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nib NZ continues strong gains to deliver pleasing result

nib New Zealand continues strong gains to deliver pleasing result

nib holdings limited (ASX: NHF) today announced that its New Zealand operations had improved top line growth and earnings during financial year 2017. Premium revenue lifted 14.9%1 to NZ$210.9 million (AU$199.3 million) and underlying operating profit (UOP) was up more than 35%1 to NZ$24.7 million (AU$23.5 million).

In its annual results statement issued to the ASX this morning, nib announced at a Group level UOP had increased 16.4% to $153.7 million while Net Profit After Tax (NPAT) grew 30.9% to $120.2 million.

nib New Zealand CEO, Mr Rob Hennin, said the New Zealand full year result was pleasing and demonstrated the company’s determination to deliver real change in the local health insurance industry.

“When we acquired the business in November 2012, we set some ambitious performance hurdles aimed at shaking up the health insurance industry, growing the market and nib’s overall share,” Mr Hennin said.

“Almost five years on and we’ve had some strong gains with the business delivering against our stated targets,” he added.

A highlight of the financial year was the ongoing success of nib’s approach to changing the way health insurance is distributed in New Zealand. Traditionally health insurance has been predominantly distributed by advisors or through group and employer arrangements. In 2013, nib opened a new channel by going direct to consumers.

“Giving consumers the choice to purchase health insurance direct has been a massive success and the results speak for themselves, with 50% of our sales for year through this channel. Providing an easy and simple online join process is also proving popular with seven out of 10 customers joining on the website,” Mr Hennin said.

Our whitelabel channel capability and pipeline also continues to grow and we’ve committed additional effort and investment to expand these channels over the coming 12 months,” Mr Hennin added.

Mr Hennin also reinforced the health insurer’s commitment to reducing healthcare bills for its customers with the imminent launch of its First Choice network in September 2017.

“Like many other countries, the New Zealand healthcare industry is subject to huge medical cost variation with no evidence of better quality care or outcomes. Our First Choice network is designed to help us better manage such claims costs while also providing customers with zero out-of-pocket medical treatment,” Mr Hennin said.

nib New Zealand Chairman, Mr Tony Ryall said with favourable macro-economic conditions expected, the business would continue to invest in organic growth, as well as look to adjacent business opportunities.

“We’ve seen great results within our Australian business operations in terms of leveraging our capability and expertise in adjacent businesses. We believe opportunity and markets exist to replicate this locally to grow our New Zealand operations and with that earnings,” Mr Ryall said.

nib declared a full year dividend of 19.0 cents per share, fully franked (FY16: 14.75 cents per share) which includes a final dividend of 10.5 cents per share (FY16: 9.0 cents per share). The full year dividend represents a payout ratio of 70% of FY17 NPAT. The final dividend has an ex-dividend date and record date of 7 and 8 September 2017 respectively, and will be paid on 6 October, 2017.

nib is forecasting FY18 UOP will be in the range of AU$150 million to AU$160 million (statutory operating profit of AU$141 million to AU$151 million), with investment income in line with internal benchmarks.


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