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Bupa UK profit wobbles after care home sales

Bupa UK profit wobbles after care home sales

Bupa Finance has reported a slight rise in profit for the first half of this year, but its UK arm stumbled in a market which saw medical cost inflation outstrip price inflation.

In its accounts for the first six months of 2018, Bupa's UK revenue declined 9 per cent to £1.25bn in the first half of this year, whilst its underlying profits dropped 25 per cent to £67.1m.

This fall was attributed mainly to the sale of 132 UK care homes in December 2017 and February 2018.

Excluding these sales, Bupa reported its UK revenue would have increased 5 per cent and its underlying profit 8 per cent, despite low economic growth and medical cost continuing to outstrip price inflation.

    Overall profit before tax at the private medical insurer sat at £306.2m in June, a growth of 9 per cent on the same period in 2017. Bupa reported revenues of £5.9bn, which had stayed flat on 2017.

Evelyn Bourke, chief executive of Bupa, said the company’s core insurance businesses performed with the majority of revenue and profit deriving from the health insurance sector.

She said: "A volatile political and uncertain economic environment means that conditions in some of our main markets are likely to remain tough in 2018.

"In response, we will continue to invest to strengthen and broaden our market-leading positions, extending the services we provide to further improve the experience of our customers, who remain our absolute priority."

Alan Lakey, founder of protection advice specialist CIExpert, said having sold their care homes and private hospitals over the past few years, Bupa now operates in a fairly well defined area which should serve them well - provided it is managed correctly. 

He said: "If you make yourself a 'jack of all trades', where noone quite knows what you are good for, it can hinder your reputation - but now Bupa are very specific on what they work on and are focusing on the original core name they started with. 

"Bupa has a fantastic brand and people trust them - this brand awareness will help them through difficult times."

In June, Bupa announced its intention to reinstate its Association of British Insurers membership in January 2019. 

The insurer had left the trade body in 2013.

rachel.addison@ft.com