Medibank Private (MPL) interim result: Health Insurance operating profit up 37.2% to $173.5m, operating margin up from 4.5% to 5.9%

Medibank Private (MPL) interim result: Health Insurance operating profit up 37.2% to $173.5m, operating margin up from 4.5% to 5.9%. Gross profit margin 13.9% as compared to 13.7% in pcp. Net underwriting margin 5.9% as compared to 4.5% in pcp. Complementary Services operating profit down 50.3% to $7.2m (impact of non-renewal of immigration contract effective July 2014. Investment income down 33% to $43.4m on the back of lower equity market returns and lower interest rates. The management expense ratio reduced from 9.2% to 8.0% representing a decrease in expenses of $22.3m. This is a significant highlight. Health insurance related capital $773.6m as at Dec 2014- representing 12.6% of premium revenue and within target range of 12% to-14%. Subject to market conditions, Medibank is on track to meet statutory $250.9m and pro-forma $258.2m NPAT in FY15, excluding benefit of an estimated $10m release of June 2014 claims provision. Recommendation: Buy rating likely to be maintained. Research report available tomorrow to Bell Potter clients. Read more: (VIEW LINK)