Mixed bag in Partners results: Profit down, market share up

Partners Life has continued to pick up market share in the 12 months to March 31, however its profit has fallen during the year.

Wednesday, July 31st 2019, 11:53AM

Chief financial officer Sean Kam says Partners Life market share has grown from 17.5% to 22.2% during the year and it continues to be the number one firm for new business in the independent financial adviser market.

The company issued a new record $54 million of new business despite the backdrop of a distracted market which saw a reduction in the overall new business volumes.

Kam says across the total market new sales were down due to disruption particularly from regulators and also corporate actions. He also says there has been a fall in life insurance sales through the bancassurance channels.

Partners profit has been impacted by adverse claims experience and higher than anticipated expenses.

Underlying insurance profit was down 25% from $21.98 million in the previous year to $16.43 million this year.

Kam says claims can be volatile and the main areas where there has been adverse effects has been in health and disability income.

Total claims paid during the 12 month period were 50% higher than the previous year and sat at $128.58 million.

Operating expenses grew to $64 million reflecting increased new business volumes, larger in-force book and the changing regulatory environment.

The total cost of acquiring new business was $121.56 million compared to $105.11 million last year. This was made up of $79.06 million in upfront commission; $39.96 million in other acquisition expenses; and $2.58 million for the shadow share scheme with advisers.

The maintenance costs totalled $47.39 million comprising of $25.05 in commission (trail) and $22.38 million in other maintenance expenses.

Premium revenue increased 20% from $206.60 million to $247.46 million.

Kam says: “Partners Life continues to grow profitably and is well positioned to take advantage of the current period of unprecedented market disruption.”

Partners Life managing director Naomi Ballantyne says it has been a challenging year for insurers.

"The Financial Markets Authority and Reserve Bank of New Zealand reported their findings following a review of conduct and culture of New Zealand life insurers. Partners Life’s business is more modern and has fewer complications relating to legacy products than other life insurers. Our strategy of providing automatic upgrades to existing customers is designed to ensure customers benefit from improving terms and conditions for the duration of their insurance cover with us.”

Partners Group’s total assets increased by $146 million to $882 million, and the life company RBNZ solvency margin reduced to $59 million reflecting optimisation of the timing of reinsurance cashflows and experience variances.

	ended 31 March 2019	ended 31 March 2018
New business API	$54.1 mill	$49.0 mill	10%
Premium revenue	$247.5 mill	$206.6 mill	20%
Claims expense	$128.6 mill	$85.8 mill	50%
Gross claims loss ratio	52%	41.5%	10.5%
Operating expenses	$63.8 mill	$48.8 mill	31%
Total comprehensive income	$53 mill	$37.9 mill	40%
Life company underlying insurance profit	$16.4 mill	$22.0 mill	(25%)