Nib's NZ earnings rise 36% in 2017

Its OnePath acquisition makes a full-year contribution.

Nib Holdings's New Zealand earnings rose 36 percent as the country's second biggest health insurer benefited from a full year's contribution of the OnePath business it bought in 2015.

The ASX-listed company said underlying operating profit in New Zealand rose to A$23.5 million in the year to June 30 from A$17.3 million in the prior year, helped by a "benign claims environment," it said. The result also includes the full benefit of OnePath health insurance after it bought the medical insurance book of OnePath NZ from ANZ Bank New Zealand for about A$22.5 million in the prior financial year.

Nib's New Zealand premium revenue rose 15 percent to A$199.3 million while claims eased 0.1 percent to A$120.9 million. the number of policyholders shrank 5.2 percent but group chairman Steve Crane said that was due to a specific corporate account loss "and our NZ business actually made significant progress in building its direct to consumer channel," something it launched in 2013. More than half its sales for the year came through that channel and 70 percent of those sales were completed on line, the company said.

The New Zealand healthcare industry is subject to "huge medical cost variation with no evidence of better quality care or outcomes," nib said. It noted cost variation is a huge driver of premium inflation and customer dissatisfaction but also "an area of opportunity." Its First Choice network - which will be available to customers from September - is aimed at removing cost uncertainty by offering a network of medical professionals, it said.

Looking ahead, the insurer said it is anticipating "weak growth and heightened competition" for nib New Zealand but that macroeconomic conditions are favorable. It also signalled it is expecting industry consolidation.

Nib New Zealand is part of one of Australia's largest health insurers, which today reported a 31 percent gain in net profit to A$120.2 million as total underlying revenue rose 7 percent to $2 billion.