Nib has just surged ahead of the big health insurance players

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Health insurance nib, the small player in the $24 billion Australianindustry, just posted a 65% increase in half-year profit to $71.1 million and grabbed the biggest share of policyholder growth.

Its core business, arhi (Australian Residents Health Insurance), grew policyholders by 2.1% for the six months to December, more than half of all industry growth for that half.

In early trade, nib shares were up more than 6% to $5.01.

Group revenue was 7.3% higher at $995 million. Premium revenue of $965.7 million was up 7% and well ahead of health insurance claims of $759.6 million, a rise of 2.7%.

This is a contrast to industry leader Medibank, which last week reported a premium growth rate lower than that for claims for the same six months. Its premium revenue was $3.118 billion, up 1.2%, but claims rose 1.5% to $2.589.9 million.

Nib’s arhi business reported an underlying operating profit of $73 million, a 41.2% rise. Premium revenue was up 6.2% to $829.8 million and claims rose 3.4% to $686 million.

Managing director Mark Fitzgibbon says the result came from a combination of factors including investment in the nib brand, price competitiveness, customer insight and new partnerships with Qantas and Suncorp.

“Equal effort is being made to keep a lid on claims inflation and thereby premium growth,” he says.

NIB recently announced an average premium increase of 4.48% from April 1.

“Our first half Arhi result benefited from fairly benign claims experience compared to the past,” he says.

“There are however, some signs that claims inflation could now be moving higher towards longer term trend lines.”

The company updated its full year guidance with statutory operating profit of between $137 million and $147 million.

Fitzgibbon says he expects Arhi to achieve even better policyholder growth in the second half of the financial year.

However, he doesn’t expect profitability will be as strong as in the first half with a full year net underwriting margin at the upper end of nib’s 5% to 6% target range.

Nib declared a fully franked dividend of 8.50 cents a share.

The numbers for the first half:

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