nib NZ first-half net profit impacted by inflation

nib NZ reported “robust” policyholder growth of 2.3% in the six months ended December but its underlying profit was impacted by high service cost inflation.

Tuesday, February 27th 2024, 6:31AM

by Jenny Ruth

Underlying net profit for the six months was $13.2 million, down from $18.2 million in the previous first half, which was also inflated by a one-off deferred acquisition cost adjustment.

The Australian parent company said excluding the latter, the NZ result would have been 7.4% lower.

Net premium revenue was up 9.6% to $197 million, reflecting the policyholder growth.

The Australian parent said claims on the NZ business were up 17.4% to A$117 million, reflecting policyholder growth and inflation.

The claims increase was driven by growth and inflation with utilisation up 2.5% and service cost up 10.8%.

Chief executive Rob Hennin said the company is well-positioned for the full year.

“nib NZ has continued to see strong growth in resident private health insurance policyholders and we have seen positive contributions from our international student, worker and traveller insurance business OrbitProtect and life and living insurance business,” Henin said.

“nib NZ's focus on innovation continued to deliver improved services to members, including the launch of the redesigned 'my nib NZ' app and website, which has made it simpler for members to make claims, request pre-approvals and review their policies.”

Hennin said the app includes a new health check to gain better insights into the health and wellbeing of members and to provide tailored support where needed.

“We also launched a new wellbeing program, Kickstarter, which helps members better manage their sleep, nutrition, exercise and stress,” he said.

The company has continued to expand its Toi Ora health initiative to improve the long-term health outcomes of iwi communities and has onboarded three new ropu, or groups.

“Since we started working on our first iwi health initiative in 2018, we have seen very encouraging outcomes, including the reduction of long-term health problems and hospital admissions.”

The Australian parent said the NZ business' gross margin eased to 35.3% from 38.5% in the previous first half with net margin easing to 6.3% from 10.5%.

The management expense ratio (MER) rose to 29.6% from 28.4% while marketing MER rose to 15% from 11.6% and other MER fell to 14.6% from 17.1%.

Excluding the deferred acquisition cost, marketing MER in the previous first half would have been 14.6% while the fall in other MER followed investment in strategic projects in the previous first half.

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