Company premiums top $39.3m

Geneva Finance’s combined net-book value came in $105.7 million at the end of 2022/23, according to the company’s annual report. 

As of March 31, its New Zealand receivables ledger was $115.3m, prior to provisions for deferred revenue and doubtful debts – as was the case for its net-book value. 

The company’s Tongan operations receivable ledger $7.4m spread over about 1,498 loans with an average balance of $4,900. 

Comprehensive motor-vehicle insurance and mechanical breakdown insurance were the largest by volume when it came to providing such products to individuals, irrespective of whether the company provided the finance.

During the past financial year, Geneva Finance wrote premiums of $39.3m and had some 106,435 active policies by the end of 2022/23.

The group also provides invoice financing, debt collection and debt-litigation services to New Zealand-based businesses. The invoice-factoring ledger balance was $5.1m on March 31.

Meanwhile, the group’s audited pre-tax profit of $4.8m was down by $3.5m when compared to 2021/22.

The annual reports states: “Lower lending in the first half of the year in conjunction with the increase in cost of funds were the primary contributors to the profit decline.

“This was exacerbated by claim costs associated with the Auckland floods as the company announced in late February.

“In addition, during the year the board increased investment in group governance which, while increasing costs, will provide ongoing benefits going forward.”

Geneva Financial Services, the group’s lending business, saw pre-tax profit come in $2.8m, which was down by 47 per cent on the previous financial year. 

“The increase in the cost of funds driven by the regular increases in the OCR was the primary cause of the decline in profitability of this operation. While this was mitigated by passing on rate increases, the impact of this action will largely be visible in the March 2024 year. 

“Lower lending volumes in the first half of the year were a driven by lower motor-vehicle sales and regulatory changes, in particular the interpretation of ‘affordability’ under the responsible lending code. 

“In contrast, the second half delivered good lending growth as a result of restructuring this operation and increased clarity from the regulator around the interpretation of the code. 

“The asset quality of receivables remained strong through current challenging economic conditions, which is a pleasing result. The net receivables ledger balance at period end was $91.2m.”

Quest Insurance reported profit of $4.4m, down by six per cent on the prior period. Although it maintained strong premium growth with gross premium of $39.3m, up 29 per cent, higher claims costs – particularly from the Auckland floods and to a lesser degree claims Cyclone Gabrielle – mitigated much of this benefit. 

Pacific Tonga, 60 per cent owned by the group, reported a pre-tax profit $1.5m, by down 1.3 per cent on prior period.  

Stellar Collections had a positive year with a consolidated profit of $0.1m, down by $0.2m on previous year. 

“The Covid impact on the debt-litigation business was much more severe than first anticipated,” states the annual report. “However, changes are being made to this operation to restore the business to pre-Covid profitability.”

Geneva Capital, the group’s invoice-factoring division, reported a loss of $9,000, up $0.2m on the prior period’s loss. It has been restructured and the result includes a goodwill impairment provision. The board will review the operations in the coming financial year.

“The year’s result was disappointing, and was an outcome of increases in interest rates and the impact of the Auckland’s floods,” add chairman Robin King and David O’Connell, managing director, in their annual report.

“The former has been addressed, and the latter is ‘one of those things’ the insurance operation will absorb and grow through. 

“The board is confident it’s continued investment in business infrastructure, together with improvements in systems and people, have positioned the business to bounce back from a difficult result and move it back into the sustainable profitable growth.”