nib NZ first half contribution NZ$3.5 million

Media Release Monday 24 February 2014

nib New Zealand first half contribution NZ$3.5 million as brand building continues

nib holdings limited (ASX: NHF) today said its New Zealand operations contributed NZ$3.5 million (AU$3.2 million) or 7.5% to group pre-tax underwriting profit of AU$42.7 million for the six months ended 31 December, 2013.

nib New Zealand CEO, Mr Rob Hennin, said the health fund is experiencing strong policyholder sales in response to its marketing campaign and new product range the company launched less than six months ago.

“Our new product range, which was designed to meet the needs of New Zealanders, is already resulting in strong consumer interest and sales. We are confident our investment to grow New Zealand private health insurance participation and with that our market share, will be a driver of future and sustainable earnings growth,” Mr Hennin said.

“When we acquired the business in November 2012, on average it had been losing annually about 4% of its entire policyholder base. Since then we have rebranded the business as nib, launched a product range that has already won great customer support, as well as kicked-off a national marketing and sponsorship campaign with the help of our brand ambassador Benji Marshall,” he said.

“The results are pleasing and the business is now growing its policyholder base after six years of steady decline. And while it’s still very early days, we are seeing an influx of younger policyholders sign up, with almost 60% of our direct to consumer sales being to people under the age of 40.” “And of all our direct to consumer sales, 50% are joining online through our website. To put that in perspective, six months ago that was zero, with very little health insurance in New Zealand sold online,” Mr Hennin said.

“And while we have been very pleased with our results to date, we believe there’s enormous potential to further grow private health insurance coverage. Financial advisors and many employers well understand the importance of health insurance. But insurers haven’t done a very good job in selling the value proposition to those without an advisor or a work scheme. We see there’s a great opportunity for us to try and correct that,” Mr Hennin added.

In its group results statement to the ASX, nib said consolidated net profit after tax increased to AU$39.6 million in the latest half year from AU$36.3 million in 1H13. Earnings per share gained 8.4% to 9.0 cents (1H13: 8.3 cents) with return on equity steady at 21.9% (1H13: 21.7%).

nib declared an interim fully franked dividend of 5.25 cents per share up 5.0% (1H13: 5.0 cents per share) totalling AU$23.0 million. The record and payment dates for the interim dividend are 7 March 2014 and 4 April 2014 respectively.

nib confirmed its group FY14 operating profit guidance of AU$73 million to AU$80 million. FY14 net investment income is forecast to be in line with relevant internal benchmarks.

About nib nib was launched in New Zealand in October 2013 after the Australian-based health insurer purchased Tower Medical Insurance in November 2012. Based in Auckland, the company is New Zealand’s second largest health insurer, currently providing cover to almost 160,000 people across New Zealand.

ENDS

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