Good morning, everybody, thanks for joining us today. I'm here with Nick Freeman, our Group CFO, and Ros Toms, our Group Head of Legal, Risk, and a few other things too. There's only the sustainability, of course. We should start this morning by acknowledging we're presenting today on the traditional lands of the Gadigal people, who for tens of thousands of years literally enjoyed the lands as we do today. We look forward to a successful resolution of the Uluru Statement from the Heart, which we support very much as a company. There I am. I always like to start with a slide. I know many of you are looking forward to talking about the numbers, nevertheless, this captures our vision, if you like, for the company.
One of being as much about the good health and wellness of our members as we've been for more than 70 years now, their sickness. It's a metamorphosis, if you like, that we're seeing around the world with many other companies who have their past in traditional health insurance. That remains very important, of course, because unfortunately, people will continue to age and get sick and injured. Nevertheless, we are making investments today very deliberately aimed at helping them and their doctors have a much deeper insight into their health and risk profile and a much broader universe of products and services which support their good health to complement the significant support we provide by way of financial protection. Look, there's lots of highlights in the results. These are very much purpose-orientated, notwithstanding the limitations of COVID-19.
You've probably all heard about the restrictions on surgery and activity. That hasn't stopped us, and of course, right across the industry, continuing to support people in need in event of their hospitalization or need for allied treatment such as dental and optical. Probably our proudest boast at the moment is the success we're having with the investment we made in Honeysuckle Health in identifying the risk in people and preventing that risk. Our hospital support program, for example, is designed to identify and target those people most at risk of an unplanned hospital readmission. Based upon the success we've had so far, we believe we've reduced unplanned readmission amongst our cohort by somewhere between 16% and 20%.
That's just the beginnings of what we imagine will be a future in where we're much more precise and targeted in identifying people at risk and supporting them, not just with financial protection, but with the types of products and services and programs designed to mitigate that risk. You can also see in the first half, travel claims have begun to pick up with the resurgence of travel, we'll talk more about that further on. Just a final point I'd made there is, consistent with our emphasis on our purpose as a company. We are developing, it's taken a while, but we want to get this as right as we can, a series of purpose KPIs or measures.
For example, we have an industry which seeks to measure the total population health, and we're also measuring, you know, more, more obvious things such as the rate of hospital admission and the prevalence of chronic disease across our population, et cetera. Expect to see that evolve and develop as the as we move forward. As I mentioned, lots of highlights in this year's results, and we'll talk in more detail about each of these as we progress. Look, you know, clearly we're seeing very strong organic growth across the business, not only in our traditional arhi, Australian Residents Health Insurance business, but also in the international workers and students business and in New Zealand. We expect that momentum to continue.
You know, the system as a whole has put on 750,000 additional people since 2020. You know, we're very much part of that story, and in fact are leading that story with our growth rate relative to the industry. You know, Nick will talk a little bit further on about our 4.2% for the year. Now, we can't say with any certainty how that compares to the industry, but I expect it'll be about double the industry growth rate. I expect our first half growth rate of 2.3% will be maybe a little bit more than double the industry growth rate. Our margin is declining very deliberately.
We've said throughout COVID-19 that we don't believe margins around 10% in arhi are sustainable or fair or reasonable. We're very deliberately pricing to bring that margin down towards our 6%-7% target range. We're not quite there yet. The plan has always been is that that margin declines back to more sustainable levels. The profitability of those other adjacencies would improve, and that's exactly what we're seeing as we indicated would be the case throughout COVID. Again, we'll talk to those, the recovery and profitability in those adjacencies as the presentation proceeds. Our investment income has improved. We see ourselves more of custodians of the capital we hold rather than active fund managers. Nevertheless, it's good to see a turnaround in investment returns.
The positive commercial performance of the business and cash flow is certainly supporting the kind of new investments we're making across the group, whether it be acquisitions in the NDIS or additional investment in companies like Midnight Health, which we now fully control. New IT systems that we're developing. We'll touch a little bit upon IT a bit further on. Of course, just the pure investment we're making in marketing, acquisition and retention. The NDIS strategy is off to a very, very good start. I think it's fair to say it's exceeded my expectations. We raised that money, when was it? Late last year. Set off on this journey, pardon the cliché.
The work our team's done in assembling, and consolidating a number of businesses, you know, very, very impressive. We're really excited about the prospects of the NDIS and the role we can play in helping, what, the 600,000 or so, participants, soon to go to 1 million participants, in achieving their goals. Bringing a level of efficiency to the business which is desperately needed given the trajectory of spending. Earnings per share grew for the half on the back of good commercial performance. Represented a very solid return on invested capital.
It's a little bit off what it was last half, Nick, you know, anything + 15% we regard as a, you know, an outstanding result in what is a very competitive sector. Our Net Promoter Score across the group pleasingly improved up to 37%. Staff engagement is particularly impressive, especially against the backdrop of the initiatives we're taking around hybrid or distributed working, whichever you'd prefer, because there's still some skepticism as to whether or not that's the future. We believe it is, so far the results are positive in terms of engagement, productivity, and commercial performance, lost time injury ratios, absenteeism, et cetera. Look, this slide's just trying to make the point that our bug system growth for the half and the full year is no fluke.
You know, our story with the arhi business at least has been one of very sustainable way above system growth. There's no special recipe to that, it's just a tale of constant experimentation and innovation and the kind of pioneering we've done over many years, whether it be an early adopter of retail brokers, companies like Choosewell, Compare the Market, and iSelect. Being pioneers in developing a white labeling or private labeling capability, whatever description you prefer, with the likes of Qantas and Suncorp and ING and others. I suppose, you know, it's fair to characterize our P2P initiative as our latest brand-new innovation initiative designed to provide the kind of momentum that has created this above system growth for so long.
You know, we regard the only form of long-term competitive advantage as constant short-term competitive advantage. Just restating some of these highlights. Nick will go into the detail on all of these, so I won't labor the point. Earnings strong, they're up. Good ROIC, good EPSes, I mentioned. You know, an attractive interim dividend and a strong NPS results. With that, I'll pause and hand it over to Nick, who'll take you through some of the more detailed financial results.
Thanks, Mark. I'll just actually sort of maybe linger on a couple of items around the result that Mark's already touched on, and starting off with the overall group result. I think the first area to highlight, the premium revenue up 5.8%. A little lower because of the impact of the give back. We gave back AUD 35.5 million this half against the prior comparable of AUD 13.6 million. Again, that premium revenue would have grown a little bit, a little bit more in that regard. Also, the claims number of 4.9%, again, quite subdued claims. What you'll see coming through there is a few things, and we'll unpack that in a little while.
Essentially, we're seeing a fairly subdued claiming environment in the hospital area, ancillary returning back to more normal levels. The risk equalization is relatively favorable as well. All of those interplaying. The last part is that we did see an increase in the DCL of up from AUD 110 million to AUD 124 million. The amount we deferred, the percentage actually declined from June, but we had further savings. Where that trends across the course of the next six months or so, again, at some stage, you know, the sort of COVID normal needs to set in. Clearly that had an impact on our high margins, which is worth taking into account. Worth just considering that as we go forward.
Just jumping down on one last point, which is on the return on invested capital. You can see that there was a decline, that's really just the inclusion of the second half 2022 investment losses. Essentially, we use the last 12 months of earnings in calculating that. Really what you're seeing is a calendar year 2021 versus a calendar year 2022 earnings, and one includes the second half 2022 investment losses. As that goes forward this year, provided that we don't have a similar level of investment losses as last year, you'll see the return go up again. We always go to this gross profit drivers page.
It's a little complex, but I find it's quite useful to answer some of the investor questions towards the end of the days. A few things that we're looking for here. The first is with the policyholder growth, again, AUD 21.9 million contribution against the scale and mix of only AUD -1.3 million. We like to try and see those things at least offset, and in this case, it's really quite favorable. The favorability again due to the strong policyholder growth and also quite benign downgrading. That's really due to strong combined cover sales. Again, our hospital sales have been quite strong, which is another pleasing aspect of the policyholder growth that we've encountered.
As we go through the rate variances, continued favorability, we've taken out the risk equalization element of that. You can come down and see on the risk equalization impact, sort of halfway down. Although it's only an AUD 4.4 million increase, you can see that it's still a fairly favorable number as a gross number. In the first half of 2022, it's AUD 32 million. This year it's AUD 36.8 million. Still seeing favorability against our expectations on risk equalization. In terms of claiming level, I've already talked about this, as you went over the last two years, what we saw is that they've been, in general, lower than expected, which is no news. Originally, it was driven across the board.
We've continued to see those claim savings, they're now more skewed towards the hospital and the risk equalization area. Just highlighting another piece that Mark's talked about in terms of the earning symmetry returning. I thought I'd just put this slide in just to highlight a couple of the trends. The first is on arhi. You can see across the course of the last halves, the arhi margin popped up to 10.6%. It's now coming down to the 8.6% level. Again, that's deliberate.
As Mark said, if you look at the first half 2022 and what I call our other developed operating segments, which is the students and workers business, New Zealand and travel, you can see that the prior comparable period, that lost AUD 6 million combined, and in this period, it made AUD 31 million. Again, a strong turnaround in those businesses, driven largely by travel and also the students and workers. We've then got another segment that I've just sort of pulled out here for transparency, which I'm calling other developing operating segments. That's essentially Honeysuckle Health, Midnight Health, and nib Thrive. You can see that the losses jumped up from 1.7 up to 3.8, up to AUD 8 million. A piece of that is actually the Midnight Health.
When we moved to majority ownership of Midnight Health, which wasn't present in the last halves, we have to now consolidate the full P&L into Midnight Health, and then we deduct it below NPAT as a minority interest. Again, there's a slide in the appendices which show those numbers. In fact, we're consolidating 100% of the loss, and then we don't deduct it until below the NPAT. That's having a magnified impact on our UOP. Okay, if I turn now to arhi , I think most of this has been covered, but I'll just highlight a couple of areas. The first premium revenue, 4.3% growth, but it would've been 6.2% without the impact of the givebacks.
A good strong premium growth driven by policyholder growth of that 4.2%. Put in the downgrading, it's not something we follow closely, but I know it's something that interests a lot of the people on this call. Again, you can see a strong result in downgrading, only -0.2% versus -1.4% before. Working through a little bit on the claims, you can see that the claims are up overall 5.4%, but there's some really quite big numbers beneath that 5.4%. The first is what I call raw claims, up 9%, again, driven by policyholder growth, 4.2%, plus or minus a bit with mix.
You've also got the impact of inflation there, and then the actual utilization was relatively little. That hopefully gives you some indication of inflation, although we'll leave it up to others to sort of try and bring that out specifically. You can see that the major offset was in risk equalization and also the impact of the provisioning. You can see there that the risk equalization benefit down 10%, and then we've also got the provisioning as well. That hopefully gives you a little bit of an idea about how the claims expense moved in that regard. Again, just highlighting DCL increasing up to AUD 124 million. You know, that's a reasonable impact on the arhi margins.
Just worth highlighting that to take that into account when you when you look at the margin impacts. Just a couple of sort of key drivers. This is a slide we've shown you before. This is our estimation of above or below pre-COVID trends on claiming. You can see in the, in the first wave, dramatic reduction below what we'd consider normal. As the lockdown ceased, you could see a little bit of catch-up, relatively benign. We had last year the Delta Omicron strain, again, reduction. What you're seeing now is that we really haven't seen that much catch-up.
Now, it's not to say it won't occur, but it's just highlighting again the difference between what's happened when we came out of Wave 1 versus out of the Delta versus Omicron. On our students and workers business, really a tremendous turnaround in this business. The workers are driving this. The workers have been growing dramatically. We've been doing very well in that segment. It's also very beneficial in the mix. Higher revenue, higher margin products. That's been driving that. If you look at the bottom right-hand side, you can see the students. The students are starting to bounce back, and we are starting to see students returning, and the understanding is that's across the industry.
It's good to see that the students are returning back into the country, and we'd see that as a tailwind for that, for that business. Good, strong turnaround there. In terms of New Zealand, you know, this is just a business that's performing tremendously for us. It's actually had a very strong result, but that strong result has been helped by a one-off. If you look about four lines down, we've got this DAC write-off credit. At the end of the year last year, we did write off some DAC. That's now coming into a benefit because we don't have to amortize that DAC into the first half. There's a $ 4.7 million benefit there.
Having said that, it's still a very strong result from New Zealand. You'll also see that we are investing in New Zealand, and that's mainly in the Oasis program in that regard. Travel. Mark says that he falls in and out of love with travel. I think he's officially back in love, so that's good news. It's really been a terrific period for travel. We've, I think there's been a lot of work done during COVID in order to get travel ready for the bounce back. We've done a lot of work on the product side in working through the products. We've done a lot of work also on the claims and automation side, although still a bit of work on that to be done.
You can see now that turnaround, that EUR 6.4 million is actually the strongest ever half we've had since we entered the travel business. Again, a good strong result in travel, driven by the increase in numbers and also there is some price rises in there as well. Just on capital management, again, in the accounts, we've provided the capital on the old version of the APRA standards, the new versions coming in on 1st of July this year. That's when we'll start reporting in the accounts, but we're providing these numbers for your benefit on our estimations. The last time that we provided these numbers was at the time of the capital raise.
We had a PCA ratio of 1.7. That's now increased up to 2x . We're in a good, strong capital position in the fund, and also the nib Group's in a good, strong capital position, which is not surprising given that we raised some capital, and we haven't spent all of that on the NDIS assets yet. Group remains in a very healthy shape. On cash flow, probably the thing worth noting on this, just the reduction in operating cash flow between the halves. We've seen this occur actually each time, in the first half as we come out of waves, that's pretty much because of the deferral.
We actually had very strong cash flows the last couple of halves, and now we are seeing those claims catch up, although not to, not to normal levels or not to expected levels there. Fundamentally, that's, you know, that's driving. We also had a large tax payment, because we didn't end up spending the DCL, so we were paying our installments on a, on a lower estimate. We had a tax catch up in there, and also the impact of the give back. Those were the main things impacting operating cash. Again, not particularly unusual. We'll go down. We've highlighted there just a few things for you.
The business combination, so that's the acquisitions, of Maple Plan and also the business that we acquired in New Zealand, OrbitProtect , which is a students and workers business over in, over in New Zealand. You can see the proceeds from the issuer shares. With that, I'm gonna hand back to Mark.
Thanks, Nick. I wonder if it's just worthwhile just pausing and reflecting on the member compensation. Just by way of background, we and the industry as a whole made a very strong commitment at the start of the pandemic not to profiteer. I prefer the word profiteer to profit because we still have to run a business from COVID-19. The total value of our partly an explanation behind the declining high margin, our total compensation to members now, AUD 175 million. We certainly believe we're being true to that commitment. Of course, COVID-19 sadly is not quite behind us yet. The further consequences of COVID-19, both in terms of claims inflation, provisioning and the kind, whatever further compensation we may seem warranted.
The ACCC, who are obviously overseeing this position, given the commitments we made to consumers. If you look at their annual report of private health insurance as at June last year, they calculate about AUD 2.25 billion in missing claims, I think is the expression they use. They noted that the industry has reported about AUD 2.1 billion in compensation. It's fairly clear that the industry is doing the right thing. I'm hoping that the ACCC and others will get some comfort on the efforts, the genuine efforts we've made to recompense our members for the, you know, the loss of activity during COVID-19. Ros, over to you.
All good, Mark. Thank you, Mark. On the right of the slide, you'll see there our sustainability pillars. There's five of them, which are closely aligned to our strategy as a company, our purpose of your better health, as well as our values, and in particular, our value to make the world a better place. I won't talk through them all, but I will just call out a few key highlights from the first half of 2023. You'll see there that we are tracking incredibly well in terms of our members enrolled in health management programs, which are programs that are specifically targeted at certain diseases and conditions.
For example, Healthy Weight for Life, which we've been using for osteoarthritis for people ahead of hip and knee surgery, we are looking at rolling that program out further in the coming months for diabetes. If you also look there under our Innovate Reconciliation Action Plan. We have launched that last year, and that was on the back of the foundation work that we did in terms of our Reflect RAP. As Mark alluded to at the opening, our full support of the Uluru Statement from the Heart. We pleasingly have increased our engagement score, as Mark also mentioned, up by 3%.
The feedback from our employees has been that that's largely been around life at nib and the hybrid working environment that nib has rolled out on the back of COVID, that we continue to implement, and people are really enjoying the flexibility and the support that the company has provided them to work from home. For example, people are given $1,250 a year to help them work from home as well as the $300 set up cost. In terms of our foundation, the foundation has reached over 100,000 people in terms of their prevention partnerships. The prevention partnerships are innovative IT solutions aimed at health and aimed at younger Australians. For example, we have partnered with the Black Dog Institute, who launched Sleep Ninja last week.
We've had, excuse me, a long-standing relationship with Hello Sunday Morning, which is geared towards improving the relationship that young Australians have with alcohol. The foundation continues to work very closely with us. You'll see there that we're also including sustainability metrics for the first time in the executive STIs, and more of that will come through with our remuneration report this year. Finally, we're also very mindful of the data that we hold and that we're custodians of very sensitive information. We have refreshed our data governance framework, and that sits in a broader framework around our ethics framework and our risk management framework. In terms of what's ahead for the next half of the year, we'll continue to invest and focus on the health management programs and general wellbeing support programs.
These are clearly a part of the P2P strategy and an important part of our overarching strategy. In terms of natural environment, we will continue to maintain our neutral carbon status. We've also applied to the SBTI for SBT certification, validation rather, of our net zero targets, and we're hoping to receive news on that in the coming months. We're also proposing to conduct a further climate change scenario analysis. We undertook one in 2019, but given how fast and rapidly this space is moving, we believe it's quite timely to undertake a further survey. In terms of life at nib, we will continue to monitor, as Mark said, hybrid working. The way that we're working is quite new and innovative, and we wanna ensure that our employees remain fully engaged and productive, as we continue to implement that strategy.
Just finally, in terms of modern slavery, we have launched our third modern slavery statement. nib at the beginning was very involved in setting up a consortium, particularly in the PHI industry, and we remain very active in that space. Mark, I might hand back to you.
Thanks, Ros. Well, look, I won't be too long-winded on business strategy because many of you have heard our plans before. Our biz strategy is what we call P2P, Payer to Partner . It sounds a bit cheesy, I know, it really describes, as I mentioned earlier, our intent to be more than just a payer of healthcare bills, rather than a partner with our members and travelers and other customers in supporting their good health. Look, just a few call-outs on this slide. Probably about six or seven years ago now, we started to view the world as a healthcare system rather than just a private health insurance system. Just taking Australia as an example, an AUD 220 billion system rather than an AUD 30 billion pure private health insurance business.
That took us down a road of identifying, well, where is the value, where is the expenditure in this AUD 220 billion? Where is the opportunity to capture value? Of course, the obvious one being a health insurer for 70 years was to differentiate the nib arhi products and support that with solid marketing and distribution as we had, and a superior value proposition, a value proposition of being there to support you, your good health with insight and guidance and access to a much broader universe of health insurance products. You can even become a member, a GreenPass member of nib today without buying health insurance. Number one priority remains to grow the category and grow our share of that category.
There are additional value pills. For example, Australians spend about AUD 35 billion a year on out-of-pocket healthcare expenses. Here we are in the business of helping people finance that healthcare. How can we be playing a role in that particular value pool that explains delivering a range of men's and women's healthcare products. For men, you know, about hair loss or for women, the morning-after pill, just to cite a couple of the products in their portfolio. We very much hope that that particular business will capture value in that, in that pool of out-of-pocket spending. Equally, we hope by. It is a company that will introduce people to nib and hopefully a segue into ultimate PHI membership.
Just to give that some definition, for every 1,000 net new members we acquire at a company, that creates about $2.5 million in value. So the loss-making of Midnight Health, you can think of in terms of its, not only its potential to do well in that value pool, but its potential to drive additional participation in our arhi PHI business. You know, the highlight of revenue capture is the work that Honeysuckle Health's doing. So of that AUD 220 billion, about AUD 100 billion is spent in hospital.
Clearly, our efforts, our ambitions to keep people healthier and out of hospital or to substitute them at lower cost settings of care, is good for in terms of our purpose, but also in terms of the potential of Honeysuckle Health being able to capture some of that value. What we save for our company and our members in terms of an avoidable, unplanned hospital readmission, is saved by nib, but it's also revenue captured by Honeysuckle Health, which most of you know is a joint venture we have with the Cigna Corporation. The better we are at keeping people healthy and well, and hopefully, out of hospital, except where that's warranted. You know, hospitals are, of course, very important partners in this entire value chain.
The need to keep people healthier transcends that, will reduce our loss ratio and also give us ability to price more competitively in the marketplace. That's another driver of value. Finally, of that AUD 220 billion in Australia, about AUD 130 billion is funded by government in what is becoming an increasingly difficult fiscal position for government because of the growing dependency ratio across the nation. You know, we do see a future where the private sector plays a greater role in delivering on those government programs in much the same way as you'll see in countries like U.S.A. where the private sector effectively delivers most of Medicaid today and, you know, most of Medicare. Half the American population is now in the private sector alternative called Medicare Advantage.
I might be in a nursing home by the time we see it, you know, the small steps are important and the kind of efforts and investments we're making in New Zealand with Toi Ora and our support for Māori populations and the initiative we're taking currently in New South Wales in a rural city are really important in terms of proving our capability and competency to help government deliver on its own social insurance programs. Just to give some additional flavor to that, we've got a little video, a short video I promise you, to share, just highlighting how we see our future relationship with consumers beyond being purely a payer of the doctors and hospitals and dentist bills as I've described.
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Thanks, Sam. You know, this is a good example of how we're trying to make a real difference to the value proposition, of being a member of nib or even a traveler or across even part of the NDIS, through the application of technology and providing a more expansive, value proposition for consumers. Okay. Look, I wanna move on to nib Thrive. It's obviously a very significant development in the company. It is entirely consistent with our Red Queen racing philosophy, pardon the characterization. We've been looking at the NDIS for a number of years. We like the fact that it's a large, growing market with this very strong social purpose.
We like the fact that essentially their plan management support coordination in the NDIS scheme is connecting the buyers and sellers of disability services, just as we have connected buyers and sellers of healthcare for 70 years. We like the fact that we have a strong and trusted brand, that we have operational capabilities in the business to pay claims and support the NDIS participants. We like the fact that the industry is still in the early stages of development, call it a cottage industry in some parts, if you like. We see the opportunity for us. As we mentioned, when we raised the money we did to fund our entry into the sector, we see an opportunity for callers consolidation, and for us to do very well.
Very well in terms of the experience of participants, very well in terms of the experience of the important providers of disability services, and very well in terms of our commercial objectives. You know, that's just a little bit of a background. Martin Adlington, who's been leading our efforts and doing tremendously well, will take you through a little bit more detail. You there, Marty?
Thanks very much, and good morning, everyone. Thanks for the opportunity to provide an update on our NDIS strategy, which is progressing very strongly. Building, of course, from our successful capital raise back in the first half of 2023 of some AUD 158 million. Our first acquisition, the acquisition of a Melbourne-based plan manager, Maple Plan, was completed in November. The business is on track and performing to expectations. We're very pleased today to be also announcing that agreements have been signed to purchase two new plan management organizations. Peak Plan Management, a Ballarat-based plan manager with over 11,000 participants, and Connect Plan Management, a Brisbane-based plan manager with over 4,000 participants, which are both due to complete in this second half of FY 2023.
We do have some further acquisitions currently under quite active progression, some 10,000 participants in all. If successful, by the end of FY 2023, we do expect a nib Thrive participant base of some 33,000 participants. Of course, on track to manage the needs of those participants, some 50,000 of them by FY 2025. Thanks, Mark.
Thanks, Marty. Okay. I'm sure there'll be some questions around that. Sufficient to say, as I've already reserved, we're very pleased with the start to this new venture, and, you know, very pleased with the earnings profile that we expect will follow. Okay, we'll finish off with a bit of an outlook. Look, we still feel constrained around giving guidance given the vagaries of COVID-19 and how it's playing out in the form of claims. Look, we are seeing catch-up in lost activity during COVID. There's no question about that. The dilemma becomes to what extent does that catch up, add to existing volumes or simply push volumes, you know, down the pipeline in the future.
It's, you know, so far it's evident that it's more the latter phenomenon, you know, because the pipeline, supply pipeline is only so large. Let's talk a little bit about arhi . Well, let's break it down a bit. We expect arhi to continue its momentum. Growth's been as strong as I can recall it in some times. There are all sorts of theories around system growth that we're seeing. Most likely, the largest factor is just the, nobody celebrates this, is that the difficulties being encountered in the public system and the delays on elective surgery is improving the value proposition. I also like to think the kind of initiatives and investments we're making is lifting our brand, reputation, and value proposition as well.
Hospital claims will likely remain subdued for the reasons I've just mentioned. It's difficult for the system to accommodate too much catch-up at any given time, which means that catch-up, that activity lost during the Delta and Omicron strain, you know, that will still be playing out and catching up three, four, you know, five years from now, which really raises some interesting questions around provisioning for that catch-up, especially through the DCL. We will continue to move towards our net margin in arhi of 6%-7% over the course of time, watching closely the recovery of profitability in other parts of the business. We make, you know, no apology for that. We think a more sustainable level is 6%-7% and a fair result for consumers.
We've deferred as part of our member compensation, as I touched upon earlier. We've deferred this year's premium increase until September 2023. There may be a case for further compensation. We just have to wait and see, depending on, you know, how COVID continues to impact our claims experience. You know, unquestionably, our current premium growth levels are beyond what you'd expect will be a long run normal. At some point, claims experience will most likely revert to some longer term mean, probably around, you know, 4%. We look to further expand on our P2P offerings within arhi, you know, to drive more growth. You know, I mentioned Midnight Health earlier as being a segue to participation in PHI and arhi growth.
New Zealand will continue to go well. You know, strong growth. Its growth rate is about almost 6% in 2022. I think that will continue. The work we're doing in New Zealand with the Māori communities through our Toi Ora is very positive. We acquired Kiwi Insurance Limited's life insurance business last year, that's adding to our value proposition. We now have this living benefits offered to complement our PHI offering. Nick mentioned we've acquired OrbitProtect, which will add to our students and workers business in New Zealand. We're very positive about the symbiosis and synergy, if you like, between our Australian international workers and students business and our business in New Zealand. You know, travel is a highlight of this result.
It's pretty much we've had our best half ever. It's pretty much turned out, turned around completely the loss making of previous years. Just listening to Graham 'Skroo' Turner yesterday on the news, it seems there's not going to be any abatement in travel at least not in the near term. That augurs very well for our travel insurance business and, you know, its prospects are, you know, are very strong. [Ditto] our international workers and students businesses, which has pretty much reversed the loss making of the last half. January was a record sales month for students.
With the government policy settings that are emerging, the increased emphasis, the increased recognition on the need for foreign labor and the need for our tertiary institutes to reboot, the competitive advantages that our tertiary education sector has in terms of time zone, COVID safety, you know, being able to stay and work after your study will mean that we'll do very well in this post-COVID world. We're very, very bullish about the prospect of both workers and students. In fact, you know, workers in the first half, its growth almost exceeded our highs, still a bit to go, but it's really been an amazing story with our dominance of the PALM Pacific Workers scheme and other initiatives.
Of course, the other big factor with students in particular is the unwinding of the high loss ratios we experienced during COVID-19. Mainly because the students weren't able to go home as they typically would for, you know, three or four months a year. That concludes our presentation. Thank you for your time and attention, and more than happy, as always, to field any questions. Nigel? I think he just had his hand up before you, Sid. I know it's your place.
Thanks, Mark. Nigel Pittaway here from Citi. First of all, just, I mean, you have mentioned switching as one of the benefits you've had in terms of premium growth. I mean, obviously the obvious question is, do you think you've picked up anything from, you know, fallout from a certain larger health insurer that had cyber attack, et cetera? What have you seen in respect to that?
Oh, look, it's hard. Well, we've seen a little bit, and equally we saw a little bit from Bupa in their kerfuffle with, was it Healthscope? Healthscope. It's not necessarily always good switching because these are people who are self, you know, bound for hospital. Although the lifetime profitability of the switcher still tends to take care of that anti-selection in the short- term. Look, the history is that typically switching accounts for about half of our, of our sales. It's been that way for a long time. We've historically been a net beneficiary from switching as you know. I guess the good part of that story is if half its switching means half of it's new to category, and new to category is typically very attractive because of that first year, waiting period, and the fact that you're just not recycling the same old folk.
To answer your question, there'll be a little bit from Medibank Private, there'll be a little bit from Bupa, but it doesn't explain the above system growth that we're experiencing.
Okay. Secondly, just a question on underlying operating profit. I mean, when you did give the AGM guidance, you were up sort of 16.3% for the four months to October. By December, that had fallen to 13.3%. It suggests flat versus PCP in November and December. Is that all due to the accounting for the pricing deferrals, or what else is going on in terms of-
More the DCL.
Mm-hmm. Right.
Um-
That was more in November, December?
Yeah. The DCL remains, as you guys know, a highly subjective issue. You know, theoretically, it makes perfect sense in as much as we know there has been activity lost that will return. Now, if Jack's got that wretched knee, at some point he's going to have it replaced one would think. It's just a question of the timing. You know, you can make a case that the DCL will run out another half dozen years. Now, I don't think it will. Of course, it'll be a accounting standard, but it certainly is putting some noise into the system. Although, you know, I think it's noise on the upside rather than the downside. You know, let's put it that way.
I think the risk of it being understated is far less than it being overstated because it won't be precisely accurate at the end of the day.
Okay. The DCL addition was basically more skewed towards the end of the half. Is that what we're saying?
Yeah. I mean, traditionally November's quite a large claiming month as well. you know, that's why we're sort of semi-hesitant about month-on-month, because we do have months where, you know, it can be a very large number of months where it can be lower because of their large claiming months.
Okay. Maybe just finally, I mean, you've obviously said that hospital claims are still sort of behind. I mean, are there any areas that have picked up in terms of being sort of back at, you know, close to pre-COVID levels? Or is it generally a comment that sort of applies evenly across the board in terms of all procedures, et cetera?
Oh, no, there is variation. There are some areas which we hope represent long-term efficiency gains. Think in particular, rehab after major joint replacement. You know, people are much more likely to have that rebate, that rehab done outside of overnight hospital, and we think that's an efficiency gain because there's huge variation in the extent of people staying in hospital after surgery. We're seeing lower levels of hospital admission for psychological conditions. You know, people have sought alternatives to in-hospital care there. We think that could be a long run efficiency. We've seen a decline in other respiratory conditions associated with COVID now, because same precautions we took around COVID have been positive for other respiratory conditions.
Whether or not that's long-term gain, you know, only time will tell. Most of the other parts of the case mix are returning to pre-COVID levels. Probably not quite there. If only for the reason that it's mainly older, and I say this with respect, I'm 63, it's mainly older people who are hospitalized, and it's mainly older people who are nervous about the ongoing risk of COVID infection. To the extent that they can defer treatment, you know, colonoscopies, but even major joint replacement, you know, there seems to be a tendency to do that. You know, that's why, you know, we're...
You know, we have to emphasize that, you know, thankfully, COVID appears to be behind us, but it's still having real consequence in the system, and particularly for hospital workforces, which is the other supply side factor playing out here.
Thank you.
Siddharth Parameswaran from JP Morgan. A few questions if I can. Firstly, just on, just picking up on what Nigel asked around where claims are, you know, still low. You gave some comments there around areas where there may be something more permanent, you know, rehab, psych, and respiratory. Can you just comment on how much as a percentage of your hospital claims cost that actually is? The reduction.
I, well, I can, but not off the top of my head. Major joint replacement. You've got basically in the case mix, you've got heart conditions are a leading source of claims, major joint replacement, hips and knees. The extent that we can treat people outside of hospital for rehab and improve clinical outcomes, that's a, you know, that's a major opportunity. Mental health, hospitalization for psychological is, you know, I want to say 5 or 6 down the track, it's been growing rapidly in the past decade, you know, unfortunately, for all the reasons we understand. Nick's got-
I've just gotta find... I've just gotta find them amongst the...
Maybe if I can ask a simpler way then. I understand there's a lot there.
There you go. Those are the two big ones.
What would you view the reduction? How much is permanent? What is the current reduction? Maybe that's in place as well.
Yeah. Look, I think those. Look, I'm back-of-envelope here. That if claims inflation historically ran at somewhere between 4% and 5%, I think these kind of improvements, we might pull 50 bits off. You know, that's. That's, you know, that's a guesstimate. They're not gonna halve it, because, you know, the major cost associated with surgery is still, you know, the surgery rather than the rehab. You know, ultimately, where we do well is not only with the systemic inefficiency improvements, which affect everybody. Bear in mind that when they are systemic, we also get the risk equalization benefit. Where we'll be the most effective in managing cost inflation and improving outcomes is around the kind of interventions we're making with Honeysuckle Health. Like, you know, keeping.
You know, keeping people out of hospital through active programs like hospital support programs saves serious dollars even after risk equalization.
Sid, what I just would say is just look at the risk equalization as well, 'cause that's a big number. We're, we're sort of talking about, you know, lung and respiratory and, so forth. In fact, because the risk equalization pool has been, well, not increasing as greatly and in some cases reducing. For us, we've been paying less and less into the pool. You know, that's actually been. You know, whether that becomes a permanent shift, that's one that I've really got my eye on. I mean, I think that the last few halves it's been AUD 30 million-AUD 35 million a half. You know, that's a, that's a decent number.
Yeah. I mean, that may just be because the industry as a whole is seeing better claims, right? Is it...
Well, that's the whole thing. Because the older cohorts are claiming less, everyone's seeing the benefit. The difference is that the ones that take money out of the pool, they're seeing it on the claims side. If you ask the same question to a health fund with an older cohort, they would have an expanded benefit on the claims side, but they'd be getting reduced benefit on the risk equalization side. We're kind of the opposite. We see less of a benefit on the claims side and a bigger benefit on the risk equalization side.
I mean, Mark, you made the comment that, you know, you're seeing signs of a return to claims, but these figures don't really suggest that. I mean, if you're saying that these permanent benefits are only 50 basis points, the claims trends that we're seeing here, you're giving a lot of money back. You know, it still seems it's well below pre-COVID trends. Your own charts show that. Just what. Yeah. Where we are.
Well, That's as I emphasize, of course, COVID is still having consequences on claims. You know, the historian in me knows that since World War II, we've spent GDP plus 2% more on our healthcare. The idea that somehow, healthcare spending is going to find this new trajectory of, you know, somewhere between 1% and 3% growth, I just don't think it's realistic. Means, you know, our challenge becomes, you know, can we manage that level of inflation? Can we price it in? Can we still grow the category, at that rate of underlying inflation? I think as we've demonstrated, in the past, I go back to my early 20-year diagram. We've been able to do that.
You know, a huge tailwind for our sector, again, I emphasize, nobody celebrates the challenges faced by the public system, but there's, you know, clearly, you know, just with private education, we see similar development. People see more value now in private health insurance compared to what they did pre-COVID. I've always had a theory that PHI participation is probably less about affordability defined by price elasticity and more about income elasticity. You know, as we become wealthier and see more value in private health insurance, people will go to it. You know, affordability in our thinking is a relative construct. It's about sure we need to manage prices and, you know, keep them as low as possible.
For us, the challenge is more about providing additional value through P2P and the kind of features that you've seen and services that you've seen today.
Okay.
What are you worried about? Let's just say that tomorrow, underlying, inflation goes to 5%. Are you worried that we can't price that in m aintain margins or?
My question was more. Didn't finish my question. My question was just how long is it gonna stay at these lower levels?
Who's gonna win next year's, this year's Melbourne Cup?
Oh.
Yeah, that's-
Oh, yeah. I was just trying to get some feeling.
Yeah.
what's going on? That's all.
Yeah, I know. We ask ourselves that question constantly, as the entire industry does. It is, you know, it's just so unpredictable, and so the best we can do is be alert to changing conditions and nimble enough to, you know, to adjust. You know, it's why we haven't. You know, our member compensation, for example, has been quite measured and prudent. We haven't preemptively made, you know, big announcements to give back money without some confidence that that is appropriate given the circumstances, given the fact that we know there is a lot of activity which hasn't occurred and will occur at some point.
Yeah. Just my final question around this issue is just that drift back to that target range for 6%-7% in arhi. How long do you think that'll take? There seems to be a lot of discretion in how you can get there and how long you can get there. How should we think about this trajectory back to that target level? Claims trends are still tracking well below. Giving us guidance before that there may be volatility, particularly around give backs and pressures around ensuring that there wasn't profiteering from COVID-19. What's your thinking on that return to 6%-7%?
Well, you're almost asking for guidance there, Sid. you know, I'd love to be able to give it. I think this year will still be quite positive for arhi and those other PHI businesses in New Zealand, international workers, and students. Let me leave it at that. Otherwise, I'm, you know, I am at risk of, you know, giving some sort of guidance, which we're not. We actually like to give guidance. you know, we think it's important to market efficiencies, but it's just not. It wouldn't have been a responsible thing to do to, you know, to talk too specifically about, you know, arhi margins in 2024, 2025, 2026, 'cause we just don't know.
Thanks.
Thank you. At this time, we will conduct the question- and- answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Vanessa Thomson of Jefferies. Please proceed with your question.
Good morning. Thanks for taking my questions. I just wanted to perhaps continue on with some of those earlier themes. I just wondered about the direct effect of inflation for nib. I mean, we spoke about claims inflation, but I was also thinking about hospital contracts and the cost of delivering home services and all that kind of stuff. I wonder if you could give us some color on that. Thanks.
Yeah, it's a good question, Vanessa. Look, first of all, let me say we have a lot of empathy and sympathy for hospitals. They've had a really rough time during COVID-19. There's no question about that. We see our relationship with hospitals as not adversarial for a moment rather than symbiotic. You know, we're partners in this important sector. We are open to negotiations with hospitals which have regard for their plight. Hopefully, you know, beyond COVID, normal reception is resumed, but with some efficiency improvements, as I've already touched upon. The hospitals know this too.
You know, worldwide, hospitals are moving outside of their own hospital gate, if I can use that metaphor, recognizing that so much healthcare prevention and treatment is shifting to non-hospital settings. Look, we can't talk deliberately about, you know, the actual contract negotiations with the major groups. Suffice to say they're fair and productive and, you know, to the extent that any increase in indexation with hospitals needs to increase to account for their circumstances, well, again, we'll manage that and we'll price it in.
I don't see any resurgence in pressures on hospitals or resurgence in indexation rates expected of hospitals to impact our ability to, you know, grow the sector, and as I've said a few times this morning, you know, our share of that sector.
Thank you. I had a question also just about tax. The effective tax rate was up a little in the half. I know that Nick spoke about an impact from the DCL assumptions, I think it was. I just wondered what we should be expecting in the second half.
No. Well, second half it'll still be elevated 'cause it's been driven by the non-deductibility of the Midnight Health losses. Again, they were deductible in the PCP because they're a share of associate. This time, they're not deductible because they're not part of the tax group, and we need to wait until the profitability of the business.
Thank you. My last question was just on the NDIS strategy. I know you've flagged you've got some acquisitions happening. I wondered, it seemed to focus on plan management, and I know you've spoken in the past of support coordination. I wondered whether that was part of the future strategy or to be determined.
Yeah. No, no, not very much so. The focus is certainly on plan management amongst the existing businesses we've acquired, although there is some support coordination in there. You know, we see what we offer in the marketplace in the future, and we're going to have to navigate our way to this outcome. You know, we want to be there helping people design their plan. We want to then help them fulfill that plan by contracting with the various providers of support service and to manage that plan. You know, from managing the contract with providers, managing their budget. That broader vision for our role in the NDIS system suggests that support coordination, you know, needs to be part of our arsenal of services.
Right now, it's very much, you know, it's very much focused on plan management, but we have a, you know, a broader view as to, you know, where we can add value for participants and suppliers and of course the funders being government.
Great. Thanks very much.
One moment for our next question. Our next question comes from the line of Kieren Chidgey of Jarden. Please proceed with your question.
Morning, guys. Maybe just starting on the arhi business. Just keen to get a sense of what drove quite strong management expense cost growth, relative to PCP. I think it was about $19 million or 14%.
That was around investment, mainly investment in IT and P2P and also in clinical governance. I think we highlighted the investments that we're making, but broadly those are the main areas.
Were there any one-off costs sort of associated within that number? Sort of is this more of a recurring cost base we should think about moving forward?
No, no, there's not a lot of recurring. It's been on investment, so it'll be a reduction in P2P investments.
Okay. Sort of any clarity there for how we should think about NPR on a go-forward basis?
Well, one thing you should always think about, I know I do, is that in terms of pure marketing acquisition, it remains the case that the MPV of a new policyholder or a saved policyholder remains far ahead. Remains very positive, the MPV. In other words, the lifetime value of a, our policyholder. I think I've said that already, didn't I? You know, somewhere around AUD 2,500 . The cost of acquisition-
The cost of acquisition is about 1/4 of that. To the extent that we'll continue to invest in organic growth, the business case is very powerful. The only thing we have to watch is the optics of having too high an NPR, and potentially the impact that has on pricing and affordability. Although risk equalization tends to level out the pricing right across the sector for reasons you know, most of you understand. We've got no hesitation on spending more -on organic growth, but within any of the businesses really, but particularly arhi.
The second question, sort of on the margin, the benefit you're seeing at the industry level from risk equalization coming through to you, are you taking account of any of that benefit within your prospective pricing? Are you sort of assuming some of the lack of return of activity, particularly in older age groups, is more structural?
Kieren, are you saying there's a risk that it bounces back and now risk equalization liability bounces back? Is that the question?
Well, I mean, there's a risk, but I'm just asking. Well, the question is more on your pricing. You know, you've come through with a low industry rate rise for 2023, whether or not you're allowing for some of that risk equalization benefit to be a bit more ongoing.
There'll be just as there is, as we've discussed today, COVID-19 and its impact on claims is going to linger, you know. 12 months, two years, three years, you know, nobody knows for sure. How long it takes for this catch up to play out, nobody knows. I think we do need to be alert to the fact that just like we have quickly benefited from risk equalization, it could turn the other way and, you know, we're alert to that risk and our pricing, you know, makes full contemplation of that risk. You know, as I said earlier, we just need to be nimble and able to respond to those.
Look, the history suggests that, if you go back 20 years, there was one year there we in the industry virtually. I think we had zero increases. It was not long after lifetime cover. The industry got it wrong. You know, we recovered margins quickly. Government accepted the position. We now have APRA, who obviously are keen to ensure that, you know, profitability levels in the industry is sustainable and support growth. Look, anything that comes along such as a rebound in risk equalization, we deal with, and it may be a factor in bringing our net margin next year or the year after year after that back within our target level.
Finally, just on the margin. Can I just ask the net COVID benefit, obviously with travel and iihi having now pretty much recovered, any further sort of COVID benefits, will they purely be recycled fully into policyholder givebacks? I know obviously you've announced a five-month deferral, but sort of on an ongoing basis from here, shall we think about COVID benefits fully returned?
I think there's a range of factors on that one that's, you know, that's a difficult one to kind of answer a yes or no to. Yeah. I think the expectations around COVID and compensation are an issue for arhi rather than those adjacencies. The health fund though.
It's probably not travel.
Sorry, just to be clear on that. That slide on sort of earnings asymmetry you kinda put up before showing travel and iihi have rebounded. I know during COVID you were sort of holding on to some of the benefit because of weaker results in those two divisions. I was under the assumption that sort of the lens being applied was at a group level from sort of whether or not you should get any claims benefit from COVID. With those two divisions now back at pre-COVID levels, I guess the question is there any need to, within arhi, hold back any further COVID benefit?
Thanks, Kieren. As I said, it's an ongoing thing that you're gonna review across the course of the next year. To give you one point of clarity, it doesn't include travel. For New Zealand.
Sorry, one other question on MDI. Can you just confirm out of sort of what you raised in capital through last year, I think it was AUD 158 million. After the further acquisitions announced to date and in the pipe for this half, is that, say that capital fully deployed or is it sort of further deals still to be done into the 2024 year? Just trying to get a sense of the timing.
It does depend on the timing of acquisitions. We would be able to on our current runway, if they all came off, we'd be able to deploy all of that capital. That does depend on things closing.
Yep. Okay. Any sort of rough views around the EBITDA margin in, on average across those businesses? I think you gave us Maple Plan at 46% in the 2022 year.
Yeah, I think we've talked before about we'd say a sustainable margin is kind of in that 35%-40%. At the moment, the larger managers do generate above that. Again, that's, you know, it's an early stage sector. We'll see how that pans out. Yes, I mean, the Maple was at 46%, and the larger ones can generate above 40%. The smaller ones are a little, well, in some cases, quite a bit less. We'd see it, you know, sort of, you know, maybe up towards that 40%.
That's great. Thank you.
As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. One moment, please. At this time, I would now like to send it back to management for closing remarks.
Oh, I've got a question. It's Sid.
Just on arhi, just, if you could just comment on, just where we are in the bounce back in terms of the earnings trajectory. We've had lots of different comments over the last few halves around competition being in the sector and that margin would drop. I think it was to around 8% net margin. Obviously, there's COVID. There's a lot that's gone on in that division. Just where are we now? You know, people are traveling again. You get some of that pickup in claims that we saw before presumably is no longer there. Is this current level sustainable or, you know, can go higher? Is that earlier competition around competition, you know, still relevant?
Well, we combine workers and students for, obviously the information's market sensitive. Workers is in rude shape, and its kind of profitability is going to accelerate, I expect. You know, you read the papers as much as I do. I think we're going to have almost an insatiable demand for further, working age immigrants, and even the Pacific labor schemes are going to continue in popularity. You know, where that gets to, you know, I'm not quite sure. We're probably only still 25% of the market in that category, so there's plenty of opportunity of growth. You know, it's complementing nicely our GU business , our corporate channel, in arhi. You know, corporations typically buy iihi products. The students is growing again.
You know, we probably lost, you know, 30% of our stock during COVID-19. There was a point there workers almost went past students in terms of the stock of policy holders, it didn't happen, and now students is restating its significance in the combined business. The loss ratios improved materially for reasons we understand. Yeah, I think it'd be reasonable to expect the kind of margins that we enjoyed in the business pre-COVID-19. What do we make these businesses combined contributed what, Nick, in COVID? I wanna say about Yeah. AUD 30 million in fiscal 2021.
Not 2021.
Not 2021. Is that a COVID year? I'm getting lost in the COVID years. We'll be back to where we were pre-COVID, if not this year. You know, I expect certainly by next year.
Thank you for that. Maybe just a similar comment on travel. You know, you'd mentioned that the volumes bounced back to pre- COVID levels. Are we now at more normal levels? Just the outlook from you?
We're racing towards more normal levels, to use your adjective. Again, given what we're seeing, like this is the best half we've ever had. I'd certainly like to think we're going to do better than what we were, pre-COVID.
On the back of that growth and momentum. You know, we have a better underwriting arrangement in place in the business today. You know, there's been ups and downs in the business, as Nick hinted. Right now, I've, you know, having had my moments over the years with travel, I've never been so positive. The sector's just growing, and we've got such a strong brand, the World Nomads brand, and, you know, Travel Insurance Direct and our own nib brands. Yeah, the outlook's positive.
Okay. Thank you very much.
You know, that puts us in a fortunate position to be able to, as I say, and we've said this many times, comfortably bring back our high margins to target without compromising growth and increase earnings in the business.
There's one more question.
One more question on the phone.
Yep. One moment for our next question. Our next question comes from the line of Andrew Buncombe of Macquarie. Please proceed with your question.
Hi, guys. Thanks for taking my questions. Just two from me. The first one's very quick. Just in relation to the arhi claims experience slide near the front of the deck, just interested in the scale of that horizontal axis. Is that to December or January? Just some clarity there would be good, please.
As in the last right-hand part of the slide?
Yeah.
Yeah, that's to December.
Okay. What did that look like in January and so far in February? Thanks.
Can't really say.
Are these December 31 results?
Yeah.
Yeah.
Look, Andrew. January is typically a subdued month for activity. You know, doctors, like I was off skiing and so forth.
Sure. My other question, given some of your policyholder growth is coming from difficult circumstances for peers, is there any concern that some of those switches are more likely to claim in the short- term? Just how are you screening for that to make sure that you're not adversely selected against? Thanks.
Yeah. Andrew, I mentioned earlier that the difficulties encountered by both Medibank Private and Bupa, I think have had a very modest impact on our book system growth. You know, interesting that there's always a risk in these circumstances of anti-selection because these people who switch are typically worried because their health fund has gone out of contract, and they're planning to go to hospital. Our latest analysis suggests that while that is a factor, that any selection factor, if they stay, the lifetime value more than makes up for that, you know, any selection event. You know, we're not as worried about people switching even though they have an event in mind.
Great. That's it from me. Thank you.
One moment for our next question. Our next question comes from the line of Doron Kur o f Credit Suisse. Please proceed with your question.
Hi. Thank you. Just one more on the high net margin, and sorry to chat on the claims again, but would it be, just the delta from last half to this half looked quite big. Would it be fair to assume that going forward, you wouldn't expect it to be as quick just because some of what we saw here was the benefit in prior period from lockdowns, and as that gets less pronounced on a comparative basis, perhaps you wouldn't see that same size of margin contraction?
I think the impacts on margin are sort of dramatic because of the impacts of give back and DCL and so forth. You know, kind of hard to, on a half-by-half basis to comment on that. It will depend on what happens to the DCL this half and what happens to give backs this half.
Again, we're bordering on risk of guidance here. I think the big picture view is that, you know, claims still remain benign, and there's no sign of that changing anytime soon, for all the reasons we've discussed today. There's a lot of noise in terms of margin comparisons, given DCL give backs, et cetera. I think you can rest assured that, you know, the arhi business and margins are in, you know, as good a shape as they've ever been at the levels they are.
As authentic as we are, but in our determination to take them back to what we regard as a more sustainable 6%- 7%, you know, we just can't say whether that's, you know, the second fiscal half or fiscal 2024 or even fiscal 2025. Although you'd like to think by 2025, you know, we're closer to where we are today. Particularly as the pricing increases are very low pricing increases of the last two pricing periods start to play out. You know, I'm not losing any sleep over it.
Thank you. That's very helpful. That's all from me.
At this time, I would now like to turn back to management for closing remarks.
Okay. Well, look, thanks again for your time today. It's been a good discussion. Just like to finish off. I know we like to think about the second half and fiscal 2024 and whatnot, but just to reassure you all of our, you know, determination to be different to what we are even today. This P2P strategy we have is very real. We're making the investments to support it. I hope you saw a glimpse of that in the video.
You know, the work we're doing as, as small as it may seem around population health, which Ros spoke about, our support for Māori population is setting us up for a much bigger vision for we and you know, maybe even the rest of the industry to play a role in the funding and servicing of our entire healthcare system and the opportunities around NDIS and even travel as well now are quite prodigious. We're very confident and positive about the future. I expect in six months' time, whenever it is, we're sitting here reporting the full year results, will be every bit as positive as we have been in this first half based upon the full year results. Thank you.