CORRECT: Nib to buy OnePath Life's medical business for $24.7 mln, extending New Zealand reach
(Fixes headline, lede, and 5th graph to show purchase of medical insurance unit, updates shares in last graph)
By Paul McBeth
Oct. 15 (BusinessDesk) - Nib Holdings, the ASX-listed insurer which bought Tower's medical insurance unit in 2013, has extended its reach into the local market after agreeing to buy OnePath Life (NZ)'s medical business for $24.7 million from Australia & New Zealand Banking Group.
The deal, which is subject to regulatory approvals from the Reserve Bank, is expected to be finalised in December, and will be funded though nib's existing available capital, it said in a statement to the ASX. The acquisition adds 20,000 policies covering 44,000 people to nib's book, lifting its share of New Zealand's health insurance market to 15 percent from 12 percent, and will immediately add to earnings per share. Nib New Zealand will provide insurance to more than 200,000 people once the deal is completed.
"The purchase of OnePath Life's NZ medical insurance business meets our strict investment criteria, and importantly provides us with additional scale and scope to grow and leverage our existing New Zealand operations," nib managing director Mark Fitzgibbon said. "The purchase also reinforces our commitment to the adviser market, with the majority of the OnePath Life NZ's medical insurance products being distributed by financial advisers."
Nib entered the New Zealand market with the purchase of the Tower business and said when reporting its annual earnings in August that it was considering merger and acquisitions. The New Zealand division's operating profit of A$7.3 million accounted for about 9.7 percent of the group's earnings.
OnePath Life NZ's medical insurance book generated gross written premium of about $27 million in the year ended June 30, and nib will honour pre-existing medical conditions where customers are covered by their existing policies.
Nib and ANZ Bank New Zealand will enter into a distribution deal where the insurer will distribute its products through ANZ's network for five years.
In a separate statement, ANZ Wealth New Zealand managing director John Body said the exit from medical insurance will let the bank focus on its core life insurance business, and isn't material to the lender.
Nib anticipates transaction costs of about A$1.3 million.
The insurer's shares fell 0.8 percent to A$3.205 on the ASX, and have gained 2.9 percent this year.