Nib New Zealand posted a 30 percent slide in first-half profit as the local arm of the Australian health insurer’s claims bill rose at a faster pace than it could win new policyholders.
Underlying earnings fell to $10 million in the six months through December, as it paid out $69 million in claims, up 9 percent from a year earlier. Premium revenue rose 6.2 percent to $113 million, with a 1.7 percent gain in policyholders to 104,399. In Australian dollar terms, underlying earnings fell to A$9.5 million from A$13.1 million a year earlier.
The increased payouts were driven by a 22 percent increase in hospital claims and a 26 percent rise in claims for ancillary providers, such as physiotherapists and dentists, nib said.
The New Zealand insurer’s management costs rose to A$33.2 million from A$31 million, which it said was largely due to launching its Whitecoat comparison website in New Zealand and investing in its First Choice Directory network.
Nib NZ wasn’t alone in facing increased claims costs. The latest quarterly figures from industry group Health Funds Association New Zealand show claims paid in the year through September rose 7.6 percent to $1.26 billion, compared to a 7.4 percent increase in premium income to $1.52 billion. Individuals covered were up 1.9 percent at 1.4 million.
Government data show consumer prices for health insurance rose 3 percent in the six months through December, outpacing a 2.6 percent increase in hospital services prices, a 1.1 percent increase in dental prices, and a 1 percent rise in medical services prices.
The ASX-listed parent – nib Holdings – reported a 4.8 percent increase in net profit to A$74.3 million, with revenue up 11 percent at A$1.2 billion. Underlying earnings climbed 19 percent to A$114.3 million and nib expects annual earnings to be at least A$195 million.
The board declared an interim dividend of 10 Australian cents per share, up from 9 cents a year earlier.
The shares slipped 0.2 percent to A$5.81 in early trading, and are down 8.6 percent from a year earlier.