Medibank delivers strong results in challenging times
Strong underwriting performance underpinned by the highest net membership growth in five years has propelled Medibank Private to overcome difficult investment conditions to post a result of $187.5 million for 2007/08.
Medibank's revenue grew by 10.1% to $3.4 billion, driven by the fund's strong membership growth of 65,584 resident memberships over the period. The impressive increase enabled Medibank Private to maintain national marketshare leadership at the end of the year, with 28.7 percent of all private health insurance memberships.
Medibank Private recorded an underwriting result $200.2 million for the year to June 30, equating to a margin of 5.8 percent. This is the sixth consecutive year of strong growth in underwriting result, and underpins the sustainability of the business in difficult financial times.
Managing Director George Savvides believes the results demonstrate that Medibank Private is in a very strong position to deal with current and emerging challenges confronting the industry and the broader economy.
"In 2007/08 Medibank Private has produced a very strong financial performance in a highly competitive and rapidly changing market. The figures show the careful attention that we have paid in the last five years to ensuring our core business is in good shape.
"Again this year we saw more people choose to join Medibank Private than any other fund, and we believe this directly reflects our focus on delivering value for our members. Our benefits to members increased by almost 9 percent to $2.9 billion, yet despite this we were able to contain our 2007/08 premium adjustment to just 4.64 percent, below the industry average," he said.
"Our highest new to fund membership growth came from individuals under 35 years of age. This is vital in a community-rated system where we need young healthy members to cover the benefits outlays for older members - it underwrites lower premiums and provides better access to enhanced benefits and services."
Mr Savvides acknowledged that not all indicators produced glowing results for the financial year.
"The current business environment in Australia, and indeed globally, is very difficult, and this is reflected in our relatively small net investment loss of $17 million, or -0.8%. When considered in the context of the past five years of positive investment returns the small loss is a testament to the responsible conservative investment strategy adopted by Medibank Private.
Medibank's Chairman Paul McClintock said, "I am pleased to be able to say today that through the hard work of the management and staff, Medibank Private is in an excellent position to withstand the difficult economic conditions facing us and our members and able to continue to offer the protection and value for money expected of Australia's largest health fund."
The fund continued its investment in renewing its business systems during 2007/08. This has included the implementation of a new automated hospital claims system. Medibank Private Limited
Mr Savvides was also positive on the future of the private health insurance industry, its changing shape, and Medibank Private's role in the changes.
"I think we will look back at financial year 2007/08 as a new beginning for private health insurance in Australia. For the industry there can be no doubt the story of the year was the launch of an unprecedented phase of consolidation, and by the end of 2008/09 it really will be a different operating environment compared to the past. We expect to see much more intense competition and a greater role for health funds in the provision of health management programmes for fund members with chronic diseases.
In July 2008 Medibank announced its bid to acquire the mid-sized health fund, Australian Health Management (ahm). It is expected that ahm members will vote on the Medibank proposal at the end of 2008.
The Chairman was pleased to announce the continued leadership role of the organisation through the re-appointment of the Managing Director, George Savvides for a further three year term.
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