The almost $5 billion surplus generated by the Accident Compensation Commission (ACC) in the last financial year has caught the country by surprise.
As there's no such thing as good news, the ACC's turnaround has been labeled as "obscene" by some claimants on the receiving end of the group's "improved rehabilitation services".
I had the same reaction when my opening my ACC levy invoice this morning, prompting an internally-voiced obscenity.
True, my ACC impost has been cut back over the last couple of years but it still seems absurd relative to the risks incurred by sitting in a swivel chair.
The explanatory documentation, however, makes clear that most of my ACC levy - over 70 per cent - has been designed to provide "cover for non work injuries".
I need to get out more.
But while not much has changed for me risk-wise since I last complained about the levy in 2009, ACC itself has been through some miraculous transformations.
In fact, the 2009 result is almost an exact inverse image of the latest ACC figures with a loss reported then of about $4.5 billion.
This year's result, representing a close to $10 billion reversal of misfortune in just four years, suggests there's some latitude in interpreting short-term figures for such a long-term enterprise as ACC.
Much of the current ACC buoyancy is due to improved investment conditions and revised interest rate assumptions.
Interestingly, the ACC investment strategy is weighted toward "long duration" New Zealand bonds, which, tend to lose value when interest rates rise, as has been the case this year.
The investment section of the ACC annual report explains why interest rate moves cut both ways as far as claims liability modeling goes:
"The rise in New Zealand bond yields adversely affected our investment income this year, but it brings some relief in terms of the returns that we can anticipate from bonds in the future," the ACC report says. "In ACC's financial statements, this is reflected in a higher discount rate used to value ACC's claims liabilities, which in turn has a downward influence on the overall value of our claims liability."
Despite earning a respectable 9.89 per cent over the last financial year (surprising the ACC "in a year when long-term bond yields rose by 0.7 per cent"), the report does acknowledge that could look anaemic compared to other investment entities.
"Our return for the 2012/13 year probably lagged the returns achieved by some other funds that have a greater amount invested in equity markets and don't have the large investment in long-duration bonds that ACC holds to help match its liabilities," the report says.
That said, ACC invests about 40 per cent of its fund in equities, of which it manages most of the Australasian shares and some global stocks in-house.
And while across its entire portfolio the ACC fund is New Zealand-heavy (it owns about 3.5 per cent of NZX shares, for example), the sheer flood of money coming its way over the next few years could force it more offshore.
"As ACC's total investment funds continue to grow over time, it will not be possible to maintain the same percentage allocation to New Zealand investment markets without holding a bigger and bigger slice of those markets," the report says. "This could make it increasingly difficult for ACC to outperform the market as a whole. This is a key consideration when deciding how our allocation to investment markets should evolve over time."