INDEPENDENT NEWS

Fidelity Life lifts annual profit 43%

Published: Mon 7 Nov 2016 08:54 PM
Monday 07 November 2016 03:16 PM
Fidelity Life lifts annual profit 43%, boosted by sale of super fund
By Paul McBeth
Nov. 7 (BusinessDesk) - Fidelity Life Assurance, the country's third-biggest life insurer, lifted annual profit 43 percent as it grabbed market share and benefited from the sale of a superannuation fund it managed.
Net profit rose to $34 million in the 12 months ended June 30 from $23.8 million a year earlier, the Auckland-based company's financial statements show. That included a $6.4 million contribution from discontinued operations, being Fidelity's former Super-Super Plan, Number 3, a retirement scheme it used to manage and which it sold to Grosvenor Financial Services in April for $11.4 million.
Earnings from the continuing life insurance operation climbed 27 percent to $27.6 million, or $19.19 per share, on an 11 percent gain in insurance premium income to $222.7 million, giving it 10.7 percent of in-force premium, up from 10.5 percent a year earlier.
The sale of the superannuation scheme "continues our transition towards focusing on life and related insurance business, and away from savings products," chairman Ian Braddock said in a statement. "As well as striving for growth in new business, we maintained our focus on keeping as many policies as possible on our books, and once again, the rate of cancellations fell."
Fidelity, which was once a takeover target for rival Tower, overhauled its business in 2013, buying Tower's life insurance business for $145 million in cash and liabilities, and selling its KiwiSaver scheme with more than $300 million under management for 64,800 members to Grosvenor, which recently rebranded as Booster Financial Services, for $16.5 million.
The insurer reaped a gain on the sale of the pension scheme's manager of $10.7 million, with the unit attracting a tax bill of $6.4 million to push it into the red for Fidelity. The scheme had 8,144 members as at March 31, with $492 million under management.
In September, the board declared a final dividend of $3.48 per share, or $5 million, after the insurer's balance date. That's up from $3.31, or $4.8 million in 2015.
Fidelity's net claims expense rose 28 percent to $27.7 million while its bill for commissions rose 12 percent to $48.9 million.
Braddock said Fidelity embarked on a three-year project to upgrade the firm's policy administration system, in what's "the single biggest investment made in the history of Fidelity Life" which will allow for more innovation in the products that it offers, and "future proofs the company for many more years to come".
The insurer added $4.1 million to its internally developed software in the period, taking the total investment to $10.5 million as at June 30, of which $3.3 million has been amortised.
(BusinessDesk)
ends
BusinessDesk
Independent, Trustworthy New Zealand Business News
The Wellington-based BusinessDesk team provides a daily news feed for a serious business audience.
Contact BusinessDesk
Email:

Next in Business, Science, and Tech

New Year Border Exception For Seasonal Workers In The Horticulture And Wine Industries
By: New Zealand Government
Grey Power Is Disappointed To Learn Of More Bank Closures
By: Grey Power New Zealand
Supply Chain On Brink Of Overload Says National Road Carriers
By: National Road Carriers
Annual Goods Trade Surplus At 28-year High
By: Statistics New Zealand
How Real Is That Bargain?
By: Commerce Commission
Births And Deaths: Year Ended September 2020
By: Statistics New Zealand
Okay Boomer: Kākāpō Wins Bird Of The Year 2020
By: Forest And Bird
Govt Goes “hard And Early” On RSE Workers
By: ACT New Zealand
Bringing RSE Workers Back The Right Move
By: Business NZ
Cream Of The Crop Will Get To Market
By: Auckland Business Chamber
Horticulture Industry Appreciates Government’s Decision On RSE Workers
By: Horticulture NZ
BNZ Optimistic About Year Ahead
By: BNZ
Māori Population Estimates: At 30 June 2020
By: Statistics New Zealand
View as: DESKTOP | MOBILE © Scoop Media