Net profit after tax fell from $11.3 million in the previous corresponding period to $6.1 million for the half year ended 31 December 2013.
Australian Unity group managing director Rohan Mead said the lower profits were the result of “claims costs in the healthcare business, one-off costs associated with implementing legislative changes, and materially reduced income from the company’s investment portfolio”.
Mr Mead said that despite a reduction in profits, the interim result “represents an encouraging position for the overall group’s operations”.
“Our balance sheet is in a positive condition and, considering the historical experience of the group where we receive most of our earnings in the second half of the year, we are positive about how we are placed at this stage,” he said.
While funds under advice grew to $3.2 billion for Australian Unity’s personal financial services business, the growth rate of the business was hindered by uncertainty around a range of regulatory reforms, including changes to FOFA.
The healthcare business was affected by higher claims costs in the retail fund, although this was anticipated.
Australian Unity said these higher claims costs are one of the factors listed in its submission to increase premiums for the health insurance funds in April 2014.
According to Australian Unity, the performance of the retail fund and the corporate health insurance fund GU Health were impacted by the cost of implementing legislative change.
“Health insurers are required to cover the cost of any and all treatments regardless of whether there is any evidence of their effectiveness – this is one of the key drivers of health inflation,” said Mr Mead.
“We continue to be motivated to develop preventative health programs that help stop people falling ill in the first place,” he said.
The underlying investments business had a similar performance to the previous corresponding period while the retirement living business increased its revenues.
“We continue to build our development profile in the retirement living business and are pleased to advise that the first stage of our $180 million landmark Carlton Wellbeing Precinct development is approaching completion,” said Mr Mead.
