Vhi Group report a net surplus of €45.5 million for year ending 31 December 2015

€1.38 billion paid in claims – an increase of 10%  

Ageing Population and Increases in Chronic diseases means significant challenges for healthcare in Ireland

 25th July, 2016 - Vhi today announced its annual results for the year ending 31 December 2015 recording a net surplus of €45.5 million and an improved reserves position of €521 million at year end. Vhi also recorded an increase in membership for the first time in 8 years and is now serving 1.068 million health insurance customers. 

2015 was a landmark year for the Vhi Group in that Vhi Insurance DAC was authorised as a Non Life Insurance Company and Vhi Healthcare Ltd as an insurance intermediary by the Central Bank of Ireland. The newly authorised entities commenced trading on the 31 July 2015. Securing authorisation has placed Vhi on the same regulatory footing as others operating in the market and has also facilitated the company’s move into new markets such as Life Insurance, an offering introduced by Vhi in May 2016.

The key financial results for Vhi during 2015 were as follows:

  • After tax results to the 31st December 2015 showed a net surplus of €45.5 million for Vhi‘s consolidated business activities compared with €54.5 million in 2014.
  • Gross Earned premium for 2015 totalled €1.428 billion, slightly down compared with €1.451 billion the previous year. Income from products other than our health insurance business amounted to €27.8 million during the year, while income from investments at €5.5 million was down significantly on 2014 owing to reduced bond yields.
  • At the end of December 2015 Vhi had free reserves of €521.6 million representing a significant improvement of €55.3 million or 12% compared with the previous year’s position. This strengthening of free reserves can be attributed to a number of key business initiatives taken by Vhi over recent years including improvements in claims and provider management. In addition, our solvency positon was strengthened by raising €90 million subordinated debt from Berkshire Hathaway.
  • Total gross claims paid in 2015 came to €1.378 billion, up by 10% compared with €1.248 billion in 2014. The increase in claims costs on the previous year reflects the full effect of significant increases in Public Hospital Charges introduced by the Government in 2014 as well as other factors including increased demand for treatment and procedures from our ageing membership.   

Commenting on the results, John O’Dwyer, Chief Executive, Vhi said “Securing Authorisation in 2015 was a major milestone for the organisation, its employees and our customers.  It has placed Vhi on a strong regulatory footing, will support the delivery of our business strategy to deliver continued improvement in care and value to our customers  over future years and will enable us to grow through further diversification.”

Commenting on the increase in membership in 2015 he said “While Ireland’s improving economy contributed in part to the growth in new business, the main drivers were an increase in people joining the private health insurance market as a result of the introduction of Lifetime Community Rating and the fact that insurers were for the first time able to offer reduced prices for those under 25.  These initial steps taken by Government were effective in encouraging more young people to take out private health insurance; however, more must be done to help sustain the market over time. This is essential if we are to keep health insurance affordable.”

Concluding John O’Dwyer, CEO, Vhi said “While I am pleased with our own solid financial results I do have concerns about the sustainability of Ireland’s healthcare model in the longer term.  The fact that people are now living longer with chronic diseases has major implications for the healthcare system as a whole but also for Vhi which has the largest share of older and sicker customers. We all need to work together to find the best solution to manage the healthcare needs of our ageing population. A stark fact is that in less than 20 years time approximately 1 million people in Ireland will be aged 65 years or over and the highest increase will be among those over 85 years old where we know healthcare needs are greatest. There is an urgent need for policy makers, insurers and healthcare providers to work together to plan for the future and adapt our models of healthcare to tackle our ageing population.”

ENDS

Vhi_Press

25-Jul-2016