Tower medical insurance purchase weighs on NIB earnings, eyed for future growth
By Tina Morrison
Aug 27 (BusinessDesk) – The purchase of Tower’s New Zealand medical insurance unit weighed on health insurer NIB in 2013, however Australia’s only listed insurer expects the purchase to help grow future earnings.
The former Tower business, now known as NIB New Zealand, contributed $8 million, or 8.7 percent to the Newcastle, New South Wales-based parent’s pre-tax net underwriting profit in the year ended June 30, the company said. The group’s full-year profit fell to A$67.2 million from A$67.6 million the year earlier because of one-time costs to acquire the New Zealand business.
NIB is expanding into new geographic markets such as New Zealand as well as targeting new areas of business such as international workers and students as growth slows in its core Australian resident health insurance business. NIB is betting on growth in New Zealand where only about 30 percent of people have health and medical insurance, compared to almost 50 percent in Australia.
“We plan a major investment in New Zealand during FY14 designed to unlock what will hopefully turn out to be significant latent demand,” managing director Mark Fitzgibbon said in a statement. “It will take a little time and expense but I see our New Zealand business being a very significant contributor to our future earnings.”
NIB paid $103 million for the Tower medical insurance unit in November, gaining New Zealand’s second-largest health insurer with more than 75,000 policyholders and market share of about 14 percent.