NEWCASTLE health fund NIB has reported a significant increase in earnings and profits, with revenue of $1.5 billion up by 9.3 per cent and underlying profit of $125.1 million up by 13.3 per cent for the first half of the 2022-23 financial year.
"We're very pleased with the result on a number of fronts," NIB CEO Mark Fitzgibbon said on Monday.
"There's a symmetry returning to the businesses and profitability, after a period of COVID-led disruption. The half-year has set us up for a good full-year result and longer-term outlook."
The NIB board declared a fully franked interim dividend of 13.0 cents per share (11.0 cents per share in the previous corresponding period).
Despite the sound results, NIB shares had dropped almost $1 since Friday, where they closed at $7.96 and opened on Monday morning at $7.00.
Mr Fitzgibbon said insurance premium revenue grew 5.8 per cent to $1.4 billion, outstripping a 4.9 per cent increase in net claims expense of $1.1 billion.
Net profit after tax rose 12.8 per cent to $91.6 million, up from $81.2 million. Net investment income rose by 47 per cent to $22.2 million, up from $15.1 million in the first half of the 2022 financial year.
"Market and business conditions look favourable for our strategy and we've definitely got an appetite to invest across the group," Mr Fitzgibbon said.
"Yet inflation, rising interest rates, and slowing economic growth suggest some level of caution is required. Claims are still lower than we'd expected and at some point, volumes will lift."
Mr Fitzgibbon said progress was being made on its "Payer to Partner (P2P) strategy", which he said was about "helping people stay well" as well as paying claims.
"We see a future whereby people join NIB not just because we offer financial security, but because we provide members and their doctors with deeper insight into personal health risk and management, and easy access to a broad ecosystem of healthcare products and services designed to better prevent, manage and treat medical conditions," Mr Fitzgibbon said.
"This is playing well for our members and the business. Members now have access to health assessments, GPs, men's and women's health products, pharmacy delivery at home, skin checks, sophisticated disease management programs and healthcare literature. And most of it can be done on your smart phone."
Mr Fitzgibbon said Honeysuckle Health - which is NIB's joint venture with Cigna Corporation, was a significant contributor to its P2P ambitions.
Mr Fitzgibbon said NIB had an insurance market target of 6 per cent to 7 per cent.
He described the current margin of 8.6 per cent as "relatively high", but said it was down on the previous comparable period and was related to the "lingering impacts of the pandemic".
He said action taken to "compensate for this higher level of profitability" included cash rebates, premium deferrals and expanded cover.
"This year's premium increase at 2.72 per cent was NIB's second lowest increase in 20 years and below the industry average of 2.9 per cent," Mr Fitzgibbon said.
He said NIB raised $158.1 million during the half year to fund its entry into the National Disability Insurance Scheme (NDIS).
He said NIB bought its first plan manager, Maple Plan, in November 2022 and launched NIB Thrive as the brand for the NDIS business. It had entered into agreements to buy two more "top-10 ranked" plan managers, Peak Plan Management and Connect Plan Management.
"After these acquisitions are completed, NIB will have around 22,000 NDIS participants and is on track to reach at least 50,000 by the 2025 financial year," Mr Fitzgibbon said.
"It is early days but there are few greater opportunities for us to have meaningful social impact than in keeping people healthy, and now, in supporting people with disabilities achieve their life goals," Mr Fitzgibbon said.
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