Medibank Private has reported a 27.9 per cent drop in full-year net profit after the anticipated widespread cancellation of elective surgery due to COVID-19 failed to eventuate.
The health insurer reported net profit after tax of $315.6 million for the 12 months to June 30.
Elective surgery in Australia was put on hold earlier this year as the coronavirus began spreading around the nation, which some expected would benefit insurers.
However, chief executive Craig Drummond explained that was not the case.
“While significant savings were projected by some commentators at the beginning of the crisis, this has not eventuated,” he said.
The Australian Prudential Regulation Authority has said most surgeries will go ahead later.
That has resulted in a $297 million liability for Medibank.
This was part of Medibank’s net claims expense increase of 3.2 per cent to $5.5 billion.
The insurer also postponed its April 1 premium increase, and introduced financial hardship measures, which lowered health insurance revenue by $80 million.
While many people have opted against the high cost of premiums, Medibank’s resident policyholders increased by 10,600 or 0.6 per cent. The organisation said this would have been more if retail outlets were not forced to close due to COVID-19.
It has gained 21,000 resident policyholders from June 30 to August 8. The insurer has been promoting insurance benefits during the pandemic.
Shareholders will receive a final dividend of 6.3 cents per share, fully franked.
The 2019 final dividend of 7.4 cents per share was accompanied by a special dividend of 2.5 cents. Both were fully franked.
Non-executive director Mike Wilkins will take the role of chair from August as incumbent Elizabeth Alexander will retire.
Shares were higher by 1.05 per cent to $2.89 at 1525 AEST.