Insurers in tough times
HEALTH insurer NIB has upgraded its profit guidance but says the health insurance market is enduring a tough time because of low wages growth and stiff competition.
NIB managing director Mark Fitzgibbon says the number of customers in NIB’s core Australian residents health insurance (ARHI) business grew by only 1.1 per cent in the first half of the financial year, down from growth of 2.1 per cent a year earlier.
However, the overall industry grew by only 0.3 per cent, and NIB accounted for about 36 per cent of that growth.
NIB expects the number of its policyholders to rise by close to 3 per cent over the full year, less than the group’s 4 to 5 per cent target.
Mr Fitzgibbon said the entire system growth of about 60,000 policyholders in the past calendar year was low.
“I used to talk about system growing by between 150,000 and 200,000 widgets a year, so it’s a long way off that,” he said.
NIB yesterday reported a 0.3 per cent dip in net profit to $70.9 million for the six months to December 31, largely due to $3.6 million in costs associated with its $155.5 million purchase of corporate health insurer GU Health.
NIB’s underlying operating profit was up 1.3 per cent at $94.6 million.
GU Health contributed $28.4 million of revenue in two months.
NIB’s non-ARHI businesses — which include international students and workers, travel insurer World Nomads, and NIB New Zealand — generated more than 31 per cent of the group’s underlying profit.
NIB raised its guidance for full-year underlying operating profit from $155 million to at least $165 million.