Westfield diversifies as competition hits 2018 earnings

Increased market competition has dented earnings at health cash plan provider Westfield Contributory Health Scheme.

The company reported a 0.4% decrease in gross earned premiums to £56.9m for the year ended 31 March 2017 – a figure it said was partially offset by the acquisition of Bolton and District Hospital Saturday Council (BDHSC) in January 2018.

Westfield said 2018 had been a year of change as it took steps to invest in its future by offering a broader portfolio of health and wellbeing products. As well as the acquisition of BDHSC, which has reported income growth of 10% a year in the past two years, it bought the Working Health Company Limited – a provider of wellbeing services in workplace settings – in December 2017 in a bid to broaden its portfolio beyond traditional health cash plan policies.

In addition, the company has invested in the development of new IT systems and a full overhaul of its voluntary cash plans.

However, new developments came too late in the year to have a material effect on earnings. Net premiums after reinsurance ceded and third party underwriting costs fell marginally to £54.2m (2017: £54.8m). At same time claims incurred increased from £41.4m to £42.2m.

The gross claims ratio rose from 72.5% to 74.3% while the combined ratio of total expenses, including an impairment on the IT system of £4.7m, came in at 103.2% against 111.8% previous year. 

Nevertheless, administration expenses reduced from £10.9m £8.7m, giving rise to a 9% decrease in the cost of providing benefits to £14.5m. The overall result was an improved deficit on the technical account of £1.8m against £6.7m in 2017.

Unrealised losses on investment along with other charges wiped out any gains from investment income resulting in a deficit on the non-technical account of £302,000 against a gain of £4.8m the previous year. After charitable donations of £2.1m, the company reported a deficit on ordinary activities before tax of £2.6m against a deficit of £2.5m in 2017.

At the year-end, the deficit transferred to reserves stood at £1.8m against £4.7m the previous year.

‘We recognise the importance of providing our customers with relevant products and benefits whilst providing an excellent customer experience,’ said the company. ‘We will continue to develop our product portfolio within the increasingly competitive health cash plan market, ensuring they remain competitive whilst managing increasing claims costs and any increases in insurance premium tax. We are also committed to expanding our health and wellbeing offering, providing comprehensive services and products to meet customers’ needs.’