Australia's largest private health insurance company, Medibank Private Limited, returned a positive financial performance during the first half of the 2003 financial year, continuing its extensive recovery program.
The not-for-profit fund produced a surplus of $2.8 million for the half-year reporting period ending 31 December 2002. The performance represents a net profit improvement of $92.1 million over the half-year ended 31 December 2001.
During an address to the Australian Financial Review 5th Annual Health Congress in Sydney, Managing Director Mr Savvides said the turnaround in the fund's operating performance was extremely pleasing.
"For some period Medibank Private has had in place a detailed business recovery program to both restore profitability whilst maintaining competitive premiums for members", Mr Savvides said.
"The objective of getting the business back on track was to put the fund in a position to deliver affordable, value-for-money private health cover."
Mr Savvides said management expenses for the fund were 5.4% lower than the 2002FY half-year due to the continued focus of the organisation on driving cost efficiencies through the business, but not at the expense of customer service. At the half-year the Management Expense Ratio for Medibank Private moved below 9%, compared to the industry average of over 11%.
Medibank Private's overall membership levels remained stable, with the small loss in membership over the period being well below projection. The fund's national share is 30.0% (as at 31 December 2002) of the private health insured population.
Investment income improved for the half-year, and was attributable to the successful defensive investment strategy adopted by the Medibank Private Board back in May 2002, shifting the portfolio to secure short-term money and fixed interest markets.
Member benefits paid for the period increased by 5.1% to $1015.3 million as a result of increased service levels and utilisation rates. The fund returned more than 93.5% of contributions back in the form of benefits paid.
"Our continued strong benefit payout ratio underlines the fact that our members are still receiving genuine value via payment return from the Medibank Private fund," Mr Savvides said.
Mr Savvides said that member and customer servicing remained a priority focus, with large scale investment in improved member servicing taking place within both call centres through technology upgrades and the fund's national retail network undergoing a refurbishment program.
About a third of Medibank Private's 100 retail stores will be upgraded with a new innovative store layout and health information features by the end of the financial year.
"We believe this new retail concept will allow us to better engage our customers and offer them expanded services beyond conventional claim transactions," Mr Savvides said.
Medibank - Half-Year Financial Performance (FY03 over FY02)Half Year ComparisonAt 31 Dec 2002****Against 31 December 2001Benefit Outlays$1.0 billion+5.1%Half Year ComparisonManagement Expenses-5.4%Management Expense RatioBelow 9%+12% 2 years agoInvestment IncomeImproved performance on prior half yearUnderwriting Profit($21.9m)+$47.7mMembership(mkt share)30.0%Strong retention in static mktFinancial Result$2.8 m+$92.1m****