Nib NZ reverses Tower Medical's decline by chasing younger insurance customers

Monday 24th February 2014 1 Comment

Nib New Zealand, which acquired Tower Medical Insurance late 2012 to become New Zealand's second-largest health insurer, says it has halted Tower's customer losses, achieving modest growth by targeting the under 40s market.

The local arm of the listed Australian insurance company contributed $3.5 million to its parent's first-half pretax earnings from underwriting in the six months ended Dec. 31.

Sydney-based nib Holdings separately reported interim net profit rose 9.2 percent to A$39.6 million as premium revenue growth jumped 20 percent and said its New Zealand business "is now growing policyholders after six years of steady decline."

The Australian insurer acquired Tower Medical Insurance in November 2012 for $102 million, and launched nib New Zealand last October. It says policyholders at Tower Medical, since rebranded as nib New Zealand, have grown by 0.1 percent to 79,324, or about 9 percent of the entire nib group, since June 30, after six years of annual declines averaging 4 percent.

The insurer is targeting younger customers, with about 60 percent of direct consumer sales in New Zealand being people under 40 and 50 percent of sales made online.

"We are confident our investment to grow New Zealand private health insurance participation and with that our market share, will be a driver of future and sustainable earnings growth," Rob Hennin, nib New Zealand chief executive, said in a statement.

The parent confirmed full year operating profit guidance of A$73 million to A$80 million. Earnings per share gained 8.4 percent to 9 Australian cents in the first half.

Its shares rose 1.2 percent to A$2.61 on the ASX and have declined 5.5 percent this year.

BusinessDesk.co.nz

Comments from our readers

On 24 February 2014 at 1:01 pm Neil said:

If ever there was a wake up call to Tower's incompetent management and Board, then this is it. My wake up call came when I got a less than 0.02% bonus this year on my own endowment policy with Tower. Simply, a woeful organization and the bad news, its getting worse.