- The largest Aussie insurance company, Medibank Private, is said to have defied trends and expectations today, by growing net profits by 3.1 per cent
- Over a full year period of business, the group boosted its customer base by 15,100 and reached $458.7 million in net profits
- Shareholders will be handed out an ordinary dividend of 7.4 cents per share and a special dividend of 2.5 cents per share
- Citing policyholder growth in all four quarters of the financial year for the first time in four years, the company also reduced business costs by $40.4 million and aims to hit an even $50 million over the coming years
Australia’s largest insurance company, Medibank Private, has defied expectations and shortcomings by releasing a strong full year profit report this morning.
Going against strong industry trends and indicators, the insurer was able to add 15,100 new customers to its insurance plans over the business period.
This uptake in customers helped boost the company’s net profits by 3.1 per cent to $458.7 million.
“This is a good quality result, demonstrating that the investment we have made to improve the value and service proposition for our customers is making our business stronger and more sustainable in a challenging market environment,” CEO Craig Drummond said.
“The ongoing strong recovery of the Medibank brand has seen policyholder growth in all four quarters of the financial year for the first time in four years.”
The company’s operating profits also jumped 1.3 per cent, to reach $542.5 million.
Management expenses also shrank by 0.1 per cent – to reach a ratio of 8.7 per cent.
The company’s Medibank Health sector saw massive growth as well, increasing operating profit by 27 per cent to $22.1 million.
“It is pleasing that our market share has grown 5 basis points over the year, driven by our dual brand strategy and improved customer acquisition and retention,” Craig continued.
“This is the first time in a decade we have grown market share over a full year.”
Since releasing its strong business update this morning, share prices in Medibank have gained 2.37 per cent in the ASX – trading for $3.46 apiece.
Like many shareholders today, loyal investors in Medibank will be handed ordinary and special dividends.
The full year ordinary dividend will be paid at 7.4 cents per share – a payout ratio to net profits of 80 per cent. Special dividends will be paid at 2.5 cents per share.
“We are also looking at alternative ways to deliver healthcare to our customers,” Craig added.
The insurer is jumping into an innovative trial with group Nexus Hospitals, helping to fund knee and hip replacements.
“Nexus is offering participating Medibank customers a zero out-of-pocket medical experience, which is a win for patients,” Craig said.
“Affordability for customers continues to be a critical focus for us.”
Medibank is able to take part in these new ventures, due to the company reducing large company costs over the the last two calendar years.
The group saved over $40.4 million in productivity savings and is aiming for an even $50 million in savings over the next three years. In the next financial year alone, the company aims to reap $20 million in savings.
“Looking forward to 2020, the Health Insurance business is positioned to grow, and we are well placed to become a leader in the in-home care market,” Craig said.
“We continue to pursue opportunities to differentiate and deepen our offer for customers and transform into a broader healthcare company.”
The major insurer’s market cap is valued at $9.308 billion today.