Slide 1: 2022 full year results
2022 full year results Investor presentation 18 August 2022 David Koczkar – Chief Executive Officer Mark Rogers – Group Executive Chief Financial Officer & Group Strategy
Slide 2: Important notice
Important notice The information contained in this presentation is general information only. The Such forward‐looking statements involve known and unknown risks, uncertainties and information contained in this presentation is not investment or financial product advice other factors. The nature of su
Slide 3: Acknowledgment of Country
Acknowledgment of Country Medibank acknowledges Aboriginal and Torres Strait Islander peoples as the First Peoples of this nation. We proudly recognise Elders past, present and emerging as the Traditional Owners and Custodians of the lands on which we work and live. We’re committed to supporting sel
Slide 4: Highlights
Highlights David Koczkar Chief Executive Officer
Slide 5: FY22 highlights
FY22 highlights We continue to deliver for our customers Experience Maintaining high levels c. 1.4 m (+12%) c. 504 k of customer advocacy1 customers registered for health cover check ins 45.3 (+8.2) Medibank My Medibank app, with c. 23 % growth in claims 42.4 (-0.6) ahm made through the app Value c.
Slide 6: FY22 financial results summary
FY22 financial results summary Strong result reflects growth across our business alongside ongoing cost discipline Customer outcomes +60.9k (+3.2 ) % +5.8k $5.7 b (+1.9%) reported net resident reported net resident customer claims1 policyholder growth policyholder growth in July 2022 Key financial m
Slide 7: Sentiment towards health will support industry growth
Sentiment towards health will support industry growth Participation remains strong as affordability and value become increasingly important to Australians Industry participation remains strong Consumers seeing more value in PHI Health spending is less discretionary • Seven consecutive quarters of gr
Slide 8: There are challenges in the delivery of healthcare
There are challenges in the delivery of healthcare The industry needs to act to create a health system fit for the future Median waiting time for elective surgery and % admitted Immediate challenges accelerate the need for our industry to act within recommended time for public hospitals5 • Costs are
Slide 9: Megatrends in health will drive sustainable patient-centric outcomes
Megatrends in health will drive sustainable patient-centric outcomes Industry fundamentals are changing Consumerisation The shift to The rise of new Outcome-based of health2018 prevention care settings care 2017 2020 Historic state Passive approach to receiving care Treating preventable disease Stan
Slide 10: Our strategy
Our strategy Growing as a health company Deliver leading Differentiate our Expand experiences insurance business in health Create personalised and Deliver more value, choice Focus growth on prevention connected customer experiences and control for customers and integrated care models Empower our peo
Slide 11: Deliver leading experiences
Deliver leading experiences FY22 key achievements FY23 focus Personalised and connected customer experiences • Created a digital health ecosystem with the integration of Live Better and • Create a personalised digital gateway between our customers My Medibank and health services • Enhance the breadt
Slide 12: Differentiate our insurance business
Differentiate our insurance business FY22 key achievements FY23 focus High quality growth in both brands • Our customer first approach continues to be the • New to industry and young cohorts c. 70% of new joins foundation for differentiation and growth • Growth in corporate and non-resident markets
Slide 13: Expand in health
Expand in health FY22 key achievements FY23 focus Prevention and integrated care models • Scale preventative programs and Live Better • Strong uptake in prevention and health and wellbeing • Develop virtual primary allied health services including o 10k+ customers enrolled in preventative programs (
Slide 14: Financial results
Financial results Mark Rogers – Group Executive Chief Financial Officer & Group Strategy
Slide 15: Group financial summary
Group financial summary Medibank Health has made a significant contribution to Group operating profit growth Financial year ended 30 June ($m) 2021 2022 Change • Group operating profit up 12.5% Meaningful growth contribution from Medibank Health Group revenue from external customers 6,910.4 7,128.5
Slide 16: COVID-19 impacts – claims recovery
COVID-19 impacts – claims recovery Claims remain below underlying expectations, deferred claims liability continues to increase Private hospital claims1 Total3 • Vic/NSW down 7% (1H22: 0%), other states down 2% (1H22: +4%) 12-month rolling to May 22 $ growth vs pre-COVID-19 period2 • Staff shortages
Slide 17: Health Insurance result
Health Insurance result Continued strength in the resident business partially offset by closed borders impacting the non-resident business COVID-19 COVID-19 Major drivers of performance Financial year ended 30 June ($m) 2021 2022 Change impact1 Adj. • Strong resident policyholder growth Premium reve
Slide 18: Health Insurance – policyholders
Health Insurance – policyholders Strong resident policyholder growth of 3.2% Financial year ended 30 June ($m) 2021 2022 Change PHI market industry remains buoyant • Estimated 2.7% growth during FY22 including strong June quarter Policyholders1 (thousand): • High quality growth including in new to i
Slide 19: Health Insurance – underlying resident claims
Health Insurance – underlying resident claims Underlying resident claims growth per policy unit declined 20bps to 2.3% Financial year ended 30 June ($m)1 2021 2022 Change Indicative composition & movement $ value Claims expense (5,706.2) (5,954.4) 4.3% in dollar value1 vs. FY21 movement Risk equalis
Slide 20: Health Insurance – underlying portfolio performance
Health Insurance – underlying portfolio performance Well positioned for growth in FY23 with improved second half trajectory in non-resident business Resident Non-resident Total Financial year ended 30 June ($m)1 2021 2022 Change 2021 2022 Change 2021 2022 Change Premium revenue 6,754.8 7,082.3 4.8%
Slide 21: Health Insurance – management expenses
Health Insurance – management expenses Benefits of scale and productivity agenda delivered a 30bps reduction in underlying MER to 7.4% Financial year ended 30 June ($m) 2021 2022 Change Premium revenue 6,680.3 6,859.8 2.7% Management expenses (530.9) (536.1) 1.0% - Depreciation and amortisation (43.
Slide 22: Navigating the current macroeconomic environment
Navigating the current macroeconomic environment Well placed to manage a period of expected higher inflation Policyholder growth Downgrading Industry growth expected to soften Modest deterioration in downgrading expected off a low base • Expected to remain well above pre-pandemic levels • FY22: 60bp
Slide 23: Medibank Health result
Medibank Health result 44.9% growth in segment profit including a meaningful uplift in the contribution from healthcare investments Financial year ended 30 June ($m) 2021 2022 Change Largely offsetting COVID-19 impacts • Travel insurance impacted by closed borders Revenue 283.8 321.8 13.4% • Lockdow
Slide 24: Investment portfolio and investment income
Investment portfolio and investment income Investment income impacted by volatile markets but FY23 will benefit from increasing RBA cash rate Reported performance2 Underlying performance2 Financial year ended 30 June ($m) 2021 2022 Change 2021 2022 Change Net investment income: Growth portfolio inco
Slide 25: Capital and dividend
Capital and dividend Total dividend increased 5.5% and payout at the top end of our target range Health Insurance capital up $41.7m Financial year ended 30 June ($m) 2021 2022 • Ratio at the top end of 11% to 13% target range2 Total equity 1,906.1 1,945.6 • Increased due to premium revenue growth Le
Slide 26: Key areas of growth for FY23 and beyond
Key areas of growth for FY23 and beyond A number of avenues for growth which further diversify earnings • Maintain policyholder growth and focus on increasing market share Maintain momentum • Target growth in priority segments including corporate and regional customers in resident PHI • Manage opera
Slide 27: Conclusion
Conclusion David Koczkar Chief Executive Officer
Slide 28: Supporting customers with their mental health journey
Supporting customers with their mental health journey An example of our broad and unique capabilities Committing to Everyday Looking to take Looking for support professional support wellbeing care of yourself towards recovery Live Better Better Minds Hub 24/7 Medibank Find a Provider Medibank Health
Slide 29: We have multiple avenues for growth
We have multiple avenues for growth Through sustaining competitive advantages in PHI and opportunities in health We will continue to do the right thing by We have good momentum We remain focused on growing our customers leading into FY23 as a health company • We have a dedicated and passionate team,
Slide 30: FY23 outlook
FY23 outlook Customer • We continue to assess claims activity and any permanent net claims savings due to COVID-19 relief will be given back to customers through additional support in the future Policyholder • c. 2.7% assuming a modest decline in industry participation growth in FY23 relative to FY2
Slide 31: Appendix
Appendix
Slide 32: FY22 milestone scorecard
FY22 milestone scorecard Milestones1 FY22 outcomes Customer advocacy: Service NPS (average) Employee advocacy: eNPS Delivering leading FY21 FY22 FY22 benchmark2 FY21 FY22 FY22 benchmark3 experience Medibank 37.1 45.3 >35 Place to work +30 +27 ≥+24 ahm 43.0 42.4 >35 Products and services +26 +29 ≥+19
Slide 33: Summary of FY22 ESG achievements and progress
Summary of FY22 ESG achievements and progress Enabling the best health and wellbeing through embedding sustainability in our business FY22 key achievements1 Future focus • 55% growth in customers engaged with Live Better and preventative programs • Grow Live Better and preventative programs Customer
Slide 34: Live Better – everyday wellbeing proposition
Live Better – everyday wellbeing proposition Activities and inspiration Live Better Rewards • Free activities offered to broader public • c. 522k Live Better Rewards participants e.g. Smiling mind meditation, free fitness • The program is deeply integrated into Medibank extras and hospital covers cl
Slide 35: Reconciliation of reported to underlying claims and COVID-19 impacts
Reconciliation of reported to underlying claims and COVID-19 impacts COVID-19 impacts – Health Insurance Reconciliation of reported to underlying claims Financial year ended 30 June ($m) 2021 2022 Financial year ended 30 June ($m) 2021 2022 2 Deferral of April 2020 premium increase 96.0 - Total repo
Slide 36: Group financial summary – half by half
Group financial summary – half by half Change ($m) 1H21 2H21 1H22 2H22 2H22 v 2H21 2H22 v 1H22 1H22 v 1H21 Group revenue from external customers 3,442.2 3,468.2 3,581.2 3,547.3 2.3% (0.9%) 4.0% Health Insurance operating profit 254.6 284.0 280.9 311.7 9.8% 11.0% 10.3% Medibank Health segment profit
Slide 37: Health Insurance policyholders – half by half
Health Insurance policyholders – half by half Change 1H21 2H21 1H22 2H22 2H22 v 2H21 2H22 v 1H22 1H22 v 1H21 Premium revenue ($m) 3,324.5 3,355.8 3,452.0 3,407.8 1.5% (1.3%) 3.8% 1 Policyholders (thousand): Opening balance 1,806.6 1,855.6 1,889.1 1,917.2 3.3% 1.5% 4.6% Acquisitions 102.6 118.6 106.2
Slide 38: Investment portfolio
Investment portfolio Average Balance Portfolio Average Balance Target asset As at 30 June 2022 Spot Balance ($m) Portfolio composition ($m) allocation composition Australian equities 133.9 5.4% 130.2 5.4% 5.0% International equities 100.7 4.1% 118.6 4.9% 6.0% Property 182.9 7.4% 175.8 7.3% 7.0% Infr
Slide 39: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year Members An enhanced network of ancillary providers where customers can enjoy better value on eligible Choice extras services. Includes dental and optical providers, and from 1 July 2022, ph