Nib New Zealand 1H underlying profit up 40% as OnePath acquisition benefits mount

Monday 20th February 2017

Nib Holdings, the ASX-listed company that's New Zealand's second-largest health insurer, reported a strong first-half underlying operating profit and updated its guidance for the full year.

Nib New Zealand is part of one of Australia's largest health insurers, which today reported a 43 percent lift in underlying operating profit in the six months to Dec. 31 to A$95.2 million as total group revenue lifted 7.3 percent to A$995 million. Its net profit was A$71.1 million, up 65 percent.

New Zealand “continues to perform in line with expectations” with revenue up 25 percent to A$100 million and underlying operating profit up 40 percent to A$10.9 million, it said. It noted that the first half result includes a full period benefit from OnePath NZ. It bought the medical insurance book of OnePath NZ from ANZ Bank New Zealand for about A$22.5 million in late 2015.

“The acquisition of OnePath health in late 2015 has provided our business with additional leverage and scale. It’s added a further 20,000 customers to our book of business which has definitely provided additional momentum and had a positive impact on our first half underwriting performance,” said Nib New Zealand chief executive Rob Hennin in a statement.

The company said its 'white-labelling' portfolio continues to grow with NZ Automobile Association – which has more than 1 million members – agreeing to partner with Nib. “Although early days, pipeline of sales through this channel is expected to continue to improve,” it said. According to Hennin, a distribution partnership with The Warehouse Group also helped bolster the result.

“While still early days, our partnership with these leading Kiwi brands provide us with an opportunity to rapidly expand our business by tapping into their large membership bases,” he added.

Hennin was optimistic about the future, pointing to significant latent demand for further expansion.

“Compared to other countries, New Zealand has a relatively low level of private health and medical insurance participation. With just over 30 percent of the local population currently covered we think there is a lot of potential and opportunity to grow the industry and our share,” Hennin said. He noted the ageing and growing population adds to the role that private health insurance can play.

Looking ahead, Nib said it expects its full-year group underlying operating profit to be in a range of A$140 million to A$150 million and its statutory operating profit to be in a range of A$137 million to A$147 million.

Nib's ASX-listed shares last traded at A$4.71.

BusinessDesk.co.nz

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