Nib Holdings Ltd · ASX:NHF
Nib — FY2023 Earnings Presentation
43 slides from Nib's earnings presentation, Aug 21, 2023
Slide 1: FY2023 Full Year Results
FY2023 Full Year Results 21 August 2023
Slide 2: Disclaimer
Disclaimer The material in this presentation is a summary of the results of nib holdings limited (nib) for the 12 months ended 30 June 2023 and/or its related bodies corporate and an update on nib’s activities and is current as at the date of preparation, being 21 August 2023. Further details are pr
Slide 3: Acknowledgement of Aboriginal and Torres Strait Islander peoples
nib acknowledges Aboriginal and Torres Strait Islander peoples as the First Australians and pays respect to Elders past and present across all the lands on which we operate. We acknowledge the rich and meaningful contribution they make to life and culture in Australia, and we aim to be a partner in
Slide 4: Mark Fitzgibbon
Mark Fitzgibbon Chief Executive Officer & Managing Director
Slide 5: Our purpose: Your better health and wellbeing
Our purpose Your better health and wellbeing • Deliver deep insight and guidance about how you may best achieve personal health and wellbeing goals and manage risk. • Connect you with a wide ecosystem of relevant and high-quality products, services, programs and providers. • Render it all accessible
Slide 6: Purpose measures FY23
Purpose measures FY23 Engagement with Rate of Health & wellbeing health & wellbeing chronic conditions3 services outcomes2 services1 87,000+ 57% 237 of participants on the Hospital Support We monitor prevalence and type of member interactions with 54 Program who achieved the target chronic condition
Slide 7: FY23 highlights
FY23 highlights • arhi policyholder growth of 4.7%, highest in 8 years, and more than double expected industry average. Net margins declined YoY towards 6-7% target as anticipated. • Total claims paid $2.2 billion, up by 6.6%. We announced $71.0 million in COVID-19 compensation for members. • iihi m
Slide 8: FY23 Group financial highlights
FY23 Group financial highlights Group revenue1 Group UOP2 Net investment income Net profit after tax $3.1b $263.2m $54.7m $191.1m ▲282.3% ▲10.9% ▲11.1% 3.1 54.7 ▲42.8% 263.2 191.1 2.8 237.0 (30.0) 133.8 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 ROIC3 Earnings per share4 Full year dividend Group NPS 18
Slide 9: Nick Freeman
Nick Freeman Group Chief Financial Officer
Slide 10: Group income statement
Group income statement • Strong premium revenue growth at +7.7% (+8.3% Financial performance ($m) FY23 FY22 Change adjusting for givebacks2) due to strong, above Net premium revenue 2,911.5 2,703.4 ▲7.7% industry, policyholder growth. Net claims incurred1 (2,223.4) (2,085.0) ▲6.6% • Claims growth re
Slide 11: Group gross profit drivers
Group gross profit drivers ($m) FY22 FY23 Change • Strong policyholder growth and low FY22 Group gross profit 637.1 downgrading continues. Policyholder growth 48.7 • $14.4m in outstanding claims (OSC) Premium revenue 137.5 development and risk margin change in FY23 Claims expense (88.8) includes ris
Slide 12: Earnings in developed adjacencies returning with investment in developing adjacencies
Earnings in developed adjacencies returning with investment in further developing adjacencies UOP ($m) FY19 FY20 FY21 FY22 FY23 • arhi margins moving towards arhi operating segment 149.5 130.4 214.2 240.5 222.9 target range coinciding with improved profitability in other arhi net margin 7.3% 6.2% 9.
Slide 13: Australian residents health insurance
Australian residents health insurance Financial performance ($m) FY23 FY22 Change 4.7% policyholder growth, best in 8 years FY23 v FY22 Premium revenue 2,426.6 2,286.2 ▲6.1% • Revenue growth of 6.1% (6.8% excluding Claims expense1 (1,916.3) (1,807.8) ▲6.0% giveback impacts) due to 4.7% policyholder
Slide 14: arhi policyholder growth
arhi policyholder growth Above system growth in every year for the last 20 years Cumulative arhi policyholder growth since FY02 200% 184.1% 180% 160% 140% 120% nib CAGR: 5.4% 9 months to March 23: industry 1.3% 100% nib 3.6% 80% 60% 53.6% Industry CAGR: 2.2% 40% 20% 0% FY02 FY03 FY04 FY05 FY06 FY07
Slide 15: arhi trends
arhi trends Revenue vs claims per policy Claims experience FY20-FY23 nib monthly claiming, % above or below pre COVID-19 trend $4,000 $3,500 $3,000 $2,500 $2,000 Nov-20 Jan-21 Nov-21 Jan-22 Nov-22 Jan-23 Sep-20 Sep-21 Sep-22 May-20 May-21 May-22 May-23 Mar-20 Jul-20 Jul-21 Jul-22 Mar-21 Mar-22 Mar-2
Slide 16: International inbound health insurance
International inbound health insurance Financial performance ($m) FY23 FY22 Change Return to profit with record premium revenue FY23 v FY22 Premium revenue 151.4 123.7 ▲22.4% • Premium revenue growth of 22.4% with Claims expense1 (87.5) (85.8) ▲2.0% continued strong performance from iwhi and improve
Slide 17: New Zealand
New Zealand Change Very strong UOP, some one offs, but another FY23 v FY22 Financial performance ($m) FY23 FY22 Change excl good year FY23 v FY22 life and living1 & int'l visitors2 • Excluding one off DAC adjustment in FY22, FY Premium revenue 330.4 291.8 ▲13.2% ▲10.1% 22 UOP would have been $27.4m
Slide 18: nib Travel
nib Travel Financial performance ($m) FY23 FY22 Change FY23 v FY22 Travel turnaround to strongest annual GWP & UOP Underwriting result 0.2 (0.3) ▲166.7% • Realisation of the pandemic recovery strategy has Operating income 113.2 46.6 ▲142.9% led to FY23 UOP of $14.0m, a swing of $21.4m from Acquisiti
Slide 19: nib Thrive
nib Thrive nib Thrive NDIS strategy progressing well with positive EPS outcome Inorganic & • Four plan managers acquired totalling $117.4m1. organic growth • 27,373 participants, with 16% annualised organic growth under nib ownership. • FY23 margins relatively low and impacted by investment to uplif
Slide 20: Capital management
Capital management Increase resulting from Cash used to acquire capital raise in Oct NDIS assets with and Nov 2022 high intangibles nib Group ($m) FY23 FY22 Change Net assets 983.9 734.3 ▲34.0% nib Group nib health funds net tangible assets ($m) net tangible assets ($m) Net tangible assets1 331.8 25
Slide 21: Cash flow
Cash flow Consolidated cash flow ($m) FY23 FY22 Change • International recovery and strong arhi and nz FY23 v FY22 performance driving increase in operating cash inflows. Operating cash inflows 3,288.2 2,916.9 ▲12.7% • Cash outflows impacted by increased in paid claims after Operating cash outflows
Slide 22: Roslyn Toms
Roslyn Toms Group Executive Legal & Chief Risk Officer
Slide 23: Sustainability – FY23 highlights
Sustainability – FY23 highlights Over 19,000 members enrolled Completed a new Climate change in health management programs scenario analysis to improve nib’s (annual target 12,000). climate change resilience. Over 25,000 member All leaders identified as having Population HealthChecks executive poten
Slide 24: Sustainability – FY24 targets and future focus
Sustainability – FY24 targets and future focus 42,000 members 20,000 members enrolled 28,000 health assessments participating in a general in health management Launch care navigation Population Health or screens undertaken by health interaction across programs across the pathway in Bourke, NSW nib m
Slide 25: Mark Fitzgibbon
Mark Fitzgibbon Chief Executive Officer & Managing Director
Slide 26: Business strategy – Payer to Partner (P2P)
Business strategy – Payer to Partner (P2P) We apply data science and predictive analytics in developing deep insight into the health risk of individuals and how it may be best managed. Similar analytics assist participants in how they might achieve their goals. We equip them with integrated online a
Slide 27: P2P ecosystem
Financial protection Insight and and support guidance private health insurance, travel insurance, HealthCheck and Good Health Plan, life and living benefits, NDIS plan management health score, e-triage, find a provider, social prescribing Healthcare networks P2P ecosystem Healthcare products and pro
Slide 28: Developing adjacencies: Honeysuckle Health and Midnight Health results
$5,600 94,635 70% of regional 14,000+ average savings per ISP1 consults provided postcodes serviced participant since launch participants in Health Management Programs +70 NPS 362% 27 products 51% enrolment growth revenue growth in market for all HMPs High participants growth and satisfaction built
Slide 29: nib Thrive strategy and vision
nib Thrive strategy and vision • Core technology platform implementation and integration underway to improve customer experience and deliver cost synergies. • Further acquisition opportunities continue to be assessed in NDIS both plan management and support coordination. ~600,000 participants • Cont
Slide 30: Outlook - supporting thematics
Outlook - supporting thematics • Growing expenditure on healthcare • Low confidence in public system and waiting times • Increasing PHI coverage and immigration • Appetite for foreign workers and return of foreign students • Enthusiasm for domestic and international travel • Increasing NDIS particip
Slide 31: Outlook
Outlook arhi iihi NZ • Continue to recover strongly • FY24 net policyholder growth • FY24 net residents and margins stabilising. 3-4 %. PHI policyholder growth 3-4%. • Student policyholders • Claims moving back toward • Net margin 8-9%. rebounding. pre COVID-19 of 4-6% but with • Continued growth an
Slide 32: Questions and answers
Questions and answers asnib
Slide 33: Appendix
Appendix asnib
Slide 34: Key trends
Key trends PHI participation rate (AU)1 Student visas lodged (AU)2 Workers visas lodged (AU)2 70,000 45,000 60,000 50,000 35,000 40,000 25,000 30,000 20,000 15,000 10,000 5,000 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Jul-16 Nov-16 Jul-17 Nov-17 Jul-18 Nov-18 Jul-19 Nov-19 Jul-20 Nov-20 Jul-21 Nov-
Slide 35: Bringing P2P to life
Bringing P2P to life Growing our non-PHI Driving PHI attraction and membership via new retention through an market ventures enhanced member CVP Creating seamless Improved health outcomes digital health leading to claims cost experiences containment Stronger provider Leveraging data and next partners
Slide 36: P2P through the eyes of the customer - the nib app
P2P through the eyes of the customer - the nib app Deliver a personalised and seamless digital-first health experience that makes the nib app the primary health tool for members. 6. Wei requires a knee replacement and is guided into our no Out of 1. Upon joining nib, Wei downloads Pocket Clinical Pa
Slide 37: Policyholder data
Policyholder data nib Group policyholders (#) FY23 FY22 FY21 FY20 FY19 Total persons covered 1,813,773 1,715,081 1,644,887 1,616,263 1,579,694 Australian residents health insurance 1,314,131 1,255,265 1,224,320 1,186,805 1,176,154 International (inbound) health insurance 212,643 181,181 187,410 202,
Slide 38: Detailed Group gross underwriting
Detailed Group gross underwriting Underwriting result ($m) FY23 FY22 Change Total claims and claims liability – arhi only ($m) FY23 FY22 Net premium revenue 2,911.5 2,703.4 ▲7.7% Outstanding claims liability (OSC) arhi 2,426.6 2,286.2 ▲6.1% Outstanding claims – central estimate 164.2 113.7 iihi 151.
Slide 39: Management expenses
Management expenses Expenses ($m) FY23 FY22 Change Core arhi operating segment1 293.5 244.6 ▲20.0% Acquisition costs 138.5 117.3 ▲18.1% Other expenses 155.0 127.0 ▲22.0% Other expenses (below underwriting) 0.0 0.3 ▼100.0% Other developed operating segments 245.7 193.6 ▲26.9% iihi 44.0 41.6 ▲5.8% Acq
Slide 40: Investments, gearing and capital
Investments, gearing and capital Change Funds invested $m FY23 FY22 $m FY23 FY22 FY23 v FY22 Defensive Net investment income 54.7 (30.0) ▲282.3% 33.7 Net investment income (8.9) Net investment return (%) 4.2 (2.4) ▲660 bps Net investment return (%) 3.2 (1.0) Funds invested 1,319.9 1,225.2 ▲7.7% Fund
Slide 41: Investment asset allocation
Investment asset allocation Consolidated Australian investment portfolio New Zealand investment portfolio nib foundation investment portfolio Net return Net return Net return Net return Balance Allocation Balance Allocation Balance Allocation Balance Allocation 12 months 12 months 12 months 12 month
Slide 42: Other income and expenses
Other income and expenses Net other income & expenses by segment FY23 FY23 FY23 FY22 FY22 FY22 Change ($m) income expense net income expense net FY23 v FY22 arhi 2.8 0.0 2.8 2.8 (0.3) 2.5 ▲12.0% nib NZ 2.9 (1.5) 1.4 0.0 0.0 0.0 n/a nib Travel 113.2 (99.4) 13.8 46.6 (53.7) (7.1) ▼294.4% Midnight Heal
Slide 43: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year Net claims expense Claims expense net of reinsurance 2H Six months ended/ending 30 June of the relevant financial year Net margin Gross profit less management expenses as percentage of net