Nib posts $3.5m interim profit
The New Zealand business of ASX-listed health insurer nib has reported a $3.5 million profit after tax for the half year to December 31, despite a big spend on brand building.
Nib, which bought and rebranded the health insurance business of Tower in late 2012, said for the first time in seven years, New Zealand policyholder numbers were climbing again.
The New Zealand operation has put in place a two-pronged growth strategy, reworking the policies it sells through financial advisers at the same time as using rugby league player Benji Marshall to front advertisements for cheap, low-coverage policies sold over the internet and telephone aimed at younger people who do not traditionally buy health insurance.
The new type of policy provides no major medical surgical cover, and has been sold overseas for some time. Giant rival insurer Southern Cross has responded by launching similar policies.
Nib said Tower had just under 99,000 policyholders in 2006. Under nib that was down to 79,000 at the end of December, but by February 14 that had jumped to 79,324 policyholders.
New Zealand chief executive Rob Hennin said the increase was in response to its marketing campaign and new product range the company launched less than six months ago.
"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," Hennin said.
"When we acquired the business in November 2012, on average it had been losing annually about 4 per cent of its entire policyholder base.
"The results are pleasing and the business is now growing its policyholder base after six years of steady decline. And while it's still very early days, we are seeing an influx of younger policyholders sign up, with almost 60 per cent of our direct to consumer sales being to people under the age of 40."
Half were buying online and the growth potential was enormous.
However, Hennin said insurers had done a bad job of selling health insurance online, and had not done a good job of selling health insurance direct.
"Insurers haven't done a very good job in selling the value proposition to those without an adviser or a work scheme. We see there's a great opportunity for us to try and correct that."
The Australian group, including the New Zealand operation, reported a consolidated profit after tax A$39.6m (NZ$42.9) in the half year, up from A$36.3m in the first half of 2013. Earnings per share gained 8.4 per cent to 9 cents, and it declared an interim fully franked dividend of 5.25c per share up 5 per cent.
For every $100 of premium collected, nib's New Zealand operation paid out $67 in claims.