investments.

However, insurers’ investment portfolios performed better in the September quarter, rebounding with a profit of $100 million after losing $1.2 billion in the preceding three-month period.

APRA says despite the turnaround, investment income remained subdued relative to historic levels.

Frontier Advisors Principal Consultant Elie Saikaly says investment markets have been very challenging for all insurers over last 12 months with most major markets experiencing losses as central banks globally raise official cash rates to combat inflation.

“However, over the last quarter investment returns in some markets have returned to positive territory,” he told insuranceNEWS.com.au.

APRA says the surge in underwriting profit from $1.9 billion a year earlier came as the industry pushed through with rate adjustments after floods and other extreme weather events drove up claims.

“Premium increases were more prominent in the householders, domestic motor, fire and industrial special risks, professional indemnity and reinsurance classes of business,” the regulator says.

Gross earned premium went up 11.3% to $61.9 billion and gross incurred claims also increased, but by a slower 8.1% to $46.3 billion.

APRA says the NSW/Queensland floods in February and March – the costliest insured flood catastrophe with losses of at least $5.57 billion – in particular led to the surge in gross incurred claims.

Importantly for the industry, net earned premium rose 10.3% to $43.3 billion while net incurred claims declined 3.4% to $26.9 billion, reflecting an increase in reinsurance recoveries.

APRA also provided an update on individual insurer results for the September quarter.

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

• AIG Australia booked gross earned premium of $287 million, gross incurred claims of $163 million and $15 million net profit
• Allianz Australia had gross earned premium of $1.61 billion, gross incurred claims of $1.09 billion and $122 million net profit
• Hollard Insurance Australia recorded $476 million in gross earned premium, $310 million in gross incurred claims and a net loss of $3 million
• IAG achieved $2.33 billion in gross earned premium, $1.41 billion in gross incurred claims and a $75 million net profit
• QBE Insurance Australia posted $1.72 billion in gross earned premium, $1.12 billion in gross incurred claims and $107 million net profit
• Suncorp-owned AAI recorded $2.37 billion in gross earned premium, $1.74 billion in gross incurred claims and a $52 million net loss