nib has announced a full-year underlying operating profit of $184.81 million for the 12 months to 30 June 2018.
The result represents a 20.2 percent increase on the previous financial year. Net profit after tax (NPAT) grew 11.1 percent to $133.5 million and statutory earnings per share by 8 percent to 29.4 cents per share.
Managing director, Mark Fitzgibbon, said the result reflected ongoing solid growth across the group business and the strong execution of its business strategy.
The Australian residents health insurance (arhi) business reported a 12.1 percent increase in premium revenue to $1.9 billion.
Its portfolio of adjacent businesses also grew, with revenue rising 8.1 percent to almost $358.9 million.
“Our core arhi business once again grew organically at a rate well ahead of the industry average and we welcomed the GU business," said Mr Fitzgibbon.
"Our net policyholder growth excluding GU was 3.0% compared to industry average of 0.5%, with the GU business adding approximately an additional 29,000 policyholders for the year. And while in arhi we paid 4.0% more in claims compared to FY17, our net margin grew 50bps to 6.9%.”
Mr Fitzgibbon said the 6.9 percent net margin in arhi was higher than the company targeted and reflected a year of lower than expected claims growth.
“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.
“It’s a welcome development and is being driven by a number of factors. One of these factors is the significant reduction in the price insurers pay for medical prosthetics. Prosthetic savings were passed on in full to members with our average premium increase of 3.93% this year our lowest increase in 15 years."
Mr Fitzgibbon said the company was also pursuing ways to improve transparency and the member experience.
“We’re pursuing multiple initiatives across the business such as directly helping our members better manage their health and choose a doctor, dentist or other healthcare provider, especially in order to avoid or limit out-of-pocket expenses,” he said.
“Today, about one in four arhi members are contacting us before going to hospital in order to check their cover or help choose a doctor. We’re also seeing 25% of dental and more than 40% of optical services occurring within our arhi 'First Choice Network', with reduced gaps for members and there are now almost 700,000 patient reviews to read online at Whitecoat. During the year we also saw over 10,000 members enrol in health management programs across the Group including our first ever Maori population health trial in New Zealand where we now help manage the health of Ngāti Whātua Ōrākei.”
Mr Fitzgibbon said market conditions in the Australian (arhi) and New Zealand market continue to be difficult with modest growth prospects due to macroeconomic factors including affordability and negligible growth in discretionary spending.
In the core arhi business, nib said it is pursuing annual organic growth of 3-4 percent but anticipates net margin contraction from 6.9 percent in FY18 towards the top end of its target range of 5-6 percent in FY19.