Margins have been squeezed at nib as health insurance claims return to a post-pandemic normal, with the health fund reporting lower-than-expected profit growth last financial year.
The $257.5 million underlying operating profit clocked by the insurer in 2023-24 fell short of expectations, while group revenue grew 9.3 per cent, to $3.3 billion.
Shares in nib had sunk to more than three-year low by mid-afternoon on Monday, down 16.8 per cent to $6.05.
Record sales across nib's core Australian residents health insurance business supported revenue growth over the 12 months.
The 2.5 per cent increase in policy holder growth came amid cost-of-living pressures, acute market competition and back-to-back premium bumps over the 12 months.
Nib managing director and chief executive officer Mark Fitzgibbon said demand for private health insurance stemmed from the ongoing crisis in the public hospital system, including long wait lists, as well as a growing population and demographic shifts.
The COVID-19 pandemic heightened people's awareness of the need for protection, he said.
Government policy was also supportive of the sector.
Net margin across the Australian residents health insurance business was 8.2 per cent in FY24 and 6.7 per cent in 2H24, reflecting "rising claims inflation and nib's intent to allow the net margin to ease toward a stated six-seven per cent target".
Mr Fitzgibbon said claims were accelerating from an artificially low base, with COVID-19 putting a stop to elective surgeries and dentist visits.
Alongside hospital cost pressures, this was keeping pressure on premiums and underwriting margins, he said.
New Zealand's underlying operating profit disappointed, down from $30.1 million in FY23 to $19.3 million, impacted by high inflation.
The insurer's travel, international students and workers, National Disability Insurance Scheme and New Zealand operations together contributed about a quarter of its underlying operating profit.
The company declared a second-half dividend of 14c per share fully franked, to 29c, up from 28c.
