A lift in interest rates and strong financial markets have delivered a paper surplus of $10 billion to the Accident Compensation Corporation, but it says levy rises are still needed.
ACC's annual accounts show its outstanding claims liability fell a net $6b to about $55b for the year ended June.
The corporation had posted combined losses of $15b over the previous two years as falling interest rates raised the cost of future claims.
Resurgent financial markets returned a better-than-expected return on ACC's investment portfolio which rose 10.4 percent to $50.3b.
"With the size of the scheme growing larger and larger to cater for the needs of New Zealanders, sizeable surpluses or deficits shouldn't be unexpected," newly appointed chair Steve Maharey said.
"Any surplus ACC makes is not a cash profit. It's reinvested back into the scheme to ensure New Zealanders pay less in levies."
ACC calculates the future cost of claims by looking ahead decades, with the higher or lower interest rates either lowering or raising the money needed to be set aside to fund those estimated costs.
The corporation's day to day cash operations had a deficit of $57m compared with a $414m surplus the year before.
The report said the opening up of the economy after last year's first Covid lockdowns resulted in a 13 percent rise in claims, while health and rehabilitation costs rose faster than inflation, and it took longer to get people back to work.
ACC's investments, which help finance future claims, were worth $50b.
Maharey said levy rates were still below the amount needed to fully fund the lifetime cost of injuries incurred during a year.
He said the shortfall in income for the past year had been funded by using $910m from its reserves.
"That is money that ACC would otherwise have used to invest. In the long term, income received from levies needs to at least cover these costs."