AUS: Insurance and Superannuation Trends

AUS: Insurance and Superannuation Trends - June 1999

Total superannuation assets stood at $408.6 billion as at 30 June this year. This represented a growth rate of 5.4% for the June quarter, or 14% during 1998-99.

This is one of the key statistics in APRA Insurance and Superannuation Trends released today by the Chief Executive Officer, Graeme Thompson.

Superannuation growth during the June quarter was considerably increased by a number of one-off exceptional employer contributions made to some public sector superannuation funds, totalling approximately $8.4 billion. These contributions had to do with replacing previously unfunded liabilities and transferring members from defined benefit to accumulation schemes.

Other statistics in the June quarter Trends show that:

Contributions rose by 101.3% in the June 1999 quarter over the June 1998 quarter, or 39.5% during 1998-99, an increase from $33.9 billion to $47.3 billion for the year.

Member contributions continued their strong growth. They increased by 24% over the previous year to $16.1 billion.

Net contributions (ie. contributions less benefits) totalling $23.6 billion - a rise of $11.0 billion or 87.5% - flowed into superannuation during 1998-99.

As outlined in Trends, self-managed or DIY funds, industry funds and retail fund assets were the fastest growing market segments during 1998-99, all growing by 23%.

In comparison, reflecting continuing consolidation and rationalisation in how companies are managing their superannuation, corporate fund assets grew by only 8% during the year, while public sector fund assets grew by 20% due in part to exceptional employer contributions in the June quarter.

Life company statutory fund assets also showed strong growth, increasing by 1.8% during the quarter, or 10.7% during the year to stand at $168.5 billion by the end of June 1999. Reinforcing the industry focus on superannuation business, superannuation premiums amounted to $33.7 billion for 1998-99, up 24.0% (or $6.5 billion) on the previous 12 months. Superannuation premiums now represent 86.1% of total life company premiums.

Total assets of private sector general insurers were $55.6 billion at the end of June 1999, an increase of 0.9% during the previous 12 months. This slow growth is in part due to the revocation of the licenses of 12 workcover insurance companies during the June quarter. These revocations were associated with legislative change in Victoria. During 1998-99 premium revenue increased by 3% over the previous year to $14.6 billion, while claims expense increased by 12% over the previous year to $13.3 billion. The increase in claims expense primarily resulted from losses incurred in the reinsurance market.

APRA Insurance and Superannuation Trends is published on the APRA web site, (http://www.apra.gov.au) at the end of each quarter.

Other attachments to this statement include the 'Superannuation survey highlights - June 1999', which provides additional information on the manner of investment and asset allocation of superannuation; while 'Superannuation industry at a glance' provides a snapshot of the current structure of the superannuation industry.

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