Business Line – Health
- Strong improvement in profitability
- Combined ratio in basic health below 100%
- Improvement expense ratio supplementary health
| (€ million) | |||
| H1 2009 | H1 2008* | Δ % | |
| Gross written premiums | |||
| The Netherlands | |||
| -Basic health insurance | 4,965 | 5,245 | -5% |
| -Supplementary health insurance | 654 | 625 | 5% |
| -Occupational health insurance | 466 | 417 | 12% |
| Europe | 147 | 126 | 17% |
| Total Gross written premiums | 6,232 | 6,413 | -3% |
| Health Service revenues | 93 | 148 | -37% |
| Technical result | |||
| Basic health insurance | 86 | 17 | n.m. |
| Supplementary health insurance | 54 | 69 | -22% |
| Occupational health insurance | 45 | 38 | 18% |
| Europe | 9 | -8 | n.m. |
| Other | 7 | -3 | n.m. |
| Total technical result | 201 | 113 | 78% |
| Other results (Non-technical results) | -13 | -13 | 0% |
| Profit before tax insurance activities | 188 | 100 | 88% |
| Profit before tax Health services | -4 | -20 | 80% |
| Total profit before tax | 184 | 80 | 130% |
| Realised gains & losses included in profit before tax | -8 | -5 | -60% |
| Impairment losses included in profit before tax | -2 | -11 | 82% |
| Realised gains & losses and impairment losses, included in profit before tax | -10 | -16 | 38% |
| Key figures basic health insurance | |||
| Claims ratio | 96.5% | 97.6% | |
| Expense ratio | 3.0% | 2.7% | |
| Combined ratio | 99.5% | 100.3% | |
| Key figures supplementary health insurance | |||
| Claims ratio | 81.7% | 78.0% | |
| Expense ratio | 10.0% | 11.3% | |
| Combined ratio | 91.7% | 89.3% | |
| Gross written premiums | |||
| The Netherlands | 6,085 | 6,287 | -3% |
| Slovakia | 90 | 71 | 27% |
| Greece | 56 | 54 | 4% |
| Other | 1 | 1 | 0% |
| Total | 6,232 | 6,413 | -3% |
| * H1 2008 figures adjusted for comparison reasons. | |||
GENERAL
Eureko’s Health business accounts for 59% of our total gross written premiums (H1 2008: 59%). In the Netherlands, we offer basic, supplementary and occupational health insurance and health services. Supplementary health is also offered in Slovakia, Greece and Romania.
In the first half of 2009, we achieved total gross written premiums of € 6,232 million (H1 2008: € 6,413 million). Our Health business realised a profit before tax of € 184 million (an increase of 130% compared to the same period in 2008). This increase is driven by the successful reorganisation at health services, tight cost control and by the release of a provision in basic health due to prudent provisioning in previous years.
Health insurance is a very stable market. The switch ratio (number of customers changing to another health insurer) remained stable at 3.5% at the start of 2009. Our health insurance portfolio growth is almost 1%, due primarily to an increase of basic health insurance taken out by students.
NETHERLANDS
Eureko remains the largest player on the Dutch health insurance market. The number of insured in 2009 increased by 30,000 to 4,794,000.
Basic health insurance
Profit before tax achieved in our basic health insurance business increased by € 69 million to € 86 million in the first half of 2009 of which € 34 million concerns the release of a provision due to prudent provisioning in previous years. This release relates to the former Dutch health system (‘ZFW’).
Total gross written premiums for basic health insurance decreased from € 5,245 million in the first half of 2008 to € 4,965 million in the same period in 2009. This decrease of € 280 million is due mainly to the preliminary settlement of the government contribution (A 422 million) that was recognised in the first half of 2008 as a contribution to prior-year claims. Excluding this item, we achieved an organic growth in our basic health insurance activities of 3%.
Our outstanding debtor balances relating to ‘mandatory own risk’ receivables increased. Additional provisions for bad debts have been made to cover the risk of bad debts. In the current economic climate it is probable that bad debts will increase.
The basic health claims ratio improved by 1.1%-point to 96.5% (H1 2008: 97.6%) compared to the same period last year, due primarily to the release of a claim provision (see above) settled during this reporting period. The expense ratio in the first half of 2009 was 3%. If the higher contribution from the government in 2008 is taken into account, the expense ratio is stable.
Supplementary health insurance
In our supplementary health market, profit before tax decreased from € 69 million to € 54 million in the first half of 2009. There is a clear trend in the health market whereby policyholders buy a more tailored policy, reflecting their specific needs. This trend led to higher claims compared to 2008. Consequently, the claim ratio for supplementary health insurance deteriorated from 78.0% to 81.7%. This was partly offset by a decrease of the expense ratio which improved by 1.3%-points to 10.0%. The improvement is the result of continuous streamlining our business processes.
Gross written premiums in our supplementary health insurance activities in the Netherlands increased by 5% to € 654 million (H1 2008: € 625 million). This is mainly attributable to a growth in volume (number of policyholders).
Occupational health insurance
Occupational health insurance provides insurance solutions for disability and sick leave.
Profit before tax increased by € 7 million to € 45 million in the first half of 2009, mainly reflecting releases of prudent provisioning from previous years, both in disability and sick leave.
Total gross written premiums increased from € 417 million in the first half of 2008 to € 466 million in the current reporting period. This growth is mainly attributable to new contracts for large institutional clients and the acquisition of ‘Risicofonds voor het onderwijs’, contributing € 12 million to our Occupational health gross written premiums.
HEALTH SERVICES
Health Services are provided in the Netherlands and in Greece and Romania.
In the Netherlands, health service activities are provided via Achmea Vitale. Achmea Vitale offers a unique combination of vitality, prevention and reduction of absenteeism due to illness.
Health services revenues decreased by € 55 million to € 93 million in the first half of 2009, reflecting the transfer of a 75% stake in Medicom Systems S.A., the holding company for Euroclinic Athens and Euroclinic Children, to South Eastern Europe Fund L.P., effective December 2008. Health services profit before tax improved from a pre-tax loss of € 20 million to a € 4 million loss in 2009. Fierce competition from existing competitors led to additional price pressure; our response was an organisational restructuring. Main goal of this restructuring is to improve our expense level and increase customer satisfaction. The cost-reduction programme has been very successful and has culminated in significantly lower expenses in the first half of 2009. As a consequence, costs declined more than the revenue and the number of FTEs in the Netherlands fell by 252 compared to the first half of 2008.
EUROPE
Slovakia
Gross written premiums improved by 27% to € 90 million in 2009 (H1 2008: € 71 million) as Union was able to increase its market share to around 7%. Profit before tax improved slightly from a € 9 million loss in the first half of 2008 to a loss of € 8 million in 2009.
Greece
Gross written premiums improved by 4% to € 56 million in 2009 (H1 2008: € 54 million). Profit before tax improved from € 6 million in the first half of 2008 to € 18 million in 2009, as a result of reassessment and releases of insurance provisions of € 12 million.
Interamerican’s new Health products, launched at the end of 2008, proved to be very successful and increased new sales by 30% compared to the same period last year. Furthermore, in June, Interamerican announced a strategic co-operation with ING Greece whereby ING Greece’s network will sell Interamerican’s new Health insurance products on a preferred provider basis.