The provident association dragged its insurance division into profit last year after two years of heavy losses and the whole Bupa group made a pre-tax profit of pounds 36.5m compared with just pounds 1.3m in 1991.
Bupa's improved financial performance has prompted industry speculation that it is grooming itself for demutualisation and a public flotation.
Peter Jacobs, the former chief executive of S&W Berisford who moved to Bupa two years ago as chief executive, said yesterday that this could not be ruled out.
'We have an aggressive plan for growth and that could bring about a need for capital. There are all sorts of ways to raise capital. It would be wrong to say we are not continually reviewing all of them,' he said.
He did not envisage a need for a large capital-raising exercise in the next three years, however. 'In the short term we have adequate capital,' he said.
Bupa's insurance division, which includes activities in Spain as well as the UK, made a pre-tax profit of pounds 14.4m after investment income of pounds 20.8m last year, compared with a pounds 19.7m loss the year before. The Spanish insurance company Sanitas made a pre-tax profit of pounds 12.7m, up from pounds 7m in 1991.
The group's underlying financial strength improved last year, with an increase in reserves of pounds 37.3m. The solvency ratio of net assets to subscriptions was up to a little over 44 per cent from 39 per cent in 1991. In 1990 the ratio was 32 per cent.
Bupa's deteriorating financial performance came at a time of headline-grabbing stories about long NHS waiting lists, when it appeared there should be plenty of scope to make money from private health insurance. But private insurers have been hit by rising claims and rampant inflation in medical costs.
The recession has also taken its toll on subscriber numbers at Bupa, with a reduction of 6 per cent to three million last year.
The turnaround at Bupa has been aided by the introduction of new budget-priced insurance schemes and a 750-strong reduction in staff numbers.
Bupa also imposed premium increases well into double figures in 1991 after it became clear that claims were spiralling out of control.
Increases are still coming through, although at a reduced level. There was a 7 per cent increase in premiums for corporate customers last July, but the group did not impose its usual second increase in January this year.
However, there have still been two increases for individual policyholders in the past year - 8 per cent last July and 6 per cent in January. Despite these rises, Bupa said the cost of claims on personal policies was still too high.
Mr Jacobs said he believed that there was substantial scope for expansion in the private health insurance industry in the next few years. Bupa was well placed to take advantage of this and would continue to launch new products, he said.
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