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nib doubles profit after OnePath acquisition

[UPDATED] nib's New Zealand chief executive says its strong investment in marketing and promotion of all distribution channels should help advisers.

Monday, August 22nd 2016, 11:32AM 10 Comments

The group said strong customer growth had helped its New Zealand operation double its underlying operating profit to $19.6 million this financial year. nib New Zealand premium revenue was up 15.4% to $189.1 million.

Customer numbers were boosted by the acquisition of OnePath’s New Zealand health insurance book.

Full year group underlying operating profit increased almost 50 per cent to AU$132 million.

nib New Zealand chief executive Rob Hennin said the most pleasing aspect of the result was that the business was generating strong levels of sales.

“Our strong customer growth highlights the value Kiwis place on health insurance when they take out our flexible and affordable products. We’re finding consumers want peace of mind that if something does go wrong or they need treatment they are covered. They can also choose when, where and who provides their treatment. Our products are meeting these needs and providing assurance which is reflected in our performance,” he said.

“This year’s result signals a remarkable turnaround since we acquired the business in 2012. We’ve transformed a business that had been experiencing customer decline for almost a decade. Our rebranding of the business and launch of New Zealand’s first direct-to-consumer insurance range has been the catalyst for change.”

He said the number of policy-holders had grown about 26% over the year. The OnePath portfolio had been made up of about 19,000 customers. He said it was an achievement for the company to have grown in a relatively static market.

 "This market is one that's lacked innovation and excitement for a long time. What we've done is we've challenged the market and brought more choice, innovation and value for money, in all the channel."

Hennin said the firm was trying to focus on a wellness message, as well as the traditional health insurance angles.  "At the end of the day we are trying to engage customers and advisers about the need to take care of themselves and their families."

Advisers were a key part of the business and nib wanted to ensure it was creating value for them, he said. "They are a key building block for us. A key differentiator for nib is that we continue to invest heavily in growing the brand ... I don't think there's another insurer in the market that invests int he same way as nib and that's got to be good for advisers.  It's helping advisers because it encourages customers to think about health insurance as part of their health needs."

He said the focus for the future would be on pursuing more growth opportunities.

“We have a number of projects and initiatives in the pipeline that will surprise and delight our customers to further differentiate us from our competitors,” he said.

“There is no better example of this than nib’s healthHQ, a unique health and wellness package for the corporate market. We think healthHQ is a real game changer, not just for employers to better manage the health and wellness of their people, but also to help Kiwis take a much more active role in looking after and monitoring their health and wellbeing.”

Many advisers already had strong corporate relationships, and initiatives such as this would help them, he said.

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Comments from our readers

On 22 August 2016 at 12:41 pm Dirty Harry said:
there were only 20,000 people left in the OnePath book.
So the profit growth will be more to do with all the premium hikes. So if they could ease up on that a bit, that would be great.
On 23 August 2016 at 10:27 am RS said:
Is it just me, or do nib increase the premiums on the aquired business at higher percentage levels than their own original range?
On 23 August 2016 at 12:14 pm Steven Popodopolus said:
At RS yes they do. They also increase the products with no migration pathway at higher rates. Thus any medical captives they will try to extract as much profit as possible before they have to leave.

And churning is unethical.
On 23 August 2016 at 3:42 pm Rob Hennin@nib said:
Hi Dairty Harry and RS,

Thanks both for your questions.

nib is experiencing strong policy holder growth which is the main driver of the successful 2016 result. The successful acquistion of the OnePath Health portfolio is a major contributor as is organic growth.

Our annual premium increases have actually declined in the last 31/2 years since we acquired the business. We do risk rate each of portfolios and price accordingly.

You are welcome to have a look at our Investor Presentation online( see our website). You'll find the key revenue and cost drivers of our business there but more importantly sense our enthusiasm for the sector and growth opportunities.

We would be very happy to explain our strategy in more detail to you and share why we are excited about the prospects and Adviser Channel.

Feel free to contact me directly at robert.hennin@nib.co.nz.
Thanks again for your feedback.
Regards,
Rob
On 24 August 2016 at 7:55 am Steven Popodopolus said:
Rob, your comment the rate risesd have declined is disingenuous as the book you rolled out was brand new with no claims history. There is no way the existing products you took over have declined in premium rises. Premier Health as an example.
On 24 August 2016 at 10:29 am Rob Hennin@nib said:
Hi Steven
Feel free to give me a call to discuss on 021811280.
Regards rob
On 5 September 2016 at 1:41 pm Tash said:
Rob Hennin
Your 2016 results may give you pride, but please sort out your customer services and claims departments. My NIB is only worth anything if your staff actually get back to clients. I have had numerous complaints about the impossibility of getting any joy from NIB (including a one who was told her surgery wasn't covered because she had not been with NIB for 6 months (she had been with Tower since 2001!)).

I myself am a policyholder and sent a request via My NIB 4 weeks ago and I am still hoping for someone to respond. Really!!!
On 5 September 2016 at 4:26 pm w k said:
@tash: agreed. one easycare application, communicated with 6-7 different people, after a month, finally completed. then an advisor wrote in twice to get a client transferred over to me, that was over a year ago .... nothing heard or done.
On 5 September 2016 at 7:32 pm Rob Hennin@nib said:
HI Tash,
Can you please call me ( 021811280) to talk through the two poor experiences you have detailed.
I will follow up personally and resolve.
Regards,
Rob
On 6 September 2016 at 9:47 am Tash said:
thank you Rob. I will do so next week when I'm back home and have my personal policy details at hand. I remain hopeful however that my My NIB request is picked up in the meantime.

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