'Edit their DNA': NIB looks to future as profit, dividends rise
Lower than expected claims growth has helped private health insurer NIB increase its profit and raise dividends as it looks to a future of big data where its members can edit their own DNA to treat diseases.
On Monday, the company reported a higher underlying net profit of $185 million, up 20.2 per cent, and statutory operating profit of $169.0 million, up 12.2 per cent. Underlying revenue rose 11.5 per cent to $2.2 billion.
The company paid out $1.5 billion in Australian residents' health insurance claims, funding more than 280,000 hospital admissions and 3.7 million dental and ancillary visits.
NIB managing director Mark Fitzgibbon said the acquisition of GU Health (GU) in October last year helped achieve a 12.1 per cent increase in premium revenue to $1.9 billion.
The company declared a final dividend of 11¢ a share, up from 10.5¢ last year, making it 20¢ for the full year, up from 19¢.
Net profit after tax (NPAT) grew 11.1 per cent to $133.5 million.
Mr Fitzgibbon said affordability was a “relative concept” but more could be done in the digital age.
He told Fairfax Media earlier this year that the fund was keen to tap into its customers' digital data to better manage and treat diseases.
“Powered by big data, artificial intelligence and amazing advancements in medical science, we are certain the future will be much more about disease prevention than it is cure and as a business we plan to be at the vanguard of the transformation,” Mr Fitzgibbon said on Monday.
“Financial protection and rapid access to doctors and hospitals will always remain crucial for when we get sick or need medical treatment but increasingly our members will look to us to help them better manage their wellbeing and known health risks.”
This future was “much closer than many think”.
“Members will be provided with the means to literally edit their DNA to wipe out a potential disease,” he said.
Members will be provided with the means to literally edit their DNA to wipe out a potential disease
NIB CEO Mark Fitzgibbon
NIB's net policyholder growth, excluding GU, was 3 per cent compared to the industry average of 0.5 per cent, with the GU business adding about 29,000 extra policy holders in the year.
While it paid 4 per cent more in claims this financial year, Mr Fitzgibbon said its net margin grew 50 basis points to 6.9 per cent.
He said the net margin was higher than NIB targeted “simply reflected a year of lower than expected claims growth”.
“As we reported in last week’s market update, NIB and private health insurers generally are currently experiencing historically low levels of claims inflation,” Mr Fitzgibbon said.
It was driven by number of factors, one of which was "significant reduction in the price insurers pay for medical prosthetics".
NIB’s Net Promotor Score – the company’s own customer measurement tool - improved to 28.7 per cent from 23.2 per cent the year before.
“Although still more than we’d like, our lapse rate dropped 60 basis points to 12.9 per cent,” Mr Fitzgibbon said. “It’s the first time in nine years we’ve actually seen our annual lapse rate drop compared to the previous year.”
NIB's international students and workers' business surpassed more than 160,000 people covered, lifting revenue by 24.7 per cent to $93.3 million.