Media alert 23 November 2023 Fidelity Life has more than delivered on its promised product enhancements, with six being launched to market today – this includes an additional enhancement since they were initially previewed at its Engage...
1 November 2023
A full year’s contribution from its Fidelity Insurance subsidiary, acquired from Westpac Group in 2022, is the key driver behind a return to profitability and dividends at the country’s largest New Zealand-owned life insurer, Fidelity Life.
Announcing its annual results for the year ended 30 June 2023 to shareholders yesterday, Fidelity Life reported total comprehensive income on a statutory basis improved from a loss of $24.0 million in FY22 to a profit of $3.2 million in FY23 (net of tax).
After taking into account movements in the government bond rate, which had an impact of $15.8 million (net of tax and hedging), the performance of Fidelity Life’s core life insurance business improved significantly, with underlying profit increasing from $4.6 million last year to $19.0 million in FY23 (net of tax).
The company says the improved performance was expected following the acquisition, and reflects broad growth across the business and a strong capital position. Insurance premium revenue was up 33%, from $338.4 million in FY22 to $450.3 million in FY23, and claims expenses grew 27%, from $164.6 million in FY22 to $209.7 million in FY23 (net of tax).
Meanwhile the company’s future-proofing programme continued at pace, with $37.4 million of transformation expenses incurred in FY23 compared to $20.1 million in FY22. $16.2 million of FY23 transformation expenses related to the ongoing Fidelity Insurance integration (net of tax).
Fidelity Life’s shareholders, including the NZ Super Fund, Ngāi Tahu Holdings and the Fidelity Family Trust, were rewarded with a full-year dividend of $8.013 per share. The dividend is unimputed as the Group continues to utilise brought forward tax losses.
Fidelity Life Chair Brian Blake says the Board is pleased to have delivered a significantly improved performance in the company’s 50th year in business.
“2023 is a special year for Fidelity Life as we look back on our achievements since Gordon and Shirley Watson realised their vision to establish a New Zealand life insurance company in 1973.
“We expected the benefits of our Westpac Life acquisition to start materialising in FY23, and that’s proven to be the case. Our performance shows the business is in good shape and proving resilient against a weak economy and the high cost of living.
“In recent years we’ve been investing in setting the foundations for another 50 years of success through a future-proofing programme, and in FY23 we made very good progress. In addition to continuing to build out our cloud-based CRM and policy platform, Tahi, we navigated significant regulatory reform and took a major step forward integrating Fidelity Insurance by officially transferring that business unit into Fidelity Life.
“Our strong capital position has also allowed us to reward our shareholders by resuming dividend payments.”
Looking forward to FY24 and beyond, Brian says the company is focused on completing the Fidelity Insurance integration and delivering more for financial advisers.
“Advisers have been at the heart of our success since 1973 so, to recognise this in our 50th year, we have renewed our commitment to the adviser channel. In response to adviser feedback, we’re introducing a raft of new initiatives spanning the digital, product and service spaces to make it easier for advisers to do business with us, focus on growth, and together take our respective businesses to the next level.
“We’ve also unveiled plans for an extensive engagement and professional development programme for up to 125 advisers each year called Adviser edge. This builds on the success of our Career connect skills and training course, and will cater for advisers at every stage of their career.
“The power of financial advice and insurance protection, combined with our community and environment efforts, mean we can continue making a real and lasting difference to New Zealand and New Zealanders.”
Fidelity Life’s FY23 annual report, titled ‘Proud history, strong future’, can be found here.
1 Underlying profit is not a prescribed or audited measure under applicable accounting standards and may therefore not be directly comparable to underlying profit as reported by other similar entities. It is calculated as total comprehensive income adjusted for the impact of government bond rate changes. Please refer to our 2023 annual report for more information.
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