The country’s largest health insurer, the VHI, has recorded a financial surplus of €7.4 million for last year.

During the year, the company lost  117,000 subscribers while about 200,000 others opted to downgrade their level of insurance cover.

VHI said its health insurance operation continued to make losses but that its diversified businesses such as its travel and dental insurance products and its Swiftcare emergency treatment centres were profitable and had contributed €51 million in income to the company.

VHI said its cost-containment strategy had helped it to make savings of €100 million last year.

Last year's surplus was the first the company has posted since 2007. In 2010 it recorded a deficit of €3.1 million and while it made losses of €41.7 million in 2009.

The company said that business decisions it had taken last year - which included highly controversial subscription increases of up to 45 per cent in some cases - had been "absolutely necessary".

VHI chairman Bernard Collins said that 2011 had been difficult year for both the company and the market in general. However, he said, a number of business strategies driven by the board and management were helping to put VHI Healthcare back on a sustainable footing for the future.

"Our focus has been on reducing costs while not compromising on the quality of service delivered to our customers. The strategy is working and while our hospital insurance business continues to be loss making, we are confident that we are creating the right financial environment to achieve long-term sustainability."

VHI chief executive Declan Moran said that company had a responsibility to its 1.2 million customers to ensure that it was in a position to meet its healthcare needs.

"The business decisions we took in 2011 were absolutely necessary to cover the costs of funding our customers' healthcare needs during the year and we have stabilised our business ensuring we can continue to do this."

VHI again expressed concern at the rising cost of private beds in public hospitals which, it maintained, had increased by 41 per cent since 2009. The rates charged for such facilities are set centrally by the Minister for Health and VHI is looking for changes to allow it to negotiate directly with individual hospitals on the prices to apply.