Nib sees further growth after doubling NZ earnings

Underlying operating profit in New Zealand jumped to $A17.3 million in the year ended June 30.

Nib Holdings, the ASX-listed company that's New Zealand's second-largest health insurer, said full-year earnings doubled and it expects further growth in the 2017 year after adding policyholders and widening its margins.

Underlying operating profit in New Zealand jumped to $A17.3 million in the year ended June 30, from $A8.7 million a year earlier, the company said in a statement. Premium revenue rose about 15 % to $A174 million while claims rose 25 % to $A121 million.

Nib New Zealand is part of one of Australia's largest health insurers, which today reported a 22% gain in profit to $A92.9 million as sales climbed 13% to $A1.89 billion. The company increased its New Zealand customer base to 212,497 after buying the medical insurance book of OnePath NZ from ANZ Bank New Zealand for about $A22.5 million in October and has an agreement to distribute its products through ANZ's network of wealth managers. It launched nib New Zealand in 2013 after buying Tower Medical Insurance for $102 million.

"New Zealand continues to deliver on the targets set when we acquired the business," the company said. "For the 2017 financial year and beyond we expect profitability to further improve through organic growth and increased scale."

When nib launched in New Zealand it included a direct-to-consumer strategy that it says has helped secure more than 15% of the health insurance market. About 45% of its sales came through that channel in the latest year, it said today.

Nib New Zealand chief executive Rob Hennin says this channel has worked very well for the company.


"We are focusing on building our direct to consumer channel, revitalising our advisory channel and expanding into the corporate and white label areas," he told NBR Radio's Andrew Patterson.

The company has also pushed a 'whitelabelling' distribution strategy, partnering with Warehouse Group's financial services brand, Warehouse Money, to offer health and travel insurance policies under the Warehouse brand. Nib plans to expand its 'whitelabel' channel this year with other such partnerships, it said today.

Earnings in New Zealand unit accounted for 13% of the parent company's underlying earnings in the year ended June 30, up from 10% in 2015.

Nib shares last traded at $A4.80 and have gained 37% this year while the S&P/ASX 200 Index rose 4%.


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