Rising claims hurt nib's bottom line
Health insurer nib says acquisitions are still ‘‘on the agenda’’ after company, hit by a rise in claims, posted a drop in first half profits.
The company’s profit fell 5.3 per cent to $36.3 million in the six months to December 31.
The insurer blamed the disappointing result on inflation driven by private hospital costs and a rise in the number of optical and dental claims.
Chief executive Mark Fitzgibbon said it was the ‘‘usual claims experience’’ felt by the company.
‘‘The underwriting result, while disappointing, is not entirely unexpected,’’ he said. ‘‘It doesn’t matter which part of the healthcare system you’re in, we’re seeing inflation in the order of 5-7 per cent.’’
Mr Fitzgibbon maintained a positive outlook for the industry despite caps to the government’s health insurance rebate coming into effect next financial year.
He said acquisitions were still ‘‘on the agenda’’ but not the company’s sole focus.
‘‘We’re taking an opportunistic approach," he said.
The company purchased New Zealand's Tower Medical Insurance Ltd for $80 million in November in its first offshore venture.
NIB shares were down 5 cents at $2.23 in late trade.
The company’s result reflects a broader trend for the industry, highlighted by UBS analysts last week, which shows profit margins of the big health insurers being squeezed as their members grow older and cash in claims.
Commsec data for the December quarter data shows private health membership levels were still steady at 46.9 per cent of the Australian population, and had risen 2.9 per cent since the corresponding period.
NIB will increase its premiums by an average of 6.5 per cent in April to offset changes to the government rebate.
The company upgraded its full year pre-tax underwriting profit forecast to between $75 million to $78 million, from $70 million to $75 million.
NIB’s interim dividend rose to 5 cents per share, up from 4.25 cents.