THE health maintenance organizations’ (HMOs) total net income in 2020 grew nearly six-fold to P7.12 billion compared to the previous year on the back of a decline in expenses and rise in revenues during the Covid-19 pandemic.
Based on the audited interim financial statements submitted by 25 out of 29 HMOs to the Insurance Commission, the sector’s total net income rose by a staggering 463.75 percent from only P1.26 billion in 2019.
“This may be explained by the 10-percent decrease in the industry’s total expenses against its increasing revenues,” Insurance Commissioner Dennis Funa said in a statement on Monday.
Moreover, Funa pointed out that HMOs have shouldered a “significant amount” of Covid-19 private medical expenses.
“The figures we are seeing now reflects the temporary changes in the behavior of the general public. It appears that people are deferring or postponing, if they can, medical procedures. But definitely this is just temporary. When the opportunity affords it, people will have their medical check-ups and procedures,” Funa said.
Despite the overall growth in total net income of the HMO industry, Funa said seven companies reported a decrease in their net income ranging from 23 percent to 729.22 percent.
Nonetheless, the IC said they observed upward trends in the HMO industry’s total revenues, equity, assets and liabilities.
Total revenues earned by the industry reached P52.29 billion last year, inching up by 1.41 percent from P51.56 billion in 2019.
“The trends that we have seen from the unaudited reports submitted by the HMOs reveal that Filipinos are increasingly recognizing the value of availing HMO products as part of health protection,” Funa said.
“Perhaps now during this Covid-19 pandemic situation, more than ever, the importance of HMO products has been highlighted, especially that the increase in the HMO industry’s total revenues is mainly driven by its continuously growing total membership, or enrollees’ fees, which comprise 97.12 percent of the industry’s total revenues.”
The industry’s total equity also jumped by 82.74 percent to P13.72 billion in 2020 from P7.51 billion in 2019.
“The positive change in the industry’s equity may be attributed to the 59.47-percent increase in retained earnings, which comprises 77.05 percent of the total equity. However, it should also be noted that the HMO industry’s capital stock decreased by 2.85 percent year-on-year, from P2.86 billion as of 4Q 2019 to P2.78 billion as of 4Q 2020,” Funa said. Total assets of the HMO industry also hit P59.25 billion last year, a 37.53-percent rise from P43.08 billion in 2019.
On the other hand, industry’s total liabilities climbed by 27.98 percent to P45.53 billion from P35.57 billion in 2019.
“It will be noted that 33.13 percent of the total liabilities were under unearned membership fees, which refer to fees paid in advance to the HMO industry for services not yet provided,” he said.
However, Funa said the HMO industry performance report for the quarter may still change after the inclusion of the data yet to be submitted by four remaining companies.
Preneed industry
Meanwhile, the IC also reported that the preneed industry’s total net income in 2020 surged by 294.58 percent to P1.4 billion, reversing its P718.6-million net loss in 2019.
However, the preneed industry’s total premium income fell by 15.26 percent last year to P18.64 billion from P22 billion in the previous year, based on the industry performance report uploaded in the IC’s website.
The number of plans sold last year by the industry plunged by 58.6 percent to 383,082 compared to 925,370 in 2019.
Of the plans sold last year, 379,198 were life plans, 3,617 were pension plans and 267 were education plans.
Total assets of the preneed industry also grew by 3.14 percent to P135.5 billion from P131.39 billion in 2019.
The industry’s total net worth in 2020 also reached P21.08 billion, a 13.26-percent jump from previous year’s P18.61 billion.
Read full article on BusinessMirror