Health insurer NIB has reported an 11 per cent rise in annual net profit to $132.4 million, boosted by improved profitability in its Australian business thanks to a slowdown in the cost of claims.
The company’s revenue was also aided by the acquisition of corporate health insurance provider GU Health last year, which lifted its total premium revenue by 12.1 per cent within Australia to $1.87 billion.
Revenue excluding the impact of GU Health lifted 5.6 per cent for the year.
NIB’s managing director Mark Fitzgibbon said the company’s 6.9 per cent net margin for its Australian health insurance business was higher than expected.
“As we reported in last week’s market update, NIB and private health insurers generally are currently experiencing historically low levels of claims inflation,” he said.
NIB shares jumped on August 13 when the insurer upgraded its profit forecast, citing lower claims inflation due to better cost control, cheaper prosthetics and customers opting for lower levels of cover.
Shares were 2.5 cents, or 0.4 per cent, lower at $6.565 at 1257 AEST.
NIB reported average premium increase of 3.93 per cent in 2018, which it said was its lowest increase in 15 years.
The health insurer’s travel insurance, international workers and students health insurance, and New Zealand operations grew full year underlying operating profit by 8.3 per cent to $61.1m.
NIB said a key focus for the insurer has been improving transparency with members by helping reduce their costs and help finding medical experts.
“Today, about one in four Australian residents health insurance members are contacting us before going to hospital in order to check their cover or help choose a doctor,” Mr Fitzgibbon said.
NIB flagged modest growth prospects for 2018/19, with likely reduction in margins due to ongoing difficult market conditions.
NIB blamed macroeconomic issues for this, including affordability and customers being forced to tighten their belts amid poor wage growth in Australia.
It is targeting annual growth of three to four per cent in its Australian health business, in line with the three per cent increase in policyholder numbers to almost 595,000 in 2017/18.
However NIB expects net margins to drop from 6.9 per cent to near the top end of its five to six per cent range for 2018/19.
It will pay a final dividend of 11 cents a share, up from 10.5 cents a year earlier.
NIB PROFITS AS CLAIMS COSTS COME DOWN
* Reported net profit up 11pct to $132.4 million
* Revenue up 11pct to $2.27 billion
* 11 cents a share, up from 10.5 cents a year earlier