Nib NZ's first-half profit nearly triples

Nib Holdings' New Zealand unit nearly tripled operating profit in the first half of the current financial year as the ASX-listed insurer bolstered its local presence with the purchase of OnePath Life (NZ)'s medical business.

New Zealand operating profit rose to $A7.8 million in the six months ended December 31 from $A2.7 million a year earlier, the Sydney-based insurer said in a statement. Net New Zealand premium revenue rose 9.6% to $A79.9 million, accounting for about 8.6% of the group's $A927.1 million total premiums for the half.

Net policyholder growth in New Zealand for the period was 25%, or 21,136 policy holders. This was aided by the insurer's acquisition of OnePath's medical business, which had 19,000 policies covering 43,000 insured persons when Nib bought it last December. The acquisition added one month's contribution to the first half results, with net policyholder growth excluding the OnePath business up by 2.4%, or 2305 policies.

"We expect policyholder growth to track positively for the remainder of the year due to our continued investment in advertising and marketing, as well as a renewed effort to re-enter the group health insurance market," Nib New Zealand chief executive Rob Hennin said.

Nib is New Zealand's second-largest health insurer, and provides health and medical insurance to more than 200,000 New Zealanders, or about 15% of the insured population, it said. Nib bought Tower Medical Insurance in November 2012 for $102 million, and launched Nib New Zealand in October 2013.

The local division's increased profit came from a combination of policyholder growth, lower than expected claims inflation, and a settlement on certain previously offered products which reduced nib's liability, the insurer said.

Claims incurred in the New Zealand division rose 18% to $A56.9 million, while gross margins grew to $A30.8 million, or 38.6% of revenue, from $A24.1 million, or 33% of revenue, a year earlier.

Mr Hennin said nib had been historically under-represented in the employer group market segment, where about 50% of New Zealand's health insurance is sold.

"Traditionally, our business has been very strong in the financial adviser space and more recently the direct-to-consumer market," Mr Hennin said. "While we will continue to concentrate on these channels, we now have a renewed focus on gaining a larger share of the group market."

Nib's group profit rose 4.7% to $A43.1 million in the half, with the board declaring an interim dividend of 5.75Ac per share, payable on April 1.

The group affirmed full year guidance, with the result likely to be "at the upper end" of its underlying operating profit range of A$102 million to A$114 million.

The ASX-listed shares last traded at A$3.28, and have declined 6.6% this year.

(BusinessDesk)