Health Insurer Prepares For Battle
The Age
Thursday February 28, 2008
LISTED private health insurer NIB is in early merger talks with two smaller funds as it prepares to face increased competition from the much-larger rival that will be formed by the $2.4 billion partnership between MBF and BUPA Australia.
NIB, which floated on the stock exchange in November, wants to expand out of its NSW base. The company, which has about 280,000 of its members as shareholders, said yesterday it was discussing tie-ups with a couple of mutual funds. Managing director Mark Fitzgibbon was reluctant to put any timetable on the talks, although he indicated NIB would consider handing back to its investors some of the capital it had reserved for acquisitions if a deal could not be reached in a year. He described NIB's ability to buy other mutuals as "problematic", given many were solvent and had no compulsion to take part in mergers. He believed a shake-up was on the cards and cited the BUPA Australia and MBF merger this year that will create an operator the size of market leader Medibank Private as an example of how the industry was changing. "The business case for consolidation is quite compelling," Mr Fitzgibbon told BusinessDay yesterday after NIB reported its first half-year results as a public company. Net profit after tax was $17.7 million, on revenue from insurance premiums of $371 million, although NIB declared a loss of $7.6 million, reflecting the one-off costs of listing.The company has not paid an interim dividend. It shares rose 6? to $1.01 after it indicated it was on target to hit its net profit forecast of $32 million this year. The reporter owns NIB shares.
© 2008 The Age
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