Southern Cross restored to good health after early crisis

Southern Cross, the country's largest health insurer, says it has returned to financial sustainability following a funding crisis last year.

Releasing its annual result for the 12 months to the end of June yesterday, the Southern Cross Medical Care Society said that after investment income and amortisation of goodwill, it made a "modest" surplus of $15.7 million.

Chairman Bryan Kensington said the organisation's operating result had significantly improved during the year and its balance sheet had strengthened.

The not-for-profit friendly society, which is owned by its members, said its operating deficit before investment income reduced from $37.7 million to $2.8 million.

"While there is more work to be done, in terms of improving operational efficiencies, the 2003 result is a significant achievement," Kensington said.

The surplus had boosted the society's group reserves, which now stood at $195 million and it intended to continue to increase reserves.

Southern Cross group chief executive Ian McPherson said the society had focused this year on areas including improving financial performance, controlling claims costs and operating expenses, and boosting reserves.

"The claims problem of 2002 is now behind us, with the organisation now paying the vast majority of standard claims within 10 days," McPherson said.

More than one million claims were received last year.

"A firm foundation for the future was established ... which will ensure that Southern Cross members continue to benefit equitably from their health insurance," McPherson said.

Members' lobby group the Southern Cross Members' Society plans to renew its call for the insurer to reverse a new policy of setting premiums in single-year bands when it holds its annual meeting next month.