nib has announced an increase in its underlying operating profit for the six months to the end of December 2022 underpinned by the strong performance of its major businesses, including Australian private health insurance.
The profit of $125.1 million was up 13.3 per cent compared to the comparable period in the previous year.
“We’re very pleased with the result on a number of fronts,” said CEO and managing director, Mark Fitzgibbon.
“There’s a symmetry returning to the businesses and profitability, after a period of COVID-led disruption. The half-year has set us up for a good full-year result and longer-term outlook.”
Total health insurance revenue rose 5.8 per cent to $1.4 billion while claims expense was up 4.9 per cent to $1.1 billion.
Mr Fitzgibbon said, “Market and business conditions look favourable for our strategy and we’ve definitely got an appetite to invest across the Group. Yet inflation, rising interest rates, and slowing economic growth suggest some level of caution is required. Claims are still lower than we’d expected and at some point, volumes will lift.”
Mr Fitzgibbon said the company's target margin for its Australian health insurance business is 6 to 7 per cent. He said the lingering impacts of the pandemic explain the company's relatively high margin of 8.6 per cent for the first six months of the financial year 2023. He said that it continues to take action to compensate for this higher level of profitability and protect affordability for members including cash rebates, premium deferrals and expanded cover.
This year’s premium increase at 2.72 per cent was nib’s second lowest increase in 20 years and below the industry average of 2.90 per cent, he said.
During the period, nib raised $158.1 million to fund its entry into the National Disability Insurance Scheme (NDIS). The company purchased its first plan manager, Maple Plan, in November 2022 and launched nib Thrive as the brand for the NDIS business. nib has also entered into agreements to buy two more plan managers, Peak Plan Management and Connect Plan Management.
“It is early days but there are few greater opportunities for us to have meaningful social impact than in keeping people healthy, and now, in supporting people with disabilities achieve their life goals,” said Mr Fitzgibbon.
He said nib is positive about the outlook for its businesses.
“No one is happy about the difficulties we see in the public healthcare system, but those issues will continue to render private health insurance more attractive to consumers,” he said.
“We don’t celebrate the problems we see in public health, with the system under considerable pressure. At nib, we have the sense of purpose and a strong appetite to do more. Private health insurers and the private healthcare sector generally, need greater non-government investment and participation in healthcare.
“We are an ageing society, with growing needs for healthcare, aged care and disability support. The inconvenient truth is we are simply running short of taxpayers’ dollars to fund our critically important welfare state. In healthcare, a very sensible start would be for private health insurers to cover members wherever they meet the healthcare system in Australia, just as we do today in New Zealand without fuss,” he said.
nib said it remains reluctant to reinstate financial guidance given lingering COVID-19 consequences and uncertainty.
“The business outlook is encouraging but there’s still some noise around COVID-19, deferred medical treatment and claims exposure,” continued Mr Fitzgibbon. “Our current provisioning is prudent, but it’s going to take a bit more time for this to settle.”