Healthy investment returns helped general insurers offset a 21% surge in claims last year, the Australian Prudential Regulation Authority’s (APRA) half-yearly report reveals.

While gross incurred claims surged $4 billion to $22.4 billion as severe storm activity took a toll, industry profit was buoyed by a 9% increase in investment income from $4.3 billion to $4.7 billion.

That allowed industry net profit to edge forward 1% from $5.36 billion to $5.41 billion in the 12 months to December 31 last year.

Insurers reported gross premium revenue of $30.2 billion, up $1.3 billion on the previous year while underwriting profit was down 6% to $3.3 billion.

APRA Executive Member John Trowbridge says insurers’ conservative approach to investment minimised the effect of financial market turmoil, with just 7.8% of funds invested in equities.

The prudent use of reinsurance also mitigated the impact of severe weather, he said.

“To have faced this combination of stresses and come through relatively unscathed to this point is a good indication of the overall strength of the industry,” Mr Trowbridge added.