Revenue2 of £7.4bn was up 9% (HY 2022: £6.8bn) at Constant Exchange Rates (CER) with period-on-period growth across all lines of business and Market Units driven by:
- Customer volume growth with insurance customers increasing by over four million, provision customers increasing by one million and occupancy rates in aged care 4ppt higher period-on-period.
- The impact of pricing action, as we seek to balance continued high inflation, remaining competitive for customers and maintaining discipline in our underwriting of insurance risk.
This half year report for 2023 marks our first set of results reporting on the new IFRS 17 accounting standard for insurance contracts which does not impact the overall economics of our business or strategy, but does change the presentation of our results and specifically the following:
- Under the new accounting rules, we are no longer able to hold certain provisions3 in Australia related to the COVID-19 pandemic. The absence of these provisions has led to significant fluctuations in both our restated H1 2022 and H1 2023 reported profits.
Underlying profit4 before taxation of £254m was down 22% at CER (HY 2022: £324m). This was principally driven by Australian health insurance where:
- In the first half of 2022 we experienced lower claims frequency and higher margins due to the impact of COVID-19.
- In the first half of 2023, costs associated with returning claims savings to customers increased to £231m (HY 2022: £109m).
Profits in our other Market Units grew significantly driven by higher investment returns, customer volume growth and the impact of premium rate changes in the Chile Isapre business reducing losses.
Statutory profit before taxation of £241m increased by 5% at AER (HY 2022: £231m) with the reduction in underlying profit offset by favourable movements in non-underlying items.
Solvency II capital coverage ratio remains strong at 171%5 (FY 2022: 181%) with leverage (excluding IFRS 16 lease liabilities) of 19.4% (FY 2022: 18.7%).
Market Unit and other Businesses underlying profit percentages are derived from reportable segments (which excludes central expenses and net interest margin). Revenues from associate businesses are excluded from reported figures. Customer numbers and economic share of post-tax profits from our associate businesses are included.
Business context
Our performance is driven by continued good customer volume growth in health insurance, increased activity in health provision and higher occupancy rates in aged care leading to period-on-period revenue growth in all lines of business.
The announcement of a further return of £175m (A$320m) claims savings to Australian Health insurance customers in June takes the total financial impact of claims savings returned in H1 2023 to £231m (HY 2022: £109m).
The global macro-economic, political and regulatory environment within which we operate remains uncertain, with high and more persistent levels of inflation than expected. Interest rates have risen in response as central banks have sought to tackle inflation. Through these challenging times we are committed to keeping our pricing as competitive as possible for our customers, maintaining a tight focus on efficiencies across the Group.
Iñaki Ereño, Group CEO, commented:
“These results reflect continuing good organic growth across our health insurance businesses, increased activity in our health provision businesses to meet growing customer demand and improving occupancy rates in aged care. We continue to be encouraged by the overall performance of the Group as we become an increasingly digital business while navigating market challenges.
“We are confident for the future and there is positive momentum behind our strategy and our ambition to be the world’s most customer-centric healthcare company. We are seeing the results of our 3×6 strategy which continues to inspire our people in the delivery of great customer service alongside high standards of care. There is much to do, but we are well positioned to meet our customers’ healthcare needs. We also remain focused on our purpose, as we support wider communities where we can while tackling environmental issues.”