HBF has issued its annual report for the financial year 2020 saying a positive result was underpinned by the prudent management of its investment portfolio and "rigorous financial discipline across the fund".
The insurer provides health insurance for almost one million Australians, most of whom reside in its home state of Western Australia.
It reported a profit of $38 million that was significantly built on investment income. It cancelled its approved 2020 annual premium increase.
CEO John Van Der Wielen said, “Through the careful management of HBF’s capital reserves – which are critical to the fund’s long-term stability – we delivered a 2.1 per cent return in a year when many organisations reported negative returns.”
He continued, “The investments return equated to $34.7 million – a substantial part of our overall $38.8 million surplus result in FY20. Delivering a surplus result helped ensure HBF was able to continue providing value for members and keep health insurance affordable, in line with our ethos as a not-for-profit organisation.
“In particular, HBF implemented an industry-leading response to COVID-19 as the only major health insurer to commit to a 12-month premium increase cancellation for all members, providing an average saving of $75 per policy.
“In addition, we put in place a range of hardship support measures that had been taken up by approximately 15,000 members by the end of the 2020 financial year.
“And we once again had one of the highest payout ratios of all the major health insurers, with 88.6c per $1 received in premiums returned to members through claims during FY20.
“This has been a challenging year but I am proud of HBF’s response to support our members in these difficult times.”
The insurer said the 2.1 per cent return on its investment portfolio was driven by two key factors – a well-timed 50 per cent reduction in its equity exposures in October 2019 to reduce risk and a gradual increase in equities in mid-March 2020 as the capital markets began to rally following the severe contraction due to COVID-19.
HBF said it used its strong financial position to progress key initiatives under its strategic plan, including expansion into the east coast market and the launch of a new mobile app.
It said the strategic plan also includes exploring merger and acquisition opportunities and new business partnerships.
“In FY20, not only did we act to support our members now but we also continued to invest in the future through our east coast expansion, technology transformation, and other strategic growth initiatives that are aimed at providing long-term value for our members,” said Mr Van Der Wielen.
“For example, in FY20 we spent $41 million of the $200 million earmarked in a transformation package that will provide a far more intuitive, personalised and modern service for our members. We also launched our innovative east coast advertising campaign aimed at attracting new members to the value we provide as an experienced not-for-profit health fund.”