MERSEYSIDE health cash plan provider Medicash incurred a pre-tax loss in 2011, according to its latest trading figures.
The company blamed a decrease in insurance rates, a high level of claims and poor investment performance for the decline into the red.
Total premium income in 2011 was £19.6m, down 3.7% on the £20.3m in 2010. Medicash reported a pre-tax loss on ordinary activities of £983,000 in 2011 compared to a surplus of £2.3m in the previous 12 months, largely due to a fall in the value of the stock market.
The drop in premium income came despite the fact the overall number of policyholders rose by 1%. One bright spot during the year was a doubling of sales of employer-paid cash plans.
Medicash protected its policyholders from the government's 1% rise in Insurance Premium Tax that took effect in January 2011.
Following a number of years of decline, premium income is expected to increase in 2012 due to the continuing growth in the number of policyholders.
Medicash paid claims worth 83.1% of net premiums written in 2011 compared to 80.1% in the previous year which is significantly more than the majority of its competitors.
The increase in claims paid in 2011 as a percentage of premiums written has resulted in a small loss for the insurance operations of £24,000, compared to a surplus of £561,000 in the previous year.
Sue Weir, chief executive of Medicash, said: “Despite difficult trading conditions during the year, we are pleased to report growth in the policyholder base which has been achieved on the back of the company’s most successful year for new sales into the corporate market.
“This market continues to grow relative to the individual market.
“Organisations, both public and private, continue to recognise the importance of proactive benefits to assist in reducing absence and to improve both morale and productivity of their employees.
“The product offerings to both the corporate and individual markets remain extremely competitive. We continue to progress innovative solutions to this market while balancing the needs of our policyholders against maintaining viable plans.”
In early 2012, Medicash launched two new products, Proactive for businesses with over 25 employees and Wellbeing for consumers – both of which feature an exclusive online discount platform delivering everyday savings.
Medicash and its associated charities contributed £85,000 to charities in 2011 compared to £150,000 in 2010.
Established over 140 years ago in Liverpool, Medicash has a corporate and individual policy base of almost 137,000 people, making it one of the oldest and most established healthcare cash plan providers in the UK, the mutual says.