2021 Group full year financial results

Financial headlines

• Revenue¹ of £12.9bn was up 8% at constant exchange rates (CER) (2020²: £12.0bn).
• Underlying profit³ before taxation of £405m, was up 14% at CER (2020⁴: £354m) as the impact of reduced COVID-19 lockdowns meant our health provision and aged care businesses operated with fewer restrictions and customers were able to access services more easily. This was offset by increased insurance claim levels resulting from reduced disruption to elective procedures compared to 2020.
• Statutory profit before taxation of £423m was up 7% at AER (2020⁴: £396m), reflecting higher underlying profit, and gains made on acquisitions and divestments.
• Solvency II capital coverage ratio⁵ remains strong at 179% (2020: 160%).

Business context

• Full year 2021 results reflect strong customer growth across our insurance businesses, improving performance in health provision and aged care as we emerge from the pandemic.
• For health insurance, our largest business line, we undertook a range of actions to support our customers including announcing plans to return cash to Australian health insurance customers and processing payments to eligible UK Insurance customers following our 2020 return of premium pledge. In the UK, we were the first major health insurer to make such payments.
• There are major shifts in customer expectations and engagement, which have been accelerated by the pandemic, particularly in digital healthcare. We have refreshed our purpose, set a new ambition and launched a new strategy to address these changes. Our focus is on embedding this strategy and leveraging our strengths while we transform Bupa.

Iñaki Ereño, Group CEO, commented: “Our 2021 results reflect the underlying strength of Bupa, with strong customer growth in several of our health insurance markets and activity in health provision returning to normal. This performance shows how we have been able to grow and provide high-quality care for our customers, patients and residents while we continue to navigate the pandemic.

“I see transformation as our route to growth and it is at the heart of our new plans. As restrictions ease, we will build on Bupa’s strong platform and I’m confident that our new strategy will position us in the best way for success into the future.”

Market performance (all at CER)

• Asia Pacific⁶: Revenue increased by 4% to £5,498m mainly driven by volume growth across our businesses. Underlying profit was £222m, an increase of 69%, reflecting the non-recurrence of the six-month deferral of the premium increase for Australian Health Insurance customers which was implemented in 2020, and reduced losses in aged care.
• Europe and Latin America: Revenue grew by 12% to £4,004m from growth in our insurance portfolio and improved health provision and aged care results. Underlying profit was down 7% at £162m from increased insurance claim levels following reduced disruption to elective procedures compared to 2020 and challenges in our Chilean Isapre insurance business, where performance was affected by regulatory interventions impacting the whole sector.
• Bupa Global and UK: Revenue was up 10% to £3,396m. This was driven by higher health provision customer volumes and portfolio growth in our UK Insurance business. Underlying profit was down 44% to £62m, as improved dental results were more than offset by higher claims in UK Insurance and higher claim volumes, alongside products priced based on 2020 experience in Bupa Global, our International Private Medical Insurance (IPMI) business.
• Other businesses: Revenue was flat to 2020. Underlying profit was down 12% to £45m predominantly reflecting higher claims in our associate business in Saudi Arabia and the additional COVID-19 coverage included in policies in our associate business in India driving higher claims.

Financial position

• Solvency II capital coverage ratio of 179% (2020: 160%).
• Leverage⁷ is 27.0% (2020: 32.4%) when including IFRS 16 leases as liabilities. Excluding these liabilities, the leverage ratio is 19.7% (2020: 25.3%).
• Net cash generated from operating activities was £907m, down £429m on prior year as a result of higher claims as disruption to elective procedures reduced from 2020.

Other highlights

• We successfully launched a new Restricted Tier 1 (RT1) subordinated bond offer to the market alongside the partial buy-back of a Tier 2 bond which matures in 2023. These transactions enable us to enhance Bupa’s capital base and demonstrate the continued financial flexibility of the Group.
• We confirmed our ambition to be a net zero business across all emission scopes by 2040. We have set science-based targets which are aligned to Bupa’s contribution to keep global warming to no more than 1.5°C.

Read the Bupa Group 2021 full year financial results statement.

Notes to editor

¹ Revenues from associate businesses are excluded from reported figures. Customer numbers and economic share of post-tax profits from our associate businesses are included.

² 2020 revenue has been restated by £24m for the remeasurement of imputed revenue and interest in respect of interest-free refundable accommodation deposits received by the Group as payment for aged care units in Bupa Villages and Aged Care Australia.

³ Underlying profit is a non-GAAP financial measure. This means it is not comparable to other companies. Underlying profit reflects our trading performance and excludes a number of items included in statutory profit before taxation, to facilitate year-on-year comparison. These items include impairment of intangible assets and goodwill arising on business combinations, as well as market movements such as gains or losses on foreign exchange, on return-seeking assets, on property revaluations and other material items not considered part of trading performance. A reconciliation to statutory profit before taxation can be found in the notes to the consolidated financial statements.

⁴ 2020 underlying profit and statutory profit have been restated by £(14)m at AER following the quantification of historical underpayments of employee entitlements in Bupa Asia Pacific Market Unit and for how costs incurred in implementing a Software as a Service (SaaS) arrangement are accounted for.

⁵ The 2021 Solvency II capital coverage ratio is an estimate and unaudited.

⁶ On 1 July 2021, we formed the new Bupa Asia Pacific Market Unit, incorporating our businesses in Australia, New Zealand and Hong Kong SAR. Results and comparatives are presented as the new Market Unit.

⁷ Leverage is calculated based on gross debt (excluding RT1) divided by gross debt plus equity.

Enquiries

Investors: Gareth Evans (Treasury): [email protected]

(BUPA 1025Z LN)

About Bupa

Bupa's purpose is helping people live longer, healthier, happier lives and making a better world.

We are an international healthcare company serving over 38 million customers worldwide. With no shareholders, we reinvest profits into providing more and better healthcare for the benefit of current and future customers.

We directly employ around 84,000 people, principally in the UK, Australia, Spain, Chile, Poland, New Zealand, Hong Kong SAR, Turkey, Brazil, Mexico, the US, Middle East and Ireland. We also have associate businesses in Saudi Arabia and India.