Vhi Group report a net surplus of €56.4 million for the 2016 financial year
Continued Growth in our health insurance, diversified business and healthcare provision businesses
Ireland’s ageing population and growth in the incidence of chronic disease dictate that Ireland’s healthcare model needs to change
19th May 2017 - Vhi Group today announced its financial results for the year ending 31st December 2016, recording a net surplus of €56.4 million and an improved reserves position of €558.2 million, a 7% increase on 2015. The improved financial results were driven as a result of the increase in membership for the second consecutive year to 1.069 million health insurance customers and our relentless focus on cost management and driving value for our customers. Over the course of the year, Vhi paid €1.34 billion to cover the healthcare needs of our members.
Commenting on the financial results, John O’Dwyer, Chief Executive, Vhi Group said: “I am pleased to report that 2016 was another successful year for Vhi Group. We grew our private health insurance membership and continued the growth of our diversified insurance and health care services offerings resulting in the delivery of another strong financial performance. These results were achieved despite the difficult dynamics of an ageing population, medical inflation and the persistence of low investment returns.”
He said “We welcome the improvements made to help sustain the community rated market in Ireland through the changes to the Risk Equalisation Scheme announced by the Minister for Health at the end of last year. However, to ensure the market can operate in a sustainable and fair manner for the medium to long term the risk sharing scheme requires further and continued enhancement to more effectively balance the cost of care between older and younger, sicker and healthier policy holders.”
This financial year marked the first full year for Vhi Insurance DAC post authorisation by the Central Bank of Ireland and also the first year that the Group is required to comply with Solvency II regulations.
Summary of the key financial results for 2016:
- After tax results showed a net surplus of €56.4 million for Vhi’s consolidated business activities compared with €45.5 million in 2015.
- Gross earned premium for 2016 totalled €1.430 billion, slightly favourable compared with €1.428 billion in the previous year.
- At the end of December 2016, Vhi had free reserves of €558.2 million, representing an increase of €36.6 million or 7% compared with the previous year’s position. This further strengthens Vhi’s regulatory capital position, which is well in excess of minimum levels required under EU Solvency II regulations.
- Total gross claims paid in 2016 amounted to €1.34 billion, down slightly compared with €1.38 in 2015. The reduction in claims paid is influenced by the timing of payments made to providers, in particular public hospitals.
- Operating expense ratio to premium income was 8.3% in 2016, remaining broadly in line with 2015. This represents a significant achievement given the range of demands on the business as Vhi invests to implement change in an evolving business and regulatory environment.
Funding the Healthcare Needs of Our Customers
In 2016 Vhi processed over 984,000 claims for the healthcare costs of its customers. Of this, over 766,000 were for in-patient and day-care claims while a further 218,000 were for outpatient and primary care claims.
The most significant areas of claims expenditure during 2016 were:
- Cancer & related care - €194.3 million.
- Heart & circulatory system - €164.8 million.
- Orthopaedic care including hip, knee replacements etc. - €145.1 million.
- Digestive system - €107.6 million.
- Respiratory illness - €74.7 million.
- Central nervous system - €74.2 million.
According to John O Dwyer , Chief Executive, Vhi Group “ Vhi is fully committed to delivering affordable quality healthcare cover for our customers and to this end we are fully focused on cost management initiatives which ensure we use our resources in the most effective way possible”.
He continued “Vhi Homecare for instance was established in 2010, has treated over 6,000 people in their own homes, saving 78,000 hospital bed days and delivering savings of €26.8 million to date. Our Special Claims Investigation Unit and utilisation review process has continued to perform well recovering more than €21.4 million in 2016 having reviewed over 37,000 claims.”
Strategy for the Future
The Board of Vhi Group has agreed a strategic direction for the next 5 years focused on positioning the organisation to better respond to our customers changing healthcare requirements.
According to John O’Dwyer, “Health insurers are important advocates for customers. We need to encourage people to take steps towards a healthier lifestyle through the promotion of health and wellness. Vhi through a combination of healthcare services, sponsorships, community partnerships and screening initiatives is doing this already and delivering positive results. Our aim is to offer our customers a healthcare proposition that meets their needs for convenient and affordable access to the best quality care and well-being services appropriate to their stage in life. By 2046, the population of those over 80 years old will increase dramatically to 470,000. This has major implications not only for the healthcare system as a whole, but also for Vhi, which is Ireland’s largest provider of private health insurance services. With more people living longer and with complex chronic diseases it is clear that the market and those providing services within that market need to change and adapt. “
ENDS
Vhi_Press
19-May-2017