iSelect says the underlying profitability of its car insurance business has improved over the past year, although Federal Government changes to health cover hit its car and health segment.

Car insurance revenue is down this financial year because marketing initiatives have been delayed, “but profitability is in line with where we wanted it to be and business leads are trending upwards as we enter the second quarter”, the company’s annual report says.

The comparison and referral website’s car and health segment recorded operating revenue of $93.09 million last financial year, down 5%, and profit of $36.53 million, down 10%.

Health cover sales have been hit by means testing of the private health rebate, changes to the Medicare levy surcharge and removal of the rebate on the lifetime health cover loading.

iSelect also announced that the Australian Securities and Investments Commission has reviewed its documents and decided not to take further action.

The regulator stepped in over concerns about continuous disclosure obligations and the company missing its prospectus revenue forecast. 

Executive Chairman Damien Waller says iSelect has big ambitions “and like many high-growth companies with aspirations to grow larger, we ran into some turbulence this year”.

He says “recent headwinds will dissipate over time as the business continues to perform”.

iSelect’s profit grew 3% to $13.37 million last financial year on revenue that increased 6% to $118.04 million, comprising fees and trail commissions.

Upfront fees increased 31% to $74.81 million as new members joined funds or bought product. Trail commission revenue fell 21% to $43.23 million.