BUPA Insurance profits fall

Bupa UK Insurance profits fall by £9m
Bupa has reported revenue from continuing operations was up 10% to £2.1bn in the first half of 2007 with the health insurer producing an underlying surplus before tax of £172.4m, up 23%.

The company said its surplus in UK insurance was lower as a result of continued investment and higher claims experience in first half, however this was offset by further strong growth in International Insurance, with good customer growth and lower claims in first half.

Revenues in UK Insurance grew by 5% to £956.6m compared with the first six months of 2006. Customer numbers were stable at 4.3m, with growth in all other businesses offset by a decrease in Bupa Ireland customers following the announcement of the withdrawal from the market.

The operating surplus decreased by £9.6m to £28.4m; after adjusting for the reclassification of a business to International Insurance in 2007, the surplus decreased by £7.6m. This excludes a charge of £9.6m (2006: £10.1m) relating to Risk Equalisation charges in Ireland and a benefit of £10.2m in BUPA Health Assurance from a change in reserving policy in accordance with FSA rules.

Notwithstanding the growth in revenues in both UK Membership and BUPA International, the surplus declined in the first six months of 2007 with a higher level of claims in UK Membership and increased development spend in the first half of 2007.

Bupa enjoyed continued growth in its care homes business while the sale of Bupa Hospitals completed on 31 August 2007, with proceeds of £1.44bn to be reinvested in the medium term to develop and further strengthen the Group.

Commenting on the results, Val Gooding, chief executive, said: "Bupa has maintained strong trading momentum in the first half of 2007. Customer numbers have risen strongly, reflecting the attractiveness of Bupa's high quality health and care services and generally favourable economic conditions in key markets.

"The Group continues to invest significant funds in the development of its core businesses. This investment, and an anticipated return to historical claims levels in International Insurance will slow the rate of growth in underlying surplus in the second half.

"We remain confident that Bupa has an attractive range of market opportunities. We will continue to invest in the business for the benefit of our customers."

Cover Magazine 02 October 2007