Perth-based health insurer HBF has posted a 53 per cent rise in its net surplus to $93.7 million, while profit at the state government-owned Insurance Commission of WA fell 27 per cent to $203.5 million, despite an improved return on its investments.
Perth-based health insurer HBF has posted a 53 per cent rise in its net surplus to $93.7 million, while profit at the state government-owned Insurance Commission of WA fell 27 per cent to $203.5 million, despite an improved return on its investments.
Between the two businesses, there are about $8 billion of funds under management, according to annual reports released this week.
At non profit HBF, member contributions dropped 0.6 per cent to be just below $1.7 billion.
HBF claimed the lowest increase in premiums among big health insurers in the financial year, at about 1.9 per cent against an industry average of 3.3 per cent.
Net investment income was up by 16.4 per cent to $66 million, which HBF said was driven by stronger equity markets, partly offset by low interest rates.
The investment return was 4.3 per cent, compared to 3.9 per cent in 2018.
Claims fell 3.7 per cent to be $1.5 billion, partly due to the removal of some services from the company’s product mix, lower use of benefits, and a further $5 million saved through a tighter crackdown on fraudulent claiming.
Chief executive John Van Der Wielen said HBF would be focussed on investing in technology and keeping premiums down in the coming year.
“Our intention is to optimise and grow our existing private health insurance business, diversify the group’s revenue streams and services, and further enhance the capabilities of our people and operations,” Mr Van Der Wielen said.
At the Insurance Commission, premium revenue was up 3.6 per cent to $797.6 million, while net claims were up 12.8 per cent to $736.5 million.
Investment income was $350.5 million, with the commission saying it’s main fund had achieved a return of 6.9 per cent, while it’s second fund, MVCIF, scored a return of 7.8 per cent.
Chief executive Rod Whithear said there was an underwriting loss across business units of $58.2 million.
“This underwriting loss was mainly caused by a decline in discount rates (based on declining government bond rates) resulting in an increase in outstanding liabilities (future claims costs), and higher expenses as a result of government’s commitment to address historic child sexual abuse claims,” Mr Whithear said.
“The cost of these abuse claims are met by the state government and the RiskCover Fund.
“The Insurance Commission delivered a core underwriting loss of $34.7 million compared to a forecast underwriting profit of $7.5 million.
“The RiskCover Fund recorded an underwriting loss of $23.5 million.
“The Insurance Commission’s investment portfolio delivered a gross return of 7 per cent for 2019.
“A 7 per cent return is pleasing given that we had recorded an investment loss of $167 million at 31 December 2018.
“Investment markets rebounded sharply from the beginning of the 2019 calendar year, resulting in a turnaround of $517.5 million for our full investment portfolio.”
