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Partners not concerned by loss

Partners Life has had a $7.8 million dollar turnaround in its results and reported a $2.85 million loss for the 12 months to March 31, compared to a $4.97 million profit in the previous year.

Thursday, August 14th 2014, 6:00AM 4 Comments

by Susan Edmunds

Partners Life chief financial officer Sean Kam says the result is not a worry for the company as net revenue, including reinsurance payments, grew to $85.16 million in the most recent financial year, from $78.56 million in the 2013 year. But total expenses grew from $69.87 million to $80.99 million.

Kam said the difference in profit from the year could be put down to changes in the discounting rate and reserving basis, which accounted for $1.8 million of the difference. He said last year’s profit was driven by interest rates. “These are not in our control.”

Kam said the 2014 year was a successful one for Partners. Premium revenue grew from $38.4 million to $68.7 million and the in-force book grew to $92.7 million. It passed $100 million in July.

He said profit was not the company’s most important measure of performance. It was more interested in market share, adviser relationships, in-force premiums and premium revenues. “Those are the metrics that we measure ourselves by as a new company.”

Partners had a solvency margin of $7.2 million, he said, and the biggest share of the independent adviser market.

“Our adviser relationships are very strong… we have strong relationships with dealer groups and individual advisers. The feedback from our recent adviser conferences is that everyone is happy.”

The company completed a capital raising earlier this year, generating $31 million.

  2014 2013 Change
Premium Revenue $68.72 mill $38.37 mill 79.10%
Claims $27.67 mill $11.75 mill 135.49%
         - Death $9.18 mill $5.06 mill 81.42%
         - Trauma, Medical, Disability $18.49 mill $6.69 mill 176.38%
Total commission and operating expenses $88.98 mill $88.96 mill 0%
Profit / (loss) ($2.86 mill) $4.97 mill -157.54%


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Comments from our readers

On 18 August 2014 at 8:57 pm Cantab Adviser said:
...not too sure that market share should be a key driver over profit. Would have liked to see what lapse rates are , suspect this will have a detrimental impact on profit as the two year honeymoon comes to an end (think write backs).
On 19 August 2014 at 10:33 am Ellie Broderick` said:
He said profit was not the company’s most important measure of performance....

You can get away with this in the short term but unless you can release the value in the book you go bust... unless you can get more capital that is.

Will be interesting to see what happens when the direct market war heats up (more adds on TV no doubt). The other players are working hard on their direct strategies but partners are sticking to the advisory model.

This should provide them with business from disenfranchised advisors leaving the competition and if they can address their capital needs they may be an attractive IPO or Trade Sale proposition.

If lapse rates increase it would make for interesting times.

On 19 August 2014 at 2:17 pm Broker said:
Pretty short sighted comment there Cantab adviser?
On 20 August 2014 at 10:09 am Bestadviser said:
Anyone who has the slightest understanding of insurance company finance will know that start-up insurance companies have massive up-front costs and can expect many years of operational losses. What is important is their continued growth of reserves - something the RBNZ watches very closely. If anything, Partners Life's previous profit is the anomaly!

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