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iSelect profit jumps on diversified strategy

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iSelect has reported a 54% rise in net profit to $9.6 million for the year to June 30, driven by higher health insurance revenue and new businesses growth.

The comparison website’s revenue was $157.2 million, up 31% on the previous year.

iSelect has diversified into energy and household utilities comparisons, for which revenue has grown strongly.

As a result, health insurance as a proportion of total revenue is down to 59% from 70%.

Trail commissions revenue dropped 15% to $32 million.

CEO Alex Stevens says iSelect is creating a solid base to further diversify earnings and deliver future growth.

The company has made gains in health insurance market share, and sales unit growth in health insurance grew 10%, which is “particularly pleasing”.

Combined health and car insurance revenue fell 3% to $101 million.

iSelect says it will continue monitoring the impact of increasing lapse rates on the health book.

“The observed trend in [2014/15] of consumers trading down their health insurance policies is expected to be an ongoing industry issue,” Mr Stevens said. “While this creates some headwinds for our health business, managing this effectively will be a major focus in the year ahead.”

Strong growth is expected to continue this year. The company says it is considering capital management initiatives including a share buyback of up to 5% of its stock and the payment of a fully franked dividend.

iSelect compares more than 12,500 insurance, energy, personal finance and broadband products from 85 partner providers.