Medibank (MPL) shares dive on claims growth


Medibank (MPL) $ as at 6/11/2019


Health insurance heavyweight Medibank has seen its shares slide today following an update regarding performance thus far in the financial year with shares around 7.5% lower in the session. Claims came in $21m more for FY19 that was provisioned at the time the results were announced with underlying growth at 2.4%, above the 2% reported at the time.

More of a concern for the market is the comment that the increase represents a trend, and Medibank now expects “the increase in claims per policy unit in the second half of FY19 to continue throughout FY20.” There has been pressure on health insurers over recent years with many Australians opting to stick to the publically available Medicare. As a result of this, those taking out policies seem to be those with a greater need to claim.

On the other side of the ledger, the company has managed to increase the book, with growth of around 0.6% in the current financial year MPL is on track to at least stabilize policyholder volumes this year as was targeted at the full year result. The company also put some of the blame back on their previous owners, calling on the government to reform the system to ensure healthcare and its insurance remains affordable, presumably not at the cost of profits for Medibank.

Medibank (MPL) Chart

Market Matters Take/Outlook

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