Nib New Zealand first-half underlying profit up 40pc as OnePath acquisition benefits mount

NIB Insurance chief executive, Rob Hennin. Photo / Nick Reed

Nib Holdings, the ASX-listed company that's New Zealand's second-largest health insurer, reported a strong first-half underlying operating profit and updated its guidance for the full year.

Nib New Zealand is part of one of Australia's largest health insurers, which today reported a 43 per cent lift in underlying operating profit in the six months to December 31 to A$95.2 million as total group revenue lifted 7.3 per cent to A$995m. Its net profit was A$71.1m, up 65 per cent.

New Zealand "continues to perform in line with expectations" with revenue up 25 per cent to A$100m and underlying operating profit up 40 per cent to A$10.9m, it said. It noted that the first half result includes a full period benefit from OnePath NZ. It bought the medical insurance book of OnePath NZ from ANZ Bank New Zealand for about A$22.5m in late 2015.

"The acquisition of OnePath health in late 2015 has provided our business with additional leverage and scale. It's added a further 20,000 customers to our book of business which has definitely provided additional momentum and had a positive impact on our first half underwriting performance," said Nib New Zealand chief executive Rob Hennin in a statement.

The company said its 'white-labelling' portfolio continues to grow with NZ Automobile Association - which has more than 1 million members - agreeing to partner with Nib. "Although early days, pipeline of sales through this channel is expected to continue to improve," it said. According to Hennin, a distribution partnership with The Warehouse Group also helped bolster the result.

"While still early days, our partnership with these leading Kiwi brands provide us with an opportunity to rapidly expand our business by tapping into their large membership bases," he added.

Hennin was optimistic about the future, pointing to significant latent demand for further expansion.

"Compared to other countries, New Zealand has a relatively low level of private health and medical insurance participation. With just over 30 per cent of the local population currently covered we think there is a lot of potential and opportunity to grow the industry and our share," Hennin said. He noted the ageing and growing population adds to the role that private health insurance can play.

Looking ahead, Nib said it expects its full-year group underlying operating profit to be in a range of A$140m to A$150m and its statutory operating profit to be in a range of A$137m to A$147m.

Nib's ASX-listed shares last traded at A$4.71.