Bupa Group Half Year Financial Results 2024

Bupa Group has reported its half year 2024 financial results.

International Private Medical Insurance Highlights

In Bupa Global, their IPMI business, revenue and underlying profit increased driven by growth in customer numbers and higher investment returns. The focus is on responding to the distinct needs of customers and people across global locations, whilst maximising the efficiency of our operating model, improving systems and digital support for our customers. 

Bupa Global serves around 360,000 IPMI customers and administers medical assistance for individuals, small businesses and corporate customers.

Group Financial headlines¹

• Insurance customers of 33.2m, up 23%, provision customers served of 14.2m, up 12%; and aged care occupancy of 93%, up 2ppt.
• Revenue £8.3bn, up 16% (HY 2023: £7.1bn) at Constant Exchange Rates (CER). Excluding Niva Bupa consolidated from this year and the returns of COVID-19 claims savings to customers in Australia Health Insurance, revenues increased by 10%.
• Underlying profit² before taxation £369m, up 50% at CER (HY 2023: £247m) driven by the strong growth in revenues and higher investment returns.
• Statutory profit before tax £420m, up 74% at Actual Exchange Rates (AER) (HY 2023: £241m).
• Solvency II capital coverage ratio of 167%³ (FY 2023: 175%). Leverage (excluding IFRS 16 lease liabilities) of 18.4% (FY 2023: 20.1%).
• In January 2024, increased our shareholding in Niva Bupa, a leading Indian health insurance company, by 22% to 63%, becoming the controlling shareholder.
• On acquisition remeasured the business to fair value, recognising a £321m increase in the value of our existing stake from £96m to £417m.
• On a fully consolidated basis at HY 2024, Niva Bupa contributed £220m in revenues and a £45m underlying loss, resulting from acquisition cost strain on short term new business and renewals. Profit associated with the value of in-force business of £48m was recognised at fair value on acquisition, of which £43m would normally have earned through HY 2024.

Iñaki Ereño, Group CEO, commented, “Our half year 2024 financial results demonstrate that we are continuing to grow our business due to a combination of strong organic customer growth in health insurance, increased activity in health provision and higher occupancy in aged care. We are encouraged by the positive overall performance across the Group as our businesses continue to transform against our strategic priorities.

"We remain focused on delivering excellent customer service and high standards of care, building on the strong foundations we have created as we move into the next phase of our strategy.”

Market Unit performance (all at CER)

Bupa Asia Pacific: Revenue increased by 16% to £3,071m. Excluding the return of COVID-19 related claims savings to customers in Australia Health Insurance, revenue increased by 8%. Underlying profit increased by £194m to £233m, primarily due to the reduction in the final return of COVID-19 claims savings to customers to £20m (HY 2023: £220m) partially offset by the claims savings arising from COVID-19 disruption in HY 2023 not arising in HY 2024⁴.

Europe and Latin America: Revenue grew by 11% to £2,678m. Underlying profit increased by 10% to £155m as a result of revenue growth and higher investment returns, partially offset by a loss in Chile as anticipated following cancellation of the GES⁵ price increase.

Bupa Global and UK: Revenue grew by 23% to £2,524m. Excluding Niva Bupa revenues⁶ which have been consolidated from this year, revenue increased by 12%. Underlying profit reduced by (55)% to £64m as revenue growth was offset by a loss in Niva Bupa and the timing of the return of premium release⁷ in the prior year, which offset the tail end of COVID-19 deferred claims in UK Insurance, some of which arose in the first half of 2024. The loss in Niva Bupa arose from acquisition cost strain and the absence of in-force profit earning through the period having recognised it at fair value on acquisition.

Other businesses⁶: Our businesses in Saudi Arabia delivered underlying profit of £56m, up 36% on the prior year driven by revenue growth and higher investment returns.

Financial position

• Solvency II capital coverage ratio of 167% remained at the top of our 140-170% target range (FY 2023: 175%).
• Leverage ratio of 25.6% (FY 2023: 27.2%) when including IFRS 16 lease liabilities. Excluding these liabilities, the leverage ratio was 18.4% (FY 2023: 20.1%).
• Net cash generated from operating activities remained strong at £676m (HY 2023: £823m).

Other highlights

We continue to expand our provision footprint globally. In the first half of 2024, we opened one new hospital, 27 clinics and 14 dental centres globally.

We now have over 6.8m customers using Blua⁸, our digital health solution, with plans to significantly increase this going forward.

In the first six months of 2024, 91% of our Business Units improved their Net Promoter Score (NPS).

In our global People Pulse survey, we reached our highest ever engagement score of 83 (81 in May 2023), exceeding the high performing (top decile) external benchmark by three points.

We expanded our Paralympic partnerships to include New Zealand and Hong Kong, building on our existing partnerships in Great Britain, Spain, Poland, Australia, Chile and Mexico. We look forward to supporting our teams in Paris later this year.

In June, we became the official global healthcare partner of the All Blacks, Teams in Black and the international healthcare partner of the Black Ferns. The four-year partnership will promote the links between health and high performance.

Bupa in Chile

As disclosed previously, Bupa’s Isapre business in Chile has been negatively impacted by judicial and regulatory action. The Chilean Supreme Court has significantly shifted its interpretation of Isapre pricing in recent years, with the cumulative effect of restricting the previously permitted, and generally accepted, pricing/rate-setting approach.

At 30 June 2024 an IFRS provision of £215m has been recognised in relation to Isapre Cruz Blanca and the retrospective liability relating to statutory Risk Factor Tables. This matter was disclosed as a contingent liability at 31 December 2023 as due to the wide range of possible outcomes and regulatory uncertainty, it was not possible to reliably estimate the value of the future payments. However, in May 2024 legislation came into force that gave clarity over the quantum and steps required for implementation of the retrospective liability relating to statutory Risk Factor Tables (used to adjust the price of insurance contracts based on risk factors such as age). The local regulator Superintendent of Health (SIS) issued additional guidance on 7 June 2024 which set out details of the next steps the Isapres are required to take.

As a result of the clarity the legislation provides, we are now able to arrive at a reliable estimate and have recognised a provision in accordance with a payment plan which has been submitted to the SIS for approval. SIS review of the plan is still underway and as such some uncertainty remains until the approval of the plan, which is likely to be concluded by 31 December 2024. The liability is expected to be settled over 13 years in accordance with the legislation and the provision has been discounted over this period using a Chilean risk-free rate.

Under Solvency II the FY 2023 provision of £187m⁹ recognised in relation to Isapre Cruz Blanca has been increased by £28m to align with the amount provided under IFRS.

Read the Bupa Group 2024 half year financial results statement.

Revenues from associate businesses are excluded from reported figures. Customer numbers include 100% of our minority interests and associates. Note customer counting methodologies may vary between business units.

1. Revenues from associate businesses are excluded from reported figures. Customer numbers include 100% of our minority interests and associates. Note customer counting methodologies may vary between business units.
2. Underlying profit is a Non-GAAP financial measure. A reconciliation to statutory profit before taxation can be found in the notes to the financial statements.
3. The HY 2024 Solvency II capital coverage ratio is an estimate and unaudited.
4. Garantías Explícitas en Salud price increase was originally approved by the regulator in October 2022, subsequently overruled by the supreme court and cancelled from 1 January 2024.
5. Following the acquisition of a controlling shareholding in Niva Bupa in January 2024 the results are fully consolidated into the Bupa Global and UK market unit, creating the new Bupa Global, India and UK market unit. Prior year comparatives remain within Other Businesses on an equity accounted basis.
6. £59m provision released in HY 2023 in response to expected deferred claims projected to arise across 2023 and HY 2024 giving rise to temporarily higher profits in HY 2023.
7. Existing stake in Niva Bupa remeasured by £321m to a fair value of £417m, resulting in net £309m gain through other income and charges in the Consolidated Income Statement after the release of associated foreign exchange translation reserves.
8. Or an equivalent digital solution.
9. Comprised of £165m contingent liability and £22m held in Solvency II technical provisions.
10. As reported at full year 2023 which includes a full 12 month of provision customers served.