Ben Telfer:

Hello, everyone. Welcome to today’s ICMIF webinar, “Mutuality at the heart of a purpose driven growth strategy”. Today is episode six in “The mutual advantage” webinar series, which looks at how different ICMIF members leverage the mutual and cooperative value proposition to gain a competitive advantage.

Today we will hear the case study from MAS in New Zealand, as they share their journey to realign their purpose and accelerate growth in a new target market for it’s mutual advantage.

I’m very pleased to introduce from MAS, Martin Stokes, who is chief executive, Mike Davy, who is chief member advocacy officer, and also Matt Judge who’s chief finance and risk officer. Mike, I’m very pleased to hand over to you first.

Mike Davy:

Excellent. Well, thank you and welcome from New Zealand, home of the reigning World Test Cricket champions. I’m glad you’re part of the world, or if you’re up that way and put on some great weather for us so that we could get through.

We’d like to just take you through a little bit of a journey we’ve been on recently and as the title of the webinar alluded to, we’re undertaking a different journey in terms of growth for us and it’s come with a few things that we’ve been learning about on the way. I won’t steal my own thunder in that regard, but a little bit of introduction to MAS. We turn a hundred as you might gather from that slide, it’s our centenary year this year which is a great milestone for us. We’re a small company by New Zealand Standards, we have been a niche market player and very focused on a small section of New Zealand’s society as a mutual with very humble beginnings. We were started by a doctor in Napier, if you know New Zealand at all. We’ve grown slowly over a hundred years to represent a bigger slice of the professional community in New Zealand. But this doctor realized a hundred years ago that the medical fraternity were underserved in the market, particularly when it came to things like income protection insurance, but they also realized that there were a community of doctors who wanted to band together to look after each other, hence the origins of our mutuality in New Zealand.

Our membership consists as you might imagine, largely of a medical community and around 50% or just under, are in the health professions of New Zealand. 85% of doctors today choose to do business with MAS, around 70 to 80% of dentists and vets. These three professions make up what we call our full membership with voting rights at our annual general meeting every year. We’ve been turning our attention more recently, probably about 12, 13 years ago, to a wider set of proficients in New Zealand, because the board back then looked at our opportunity to grow and have scale and sustainable growth in our business and said, “Look, we need to be targeting more than this niche group of medical professionals in New Zealand.”

We turned our attention to legal, accounting, architecture and engineering and over the last 12 years or so we’ve got about 20% market share, particularly in legal and engineering, and I’d go as far as to say that some of the events that have happened in New Zealand may not be a surprise to any of you to understand we’ve had some pretty big earthquake activity in our country, but that has also helped us engage with a different set of professionals in New Zealand, those legal and engineering community in particular.

We managed to impress in the New Zealand market as we worked through over a long period of time after that working through the impact of those earthquakes, but today we have pretty good engagement in those communities. Probably two or three years ago, the board also talked to us about where we would grow, and at that time we were looking at the type of word of mouth referral we were getting and as a business we’ve been very fortunate over the years to have good advocacy in good word of mouth referral, that’s been our primary mechanism of growth for quite a long time. As a marketer myself, you dream of coming into a company where word of mouth referral is the primary marketing and growth mechanism and this was the case. We saw that we were growing in professional communities and the family of our primary members as well.

We expanded our mandate and we bet to say, “Actually, if we were targeting and talking to any professional in New Zealand, we’d actually be happy to extend membership of our mutual to them.” That has brought us some success and we’ve probably had record growth rates in our membership over the last two years in particular, but last year our board took a very courageous decision to try a new approach. Before I do that though, just to give you a quick introduction to the origins of MAS, Ben, I wouldn’t mind if you played that first video that we’ve got.

[VIDEO]

On 25th of April, 1915, ANZAC forces landed on the beach at Gallipoli for what would become one of the bloodiest and most ill-considered campaigns of World War I. Tending the sick and wounded was a 26 year old doctor captain Frank Harvey, an Irish born general practitioner from Napier. Frank survived the carnage of Gallipoli and went on to see even more human suffering on the Western Front. His war experience and then the influenza pandemic, which ravaged New Zealand on his return home in 1918 would see him become the driving force behind the foundation of MAS.

Gallipoli was an eight month long campaign that took them through blazingly hot summer, a freezing winter. Like all of the New Zealand soldiers who were there, the doctors were on the peninsula, they were bombarded with them, they ate the rations they ate, they probably suffered from the dysentery, they probably experienced malnutrition like soldiers did as well.

Things that had to happen at a field hospital on Gallipoli would have been treating rifle wounds, artillery wounds, shell blast wounds, but also a lot of caring for men with disease. For someone like Frank, he would have trained as basically a family doctor, childhood illnesses, a little bit of basic surgery, dealing with accidents and infections. Of course, were about nearly 10 years short of the discovery of penicillin so there were no antibiotics.

The medical experience of the war, and then the influenza pandemic, which ravage New Zealand as the soldiers returned home in 1918, shaped a generation of New Zealand doctors. One of them, Frank Harvey, would soon go on to become the driving force behind the foundation of MAS.

The influenza pandemic, I think it’s very hard for us to imagine how that must have in a way re-traumatized or doubled down on the trauma that a society and the culture was already experiencing by the armistice in November of 1918. About 18,000 New Zealand men had been killed, then the pandemic was exacerbated by the armistice celebrations, people going out congregating together, and it was a specific influenza that the very young and the very old tended to be spared and it was that group in the middle of able-bodied younger adults who were struck down by it.

Someone who’d come from war where at least there was a reason, there was duty, and while it might not have been glorious and noble as people had hoped it would be, there was at least some consolation in deaths being worth something, but you could see that perhaps the flu just felt random and cruel and even for doctors, that must have been extremely difficult to handle.

The trauma of World War I and the flu pandemic had lasting impacts on New Zealand society in peace time. As New Zealand has looked to rebuild in the 1920s, improving public health was a major priority.

It’s interesting that some of the key things that we now take for granted around health, so the school dental service, for example, the Plunket system of infant welfare, they’re two initiatives born out of the war and a concern for the health of young women as the mothers of children and the concerns around infant welfare around the growth of children, how could they be looked after better.

For most occupation groups, it wasn’t possible to get insurance that covered personal injury and accident before the war, but the soldiers of World War I had seen something quite different when they joined the army.

The army, it ensured everybody effectively, that in volunteering, in signing up, in enlisting for the army, in a way you entered into a bargain with the State, they paid you for your work or your service, but they also guaranteed that if something were to happen to you, if you were wounded, or if you died, they would take care of you. If you died, they would bury you and they would take care of your family.

We see a lot of men who didn’t have to join up, men who were in protected industries, for example, mining is a good example, forestry, they didn’t have to join up, but they chose to because their jobs were dangerous. A lot of men reasoned, well, my work is just as dangerous as going to war, but if I go to war and something happens to me, the army will take care of my mother or the army will take care of my wife.

The sense that the army would provide, I suspect was part of what Frank was observing and that perhaps when he came back he decided that again, this model of who will provide for us as independent businessman, which doctors were, who would provide for us if something happened to us and we could no longer earn. I wonder whether it was exposure to a different institution and a different model that perhaps spurred him to do that.

In August, 1921, Dr. Frank Harvey gathered six colleagues in the sitting room of his Napier home, and they formed the Medical Assurance Society.

Dr. Frank Harvey was the key person behind the establishment of MAS, he was a family doctor and during the war developed an interest in radiology. For the first time, really, he was starting to think about the idea that his colleagues, this group of health professionals in New Zealand, could really benefit from establishing an insurance business for the benefit of the members and then ultimately through that a better level of health care for the country.

By the end of the first year, MAS had 200 members and through the 1920s the memberships steadily grew stronger, as did the sense among members that they were lucky to be part of MAS and that they should protect it if necessary.

In 1934, the directors proposed a merger with a commercial insurance company, FAME, and put it to the membership. The response from the members was overwhelmingly opposed to that proposal, FAME in the end actually decided to withdraw, it occurred to them that they wouldn’t be able to secure the level of ongoing business that they’d hoped to if it was to be successful, even though only 13 years old, it was pretty clear that the membership were determined to essentially control their own destiny, they wanted to be a mutual.

Part of it is that to begin with at least it had a narrow but deep focus, even now over 90% of all doctors belong to MAS. That to a large extent to reflects the mutuality, the co-operative nature, and a little bit, at least historically the elitist nature of that organization, that you were a doctor so you could belong. It was very much a boys club, but it did have a mutually beneficial reason for existing and that has really continued through the decades since it’s been in existence.

That helped establish and give it an incredibly deep and lasting basis on which to grow, and it’s never lost that even though it has extended its membership and now as you may well know, it’s now extended to all professionals, but that doesn’t detract from its beginning, it has a deep, deep root that would be really hard to extinguish now, which is why you can extend the membership and not lose what we have had for the last hundred years.

Mike Davy:

That just gives you a little bit of appreciation of our heritage, our history and our legacy and what got us started from that wartime point of view in the early machinations of society in New Zealand. Our membership has been growing now for obviously quite a while, but in the last 10 years we’ve effectively doubled our membership and that has left us no man’s land, because we look at our business and we are a small market share player as I mentioned before, and by New Zealand standards or anybody’s standard, and we have a general insurance business, a life insurance business and effectively a superannuation business that we provide these different financial services to our members.

We are looking ahead at very significant investment required in our business, particularly from a technology point of view, and as we think about that, we look at the scale that we require and there’s just no downside for us to be a much bigger business today. Effectively as we look at that, and as we talk to our members about our need to grow, there’s beginning to be an understanding from our membership where we’re used to us being a very small nation focused company to understanding that we do need to be bigger, that simply looking in the core seven professions that we’ve targeted for so long, and even maybe the wider professional community, won’t be enough for our next a hundred years as we look ahead.

We’ve been starting to think about how we enact our growth strategy and we’ve tried to keep it as very simple and as targeted as possible. We want to double our revenue in the next five to seven years and the key to this is what I alluded to before, is this very courageous idea that we put forward to our board, just in the last year where we said, what if we actually changed why our business shows up and the target market that people are attracted to? Why don’t we take a purpose-driven approach to our growth?

The boards agreed to do this, and as we started to think about how that would show up, we said that we would become a business that was less about our traditional purpose, which over the years has been many things, but our purpose was protecting what matters in our members worlds, which you would expect and resonates very well for a mutual. But we said, what if actually the alignment of what our business does, what its footprint is and what it really sets out to do, was something that was connected to the health of new Zealanders, of its communities, and largely that was because of our heritage and our membership too, because we’d been serving a medical community for so long who in turn served the communities of New Zealand as you see in this relationship here. We were a traditional mutual model that said, “Yeah, there’s mutual benefit here between our members, our customers and mayors and its sustainability.” We felt very proud about serving them while they served New Zealand communities.

six years ago when I joined, if I walked around and asked our people and said, “Look, why are you here?” They would just almost unanimously say, “We’re here to serve our members. We provide excellent service, we provide insurance and we help them so that they can help new Zealanders.” When we went to the board, we said, “Well, look, when we see the trends in New Zealand, if we see the trends globally about what business is doing, what if we actually just changed the shape of this away bit to actually put communities really at the top of this relationship. When we’re talking to our people about our growth strategy, rather than saying, it’s just doubling our revenue so that we can afford to invest in technology or become a more modern and sustainable insurer, what if actually the real reason for growth was to inspire that healthier New Zealand, what if in the mutual benefit between us and our members that actually served a larger purpose and therefore the growth of our company over time organically serves that same purpose.

This went down very well with our people, it went down very well with our board, we had a long debate and a number of strategy sessions with our board to understand how would we step into this and what is the level of commitment that we have to it, because when you do things like change the purpose of a company it comes with a certain level of commitment and a level of follow through that is necessary to make it successful.

When we talk about inspiring a healthy New Zealand, and we are just starting to grapple with what exactly this means, one thing we did say was that it would be important for us to take a challenger position in the market, because what we wanted to do and and if we look across the insurance and investment community, there are varying degrees of commitment to social or environmental impact. We sat and looked at our unique endowments and said, what could we do to stand out in the market to successfully execute our strategy? We decided that doubling down on this idea of social environmental impact would be something that actually would resonate with members of New Zealand society. I’ll cover that a little bit more about what we found when we did some research around that shortly.

It’s important for us to be a challenger, it’s so important for us to say, in the insurance world we have something different we can talk to you about, and that difference is our mutuality, but it’s also the fact that we can be purpose-driven and that we would challenge other insurers and other investment companies to be like us, because that challenge, that inspiration, we hope will layer up for New Zealanders and particularly in underprivileged communities. I have one more video that would be good to show that probably does more justice to this.

[VIDEO]

Corporate New Zealand has to change. We want to be at the forefront of that change. Because we think there are a growing group of New Zealanders who demand it. Why not have your insurance products, your KiwiSaver product, make a difference? It’ll help you save for your retirement, it’ll protect what you need to protect, but why not have it impact on all New Zealand?

It’s an absolute essential that business has to start to relook and rethink about who they are and what they do, and the purpose of even being here. Because what we thought was okay as we set our businesses up a few years ago, certainly isn’t the way things are heading into the future. It’s essential really, if they don’t start to understand those deep issues, they’re going to struggle to survive.

We think this changes a complete progression from where we’ve come from. For a hundred years we’ve served professionals who serve New Zealand. We’ve decided that the next a hundred years we should actually join them.

As MAS approached it’s centenary, its leaders realized that it needed to grow in size to be sustainable. At the same time, there were growing calls from members from MAS to become a different organization, one that made a positive impact on the planet and society. The opportunity to transform into a new organization began to take shape.

What we’re starting to see is the evolution of the conscious consumer. These are people who are choosing organizations to supply the goods and services that have values that match their own. In addition to globally dealing with the impact of the pandemic, the world is also dealing with growing inequality of wealth between haves and have nots and New Zealand’s not immune from that, and a growing climate crisis.

There is this move in society for corporates to have a social good. For MAS we’ve seen our members, that’s what makes them thrive. At MAS we do it in an authentic way, it’s not another layer for marketing, it is what we really care about, what we really want to do.

The impetus for the latest evolution of MAS into a company driven by a greater purpose than profit and a desire to make a positive impact on society and the planet began when members started questioning the investment portfolio.

We got members asking if we were running an ethical fund, we got members asking us was it true that we invested in tobacco companies, we got members asking us were we investing in ammunition and nuclear companies that were supplying nuclear arms. We didn’t really know and so we thought, well, we probably are, we probably shouldn’t be, yes, we’re not now.

For me, that was like an aha moment, our members really care about what we do in these other areas, not just the service we provide them, but how we invest. Our members, they do good in the community and they want us to do good in the community. Then we said, “Well, we don’t pay dividends, but maybe if we change their charitable status, we could all meet the good that they’re doing in the community.”

We saw the example of Southern Cross, who is charitable company and thought, “Well, if Southern Cross is a charitable company would seem possible that we could maybe become a charitable company, and then we could set up a foundation and invest in what was important to members.”

When we set up the charity, we had that vote where over 80% of our members and we made sure there’s a lot of members voting. These members were voting to set up a charity that wasn’t going to benefit them, it was going to benefit other parts of society, which again, talks about the value set of our members.

MAS members voted to establish MAS Foundation in 2018. Now, the company pays profits into the foundation and independent trustees make decisions about how many will be distributed to programs that improve health outcomes in the first 1000 days of life.

MAS is a hundred-year-old organization and they made the decision a few years ago to set up a foundation and to change their status to a charitable company with a foundation, which is a really interesting and innovative thing for a company to do. They were really driven by wanting to make a difference in New Zealand., it has the potential to be one of the leading corporate foundations in New Zealand.

I have got many years experience as a governor. What I really love about the opportunity with MAS Foundation is that we’re a multi discipline, multi ethnic board. We’ve got that opportunity to do something differently. We’ve created a Te Tiriti-based leadership, I haven’t been on any boards to date that has done that as explicitly, and that’s really courageous. It’s a groundbreaking opportunity for us to show what that might look like in the future to other agencies and organizations.

Health and equity is an uncomfortable topic. Here we are a well-off country and we’ve got people with a 10 year shorter lifespan because of the ethnicity and that doesn’t make anybody feel right, neither the people whose lives are affected, nor the others of us who live 10 years longer, it just doesn’t feel right. Our foundation can go and say, “Well, let’s try some different things, let’s make some early investments and see if it has an effect in the longterm to address some of those issues, and let’s make a difference in our country.

We know that there are significant disadvantages experienced by mothers and also young children and there’s heaps of evidence to show that the better off you are from birth, the more likely you are to enjoy a bit outcomes later in life. We know that the first 1000 days are really crucial.

That’s a legacy for their life in terms of the digital health, in terms of their mental health, in terms of their physical health, in terms of their development and their education.

As a country, look, we’ve got so much to give, we have amazing resources, health system, education system, social system, and now we’ve got MAS Foundation as a key player in that space.

For a company like MAS who have a history in health, so a lot of the original clients and people involved in this organization are health based. These are people at the front line, they seeing the health indicators across our country worsen and the things that they’re looking at and really drilling into how do we make sure our purpose meets health outcomes, they’re really aligning those two nicely together. The health outcomes obviously sit within environmental matters and socioeconomic matters, that’s a tricky one, but it’s a really good one, and if they do that really well, the impact of that work will be felt across this country.

When I tell people that MAS is a hundred years old, there’s something quite inspiring about that, that an organization in our country has been around for a hundred years and that we’re not just a hundred years and stagnant, we are a hundred years and we’re looking forward to the next a hundred years.

We’re really proud of what we’ve achieved in our first a hundred years, and we don’t underestimate the challenges ahead, but we’re really excited about delivering to a new purpose. We believe that MAS can exemplify what it truly means to be a purpose driven company. It will be achieved by the whole company, everyone working here, making a real mindset shift. We’re not here to make money, we’re not here even just to provide great insurance products, we’re here to inspire a healthier Aotearoa.

Mike Davy:

Thanks for that, Ben. Look, the big thing you would have heard and there are two big things really, over the years our members have really influenced our journey and we’ve done two things in particular. One is we changed our funds under management to be a responsible investing fund. That means early on we prioritized excluding tobacco and ammunitions as you would have heard, but also excluding fossil fuel companies and we took a pretty progressive stance in that regard, and then more recently we overlaid some pretty progressive ESG filters as well. It probably puts us in a pretty good position in the New Zealand market in that regard, we’re one of the more progressive responsible investors, but what’s just as important for us is that our capitalism is invested in exactly the same way. That has seen us take some positive steps and you would have heard us talk about the MAS Foundation and taking steps to become a charity, but Matt will talk in more detail about our journey in that regard.

As we as we looked to talk to the board about how we’ve skewed on this, we’re begun planning how we become purpose-driven. It’s one thing to say, we want to inspire a healthy New Zealand, but what really are we going to do about it? This is a complex slide, but really the short messages here, we want to line our three businesses in our group brand to make sure that they are all taking what is unique to MAS, and then creating scale on that and leveraging it. You’ll see that how we think about our investments, how we think about how our products show up on the market and how we align our supply chain and value chain to this cause to inspire a healthy New Zealand, whatever that means. That can mean different things to different people.

We believe that that will set us up for success because then we’re considering our footprint, we’re considering where our money goes and what it does, we’re considering the people we invite to partner with us in our business and we’re making sure that as we grow all that leverage is up to make a bigger difference than you can see there, the SDGs, the sustainable development goals that are aligned to the journey that we’re undertaking.

Anyway, without further ado, I’ll get Matt to start talking a bit about our journey to becoming a charity because that’s been a key step in our progression in this regard.

Matt Judge:

Thanks, Mike. I’m Matt Judge, chief finance and risk officer at MAS, and as part of becoming a purpose driven mutual. We recently created a charitable foundation that’s making a difference to the health of people in New Zealand. I’m going to provide an overview of the strategic reasons why we’ve gone down that path, also touch on the structure and how that’s changed and how that was enabled by being a mutual, and also look at the process for engaging the membership as we made the decision to become a charity and then also executed on it.

In terms of the strategic context, we’re a mutual, we have around 40,000 members and market share is relatively small in New Zealand, we’re about a 2% market share player. We operate three businesses, we run a general insurance company that provides house, car and contents cover, we run a life insurance business and an investment business.

Historically we’ve competed largely on the basis of providing high quality products and services to a very niche sector of the of the market, but as Mike and the videos have alluded to a core part of our strategy going forward as to grow and capture a larger share of the market than we presently have, and that will mean growing in a faster and more deliberate way, and we see a big opportunity to go beyond the traditional health professional market of which we have around 80% at the moment and expand our target market and to those that value interacting with the New Zealand our mutual one that provides a high quality of service that will not change but an increasingly important part of our value proposition will be that we operate in a values based and socially responsible way. Opening up their conscious consumer market and we’ve got some good runs on the board in this regard so far with the move to a socially responsible investing approach and the creation of the foundation, that charitable in today as a key part of this.

From a strategic perspective that appeals to members, but this purpose driven approach as one that’s focused entirely on all members, it’s obviously about making a genuine difference and it has an appeal to a broader range of of stakeholders including staff and as an interesting example, even our credit rating agency now regards our ESG credentials as a favorable factor on the credit writing process.

This is our structure before becoming a charity and before we established the foundation. If I start at the base of the slide, there are the three businesses that we referred to before, all aligned by the MAS’ parent into today, and naturally as a mutual control by the membership base, and as part of our old structure, there was a theoretical ability to pay financial dividends to members and I say theoretical because we have never paid and we’ve never had to do so. It was important context in terms of the charitable transition, because that was one of the key things that members had to give up to establish the foundation and convert them as charitable group to be a charity.

The transition to being a charitable entity and the creation of the of the foundation. An important point is that members are still at the top of this structure and retain all of the same voting rights and control. They did pre conversion to a charity, we’ve established the foundation that’s on the right hand side, and the foundation owns a distribution share in MAS, so that is now the only way that we can pay a financial dividend out of the MAS’ group, but the foundation doesn’t have any control or voting rights in the mutual.

In terms of money flow from the operating entities out to the foundation, we are in a very fortunate position, from operating over a hundred years that we’ve been able to build up a very strong capital position, but one of the features of this structure is that the funding of the foundation is out of the operational earnings of the MAS’ business, the success of the foundation over time, what were closely tied to the success of the MAS’ business and how much we grow over time. We are conscious that providing a stable funding stream to the foundation and providing consistent amounts year on year is going to be much more preferable than volatile funding of the foundation. For example, providing a very large dividend one year and then not much the next, so we’ve implemented a smoothing mechanism to fund the foundation.

The other key feature of the structure is what the conversion to charitable status, the MAS operating into these gain income tax exemption, we still pay other forms of payroll tax and value added tax. We can enable some substantial funding of the foundation through our income tax exemption, which the New Zealand government allows.

I’ll touch on the comprehensive member engagement process shortly, but one of the key elements of the structure is the creation of an independent board. There was some very strong feedback that we received from members through the engagement process. We’ve recruited an under payment of high quality board to run the foundation, and that just removes the risk of any perception that the foundation as an entirely focused on health outcomes and the main times the segregation with the MAS’ operating businesses.

In terms of the process for engaging the membership, naturally as a mutual are involved a significant amount of member consultation. Our process lasted for well over a year and we ran a number of member focus groups, surveys, and town hall style meetings and development with the membership was very useful in refining the proposal and coming up with the eventual structure of the foundation. In the same regard, the composition of the MAS’ board worked really well in this regard in keeping a finger on the pulse of how the members might receive the proposal, our board structure by constitution is a mix of health practitioners who are in a sense member representatives and also commercial directors. The member representative practitioner directors had a very strong sense of how members would receive the proposal, and again, that helped calibrate where we got to before we actually put it out to the members for a vote.

Mike Davy:

I’ll carry on from there. Look, just to continue that thought a way better in case you didn’t pick up everything in that section, the main point there is we decided that one of the best ways to showcase our purpose and step into this social and environmental impact was to make sure that we were aligning our business to have that impact on communities and we thought that there would be no better way to do that than actually get charitable status, in which case we didn’t pay income tax, but it allowed us to establish and fund a foundation that invests in the health of New Zealand communities, particularly ones that don’t have the same privileges that all of us do in New Zealand society.

This has become a very important piece and we have just been recently doing some focus group research with our members around the idea of a few different constitutional things. But one thing we do touch on and check in on is what the reaction is to our purpose driven growth approach, and one thing I would note strategically for us is that we are finding through those focus groups that members are more inclined to think favorably about the mutual, they’re also more inclined to think favorably about buying products through the mutual, but they’re also more inclined to want to have a closer look at our governance and be part of our voting structure and things that come through annually during the meetings because of the step we’re taken.

All of that really suggests to me that there is a higher level of commitment and Goodwill from the membership because of a purpose driven approach, which is an important thing to note in this webinar.

Very quickly I’ll describe our target market and our approach now to take it, and then we’ll open up for questions because I’m mindful we’re drawing to a close of our time. Our new target market looks very similar in fact to the professional market we’ve always been targeting. We see the very urban centered 25 to 45 year old, very career minded, higher income, higher education, we find that they’re already thinking about things that are charitable, they’re already very involved in their communities, but because of this combination they’re also very time poor.

That’s where we traditionally have stepped in and had a real advantage in the market because one thing we’re very good at is helping time poor professionals do business with us. Just interestingly, when we did our research, when we asked and described this mutual if it was purpose driven, we found that of the total population that may be available to take insurance, 25% of that total market said, “That sounds really attractive and it sounds like something I would look to prioritize.” Then when we asked again, “Well, would you trade off on price?” Because there’s a large portion of the market that is still very price driven, we found that 16% of the total market would trade off on price for that proposition. That becomes our warmer target market and we feel that that’s a substantial enough population given our market sheer size today for us to fill our boats with, to be honest.

We saw that number one are having a very good reputation was still incredibly important to this part of the market, but the extra thing that they love the sound of as this, this multiplier effect where they can have their product, it can be doing good on their behalf at the same time. This combination of good product, excellent service, and we’re renowned for our personalized service, combined with a product that would do good on their behalf was really important to them. 72% of them said they’re more likely to take a policy very quickly with us because of that and 89% of our target market said, “We think other companies should be more like you,” in which really validated our challenger positioning.

As we come to market, we’re starting to think about how we communicate as a mutual differently. This idea that we’re an insurer driven by purpose not by profit is something that we’re going to test out there with our marketing very shortly, I’m looking forward to that. Haven’t got any results to share with you yet, but this idea that house, car and contents insurance, for example, that inspires a healthier community is going to be intriguing. We have done a little bit of testing on this and we think it will be intriguing enough for people to go, “What’s this company that’s doing these things and then profit is a secondary thing?” On that note, Ben, I will happily open this up for questions.

Ben Telfer:

Thank you very much, Mike and Matt, thank you as well.

We do have a number of questions and I don’t think we’re going to get to all of them, but we still have a good five minutes here to go through some of the questions that have come in. First question that I will pose to you, were there any negative implications by extending your eligibility criteria?

Martin Stokes:

We were conscious, we didn’t want to alienate our existing membership, we didn’t want to compromise the trust that had been established over a long period of time. We certainly wanted to get a sense from them, whether they were comfortable with the expansion of membership over time and explained why we needed to do it as well. For the most part, we’ve had a pretty positive response to that and an appreciation of the importance of being able to do it, in fact how critical it is ultimately to sustainability.

Ben Telfer:

Thank you, Martin. Another question here, after the conversion to a charitable organization, do your members still receive dividends?

Matt Judge:

Yeah, we’ve been around for a hundred years, we’ve never paid a financial dividend to members and there’s never been any demand for a dividend for our members. That’s not something we’ve done, but as part of the transition members gave up the rise or the theoretical possibility to receive a distribution in the future.

Ben Telfer:

Thank you, Matt. Another question here, it’s a three-part question, but it looks at the impact of the pandemic on MAS’ new strategy and has it influenced, A, the board’s decision to adapt to the purpose driven approach, B, has the growing sense of purpose and community amongst New Zealand consumers impacted the new strategy and also the whole idea of health being top of mind since early 2020, have these had an impact on MAS’ execution of the strategy over the past year?

Martin Stokes:

That’s a good question which we may not be in a really good position to answer until we can perhaps look more backwards at it rather than being in the middle of it. But my view at present is that the pandemic has focused people’s attention more on what’s really important to them and perhaps rethinking some of their values. Certainly as a nation we’ve pretty much locked our borders, we’ve had to from time to time go through periods of where there’s been a significant hardship for various sectors of our economy, those particularly reliant upon overseas earnings, tourism, hospitality, and so on.

There is a sense of community, a sense of trying to find ways to look after each other, in a sense of perhaps realignment of values. Those things have all coincided with our developing view that we need to shift our purpose from being solely focused on providing great service to our members, to thinking more about, we’re not just alongside this community, we are actually part of this community, so how can we leverage our endowments as Mike described them before to actually benefit that community?

The examples for me included very early on in 2020, as we went into full lockdown in the country, not only were we thinking about how we can help our own members, but the foundation as Matt mentioned, had been established just three months earlier. Even though the foundation strategy is primarily about helping those parts of our community that are disadvantaged or have inequality of access to health services and so on, the foundation quickly pivoted toward providing support and grants that were COVID related.

That ability to think about how we can be more meaningfully helpful without having to go through some bureaucratic process to do so, has shown up in a really positive way for the way not only our existing members think about us, but this target market that Mike’s described, will respond positively to what our proposition is. It will be good for the mutual.

Ben Telfer:

Excellent. Thank you, Martin. We’ve got time for two more questions. What market share difference do you expect to come out of this new strategy?

Martin Stokes:

If we have to double our revenues, we’re going to have to more than double our market share. We’re fortunate that the average relationship we have with our existing membership is quite large because of their profession, they’ve got sizable incomes, they’ve got sizeable net worth, this wider market that we’re looking to move into tends to be younger, they’ll have low net worth, requirement’s will not be as much. To double revenues, we’re actually going to have to do much more than double our market share. Matt, will probably be in a better position than I am to give you more precise numbers on that, but we might have to go to something like three times.

Matt Judge:

Over the course of five years with inflation impact, if we doubled the market share we would do a lot more than that from a revenue perspective, going from 1.5% to 3% got over that time horizon.

Ben Telfer:

Thank you, Matt. Thank you, Martin. Just finally our last question, this is a great question. If someone asks, is MAS an insurer, what do you say and what do you think you will say in five or 10 years time?

Martin Stokes:

The answer has to be that we are an insurer, but is that our primary purpose anymore? The answer to that will probably be no, insurance or investment management or life insurance management, all these are activities that allow us, give us permission, give us a social license if you like to achieve the much broader and more important objective that we’ve set ourselves, which is inspiring a healthy New Zealand. They’re means to an end, they’re important and it’s important that we continue to do them really well and not take our eye off the ball there, but they are the things that give us the leverage to do the more noble cause that we’ve set ourselves.

Ben Telfer:

Mike or Matt, anything to add on that?

Mike Davy:

Look, from my perspective when I listen to members, they actually tell us first and foremost, they say, “We love what you’re doing, don’t stop being a great insurance company with great service.” It’s a gateway to play and we do think that people will come and check us out because of what we stand for and what we’re doing and if they have to choose their insurance they’ll have to go at one place or another, we hope they will choose us, but it still comes with an expectation that we will perform as an excellent insurance company. Our NPS is through the roof and our advocacy is through the roof, we can’t afford to let that Goodwill erode. Yes, we’re a purpose-driven insurer.

Matt Judge:

My first response probably would have been well, insurance is only two thirds of what we do. We’ve actually got a growing investment business and that’s the fastest growing part of MAS by a long way. But this is an end story, we will continue to do what we do really well in terms of general insurance, life insurance and investment products and the high levels of service that goes with that. But what we’re adding to the reason to join MAS is that purpose driven approach.

Ben Telfer:

Fantastic. Thank you very much and I will conclude the webinar there. Mike, Martin, Matt, thank you so much for that insightful presentation into MAS’ new purpose-driven strategy and for those fantastic videos and just would like to join you in your celebrations, not just for MAS’ hundredth anniversary, but also for the cricket earlier, congratulations to everyone over there.

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