Medibank Private today announced a record annual financial result of $200.1 million profit, driven by better management of healthcare costs and strong membership growth due to improved member value.
The result marks the fourth consecutive year of improved financial performance for the health fund with the highest membership growth in four years. A record $2.45 billion was paid in benefits on behalf of members and a $100.2 million underwriting profit after expenses was achieved.
Medibank Private Managing Director, George Savvides, said by demonstrating a powerful performance in membership and market share gains against key competitors Medibank was, beyond any doubt, leading the industry to a sustainable future.
"This result has reinforced the foundation on which the business will move forward.
"Our financial performance is responsible and sustainable. In our 30th year of operation, we are in a strong prudential position to serve the future needs of our members," he said.
The results were attributed to a number of factors including: targeted product innovation attracting new members; more efficient purchasing of health services; excellent investment returns; and efficient management of expenses with 86% of contributions returned to members in benefits.
"Importantly, this result has been achieved while keeping the member at the centre of our strategies. In the last financial year, we've attracted the largest number of new members of any health fund since the introduction of lifetime health cover in 2000.
"As a direct result of successful product innovation, more than half of this membership growth was in the 25-34 age bracket.
"We are now stronger than ever and I am confident that our ongoing performance will result in increasing value for members and increasing membership growth.
"We have delivered on our commitment to take pressure off premium growth. Our strong financial performance ensures that we can continue to protect our members and gives us the ability to continue to decrease the rate of premium growth.
"We expect that 2007 will see the rate of premium growth below this year, making it the third consecutive year of reduced premium growth.
"We have got the balance right: we've increased member value by eliminating excess payments for children on hospital cover; introduced new targeted products for the youth and corporate markets; successfully diversified into the marketing of travel insurance; and delivered on a promise to slow the growth of premiums," Mr Savvides said.
"Medibank Private's prospects are exciting, with the imminent introduction of broader product legislation and continued strong financial performance we can offer more comprehensive products and services that will bring improved efficiencies.
"For now though, our improved financial stability means we can continue to take pressure off the rate of premium growth, add value for members, and most importantly, continue to build a sustainable private health insurance industry," Mr Savvides said.
Highlights of Medibank Private's 2005-06 results:
� Highest increase in net resident membership growth in four years - over 200,000 new resident memberships sold
� A 53%, or $69.4 million, improvement in bottom line results on previous year to $200.1million.
� Positive underwriting profit after expenses of $100.2 million - an improvement of $37.9 million or 61% from previous financial year.
� Investment income increased by 44%, or $29.9 million, over the previous year to $97.9 million - achieved by increased operating cash flows and strong equity market returns, whilst maintaining a well-balanced investment portfolio.
� Return on equity of 27%, up from 24% the year prior.
� A record $2.45 billion paid in benefits on behalf of members.
� Maintained leadership in market share of 29%.
� Premium income rose to $2.8 billion
� Profit improvement over the past four years equals $376 million
� Retained Standard & Poor's rating of 'A-' - highest rating achieved for the private health insurance sector
ENDS
For further information please contact:
Libby Woolnough - Medibank Private
T. (03) 8622 25181 or 0411 659 060
E: libby_woolnough@medibank.com.au