Kiwi insurer Fidelity Life has made a decisive return to profitability and dividend payouts, driven largely by a significant contribution from its Fidelity Insurance subsidiary, which it acquired from Westpac Group in 2022.
In reporting its annual results to shareholders for the year ended 30 June, Fidelity Life reported a turnaround in total comprehensive income on a statutory basis. In the previous financial year, a loss of $24.0 million was reported in FY22, which turned into a profit of $3.2 million (after tax) in FY23.
Taking into account fluctuations in government bond rates, which had an impact of $15.8 million (net of tax and hedging), Fidelity Life’s core life business showed significant improvement. Underlying profit increased from $4.6 million in the previous year to $19.0 million in FY23 (after tax).
The company said this improved post-acquisition performance was expected and attributed it to strong business growth and a robust capital position. In particular, there was a notable increase in insurance premium income, up 33% from $338.4 million in FY22 to $450.3 million in FY23. At the same time, claims expenses increased by 27% from $164.6 million in FY22 to $209.7 million in FY23 (after tax).
Meanwhile, transformation expenses totalled $37.4 million in FY23, an increase from $20.1 million in FY22. Specifically, $16.2 million of FY23 transformation expenses (after tax) related to the ongoing integration of Fidelity Insurance.
Fidelity Life shareholders, including the NZ Super Fund, Ngāi Tahu Holdings and the Fidelity Family Trust, benefited with a full year dividend of $8.013 per share. Notably, the dividend is unfranked, reflecting the Group’s strategic use of tax loss carryforwards.
“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 acquisition of Westpac Life to be realised in FY23 and that’s been the case.
Looking ahead to the coming year, Blake said Fidelity Life was focused on completing the integration of Fidelity Insurance to simplify its structure.
“The power of financial advice and insurance protection, combined with our community and environmental efforts, means we can continue to make a real and lasting difference to New Zealand and New Zealanders,” Blake said.
