SENIOR executives at the government-owned private health fund, Medibank Private, secured big pay rises last year even though the company's bottom line profit more than halved to $91 million.
Higher performance-based pay and special retention payments pushed the total remuneration bill for the company's six most senior executives to $5.33 million -- up $1.5 million on the previous year.
Medibank Private chief executive Bruce Levy has displaced managing director George Savvides as the highest paid member of the management group after a $300,000 retention payment boosted his package to more than $1.4 million.
Mr Savvides earned $1.2 million during the year.
Volatile global equities markets and higher claims costs crunched the earnings of Medibank Private and other leading funds in the year to the end of June, but most have stayed in the black.
Medibank's 51 per cent slide in net profit was mainly attributable to a $54 million paper loss on its investment portfolio.
The company also experienced a sharp rise in claims, which blew out by almost $500 million to $3.34 billion.
This led to a 28 per cent fall in the underwriting performance of the core health insurance business to $143 million.
"We are now paying out $68 million per week in benefits on behalf of our growing membership," Mr Savvides said.
"Although the growth in private health insurance membership in the past year has slowed we continue to grow our membership."
While Medibank's investment earnings are likely to rebound in this year, the group bottom line will take a big tax hit. From October 1, the company will lose its exempt status on paying corporate income tax.
Australia's sixth largest health insurer, Australian Unity, yesterday also reported a big fall in annual net profit.
Negative investment returns and higher claims crunched AU's bottom line profit by 95 per cent to $1.1 million.
While AU's core operation is in health insurance, the group has pinned much of its future growth on its wealth management businesses.
Managing director Rohan Mead yesterday launched a push into Asia, with the formation of a Hong Kong-based joint venture, Seres Asset Management.
The head of AU Investments, David Bryant, said the decision to establish a funds management arm in China was driven by the higher economic growth outlook for the region.
"Australia's economic recovery is closely linked to growth in Asia, particularly China, and we believe that there are outstanding opportunities in this region for investors," he said.
"The Asian region accounts for one quarter of the world's GDP yet remains under-serviced for investors."
AU has taken a 50 per cent stake in the venture.
