Vhi announces after-tax profits of €65m for last year

Tuesday 17 June 2014 23.05
The health insurance provider said it has boosted its solvency levels to €389m
The health insurance provider said it has boosted its solvency levels to €389m

Ireland's largest health insurance provider, Vhi Healthcare, has announced an annual surplus after tax of €65m.

The figure for 2013 is almost 20% up on the surplus recorded in the previous financial year.

The State-owned company said it has boosted its solvency levels to €389m.

It said today that it has agreed a new four-year reinsurance agreement with Warren Buffett's US multinational Berkshire Hathaway. 

Vhi said this builds on the one-year agreement secured in 2013 and is an acknowledgement of the company's "improved financial position".  

The company's CEO, John O'Dwyer, said the agreement is "a vote of confidence" from a highly-respected company, adding that it is looking forward to continuing the partnership over the next four years. 

"Putting in place a longer-term reinsurance arrangement and demonstrating that the business was sustainable in the long term was critical in making our submission to the Central Bank," he added.

The company said that its total gross claims paid last year amounted to €1.366bn, down 2.1% compared with €1.396bn in 2012. 

It said its operating expense ratio to premium income was 6.2%, the same as in 2012. 

"This is welcome given the increased costs associated with preparation of the organisation for Central Bank authorisation. Vhi Healthcare's operating expense ratio is very efficient by international standards," the company said in today's results statement.

Last year, Vhi set up a pharmaceutical and medical implant unit to tackle rising costs in the area of medical implants and high-cost drugs, with a key focus on promoting the use of generic drugs.

This unit continued to record savings, recovering a total of €14.8m during the year.  

Vhi Healthcare has said it is confident that it can keep health insurance premiums "to a minimum", following the increase in its surplus for last year.

However, company CEO John O'Dwyer said it was "too early" to entirely rule out any future premium increases. 

Speaking on RTÉ's Morning Ireland, Mr O'Dwyer said a deal reached between the insurance company and billionaire US investor Warren Buffet on re-insurance meant that the company's position had improved, and was a vote of confidence in its strategy.