Vhi is authorised by the Central Bank of Ireland
Berkshire Hathaway extends its partnership with Vhi through a combination of reinsurance and subordinated debt
Vhi announces a net surplus of €49.8 million for 2014.
28th July 2015 - Vhi announced today that the Central Bank of Ireland has authorised Vhi Insurance DAC as a Non-Life Insurance Company and Vhi Healthcare Ltd as an Insurance Intermediary. The newly authorised entities will commence to trade from 31 July 2015. The total capital reserves upon commencement to trade of Vhi Insurance DAC will exceed €540million. To prepare for authorisation, the Vhi Group raised €90m of subordinated debt through a funding agreement with Berkshire Hathaway. The agreement with Berkshire Hathaway builds on an existing partnership dating from 2013.
Commenting on Vhi’s authorisation by the Central Bank of Ireland, John O’ Dwyer, Chief Executive said: “As the largest general insurance company in Ireland, authorisation will put the business in a strong position to deliver on Vhi’s business strategy over the next five years and beyond. This has been a complex project completed during a challenging economic period but today is a very important day in the history and development of Vhi. We are particularly pleased that Berkshire Hathaway has extended its relationship with us through reinsurance and subordinated debt. This is a strong vote of confidence in the company and its future. The ability to raise this private finance, together with our strong financial performance in the past three years, has enabled us to meet the solvency requirements of the Central Bank of Ireland.”
Vhi also detailed its annual results for the year ending 31st December 2014. The company generated a net surplus of €49.8 million for its consolidated business from a total gross earned premium of €1.462bn. The surplus, which represents a margin of 3.4%, marks the continued strength of Vhi’s business as the organisation focuses on the delivery of quality healthcare solutions to customers while continuing to drive down costs.
Commenting specifically on the financial results, John O’Dwyer, CEO, Vhi said: “We have delivered a strong set of results for 2014. This follows a good performance in the preceding two years and this, together with the fact that we are now an insurance company authorised by the Central Bank of Ireland, positions Vhi well for the future. This financial performance was delivered in the context of meeting the healthcare needs of our customers – claims of €1.377 billion were incurred from a total earned premium of €1.462bn.”
He continued: “We have recorded a satisfactory surplus for the third year running, further consolidated our solvency position and secured the necessary finance to meet Central Bank of Ireland solvency requirements through our own fundraising efforts. During this period of tremendous transformation and change for the company we have remained at all times focused on the delivery of quality healthcare to our customers. We have also driven a rigorous cost containment programme across all aspects of our business on our customers’ behalf. This continues to yield results and will remain a central focus for the year ahead.”
The key financial results for Vhi Healthcare during 2014 were as follows:
- After tax results to the 31st of December 2014 showed a net surplus of €49.8 million compared with €65m in 2013 for Vhi‘s consolidated business activities. The surplus represents a margin of 3.4% which, although 1% down on the previous year, demonstrates the continued strength of Vhi’s business.
- Gross Earned premium for 2014 totalled €1.462 billion, down 1.9% on the previous year. Income from products other than health insurance amounted to €15.6 million during the year, while income from investments was €17.6 million, an increase of €3.6 million on 2013.
- At the end of December 2014 Vhi Healthcare had reserves of €453.7 million representing a significant improvement of 16.7% compared with the previous year’s position. This strengthening of reserves can be attributed to a number of key business initiatives taken by Vhi over recent years including improvements in claims and provider management. In addition, our solvency position has been further strengthened by the agreement with our partner Berkshire Hathaway to enter a four year reinsurance agreement commencing during 2014.
- Total gross claims incurred in 2014 came to €1.377 billion, up by 0.8% compared with €1.366 billion in 2013. The increase in claims costs on the previous year includes the increases in Public Hospital Charges introduced by Government in 2014.
- Vhi Healthcare’s claims ratio i.e. costs incurred for medical care as a percentage of earned premium, came to 89% (versus 87% in 2013) and means that of every €100 received in premium income €89 is allocated to cover the medical care needs of our customers.
Concluding, John O’ Dwyer said “Our priority for the foreseeable future is that Vhi will continue to drive down costs, increase efficiencies and provide appropriate health insurance plans and services to our customers. We will also focus on improving the overall health and wellbeing of our customers and on creating new commercial opportunities for the company. In this regard we need to ensure that we are continuously innovating in order to keep abreast of medical developments and meet our customers healthcare needs now and into the future. “
Note to Editor
On the 31 July 2015 the business of the Voluntary Health Insurance Board (trading as Vhi Healthcare) will transfer into a group of incorporated companies, two of which will be regulated by the Central Bank of Ireland. Vhi Insurance DAC will be regulated as a Non-Life Insurance Undertaking and Vhi Healthcare Ltd will be regulated as an Insurance Intermediary. Both entities will commence to trade from 31 July 2015. Authorisation means that these two companies will be required to meet the regulatory requirements which apply to a Non-Life Insurance Company and an Insurance Intermediary. There will be no impact on customers, their cover, terms and conditions will remain exactly the same.