Nib Holdings Ltd · ASX:NHF
Nib — J.P. Morgan Access Days 2015
23 slides from Nib's conference presentation, Feb 11, 2016
Slide 1: Presentation to J.P. Morgan Access Days – March 2015
nib holdings limited t 13 14 63 Head Office f 02 4925 1999 22 Honeysuckle Drive Newcastle NSW 2300 e nib@nib.com.au abn 51 125 633 856 w nib.com.au 19 March 2015 The Manager Company Announcements Australia Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 2000 Presentation to J.P. Morgan
Slide 2: 2015 J.P. Morgan Access Days
2015 J.P. Morgan Access Days March 2015 All figures in this document are represented in Australian dollars unless otherwise stated
Slide 3: Agenda
Agenda • Healthcare in Australia • nib key performance metrics • Overview and results to date • Australian Residents Health Insurance • nib New Zealand • International Workers Health Insurance • International Students Health Insurance • Other business
Slide 4: Healthcare in Australia
HEALTHCARE IN AUSTRALIA Australian healthcare spending ($b) Components of healthcare spending Government Non-Government Other 160.0 6% Individuals 120.0 18% Australian Government 38% 80.0 Health Insurance# 11% 40.0 State Government 0.0 27% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * Sou
Slide 5: PHI Structure in Australia
PHI STRUCTURE IN AUSTRALIA • At 30 June 2014 there were 34 private health insurers operating in Australia. • Top five PHI players represent 81% of the polices nationally. • For profit insurers make up around 68% of the industry. • Direct to Consumer (DTC) accounts for ~85% sales. • Policies are comm
Slide 6: nib Key Performance Metrics
nib KEY PERFORMANCE METRICS Group premium revenue ($m) Group operating profit ($m) First half (1H) Full Year First half (1H) Full Year FY15 guidance range ($75m-$82m) 1,500.0 80.0 60.0 1,000.0 40.0 500.0 20.0 0.0 0.0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1H15 FY08* FY09 FY10 FY11 FY12 FY13 FY14 1H15 Re
Slide 7: nib Key Performance Metrics
nib KEY PERFORMANCE METRICS Dividend (cps) Net promoter score* NPS (Australia) NPS (NZ)* Ordinary Dividend Special Dividend Capital Return 30.00% 30.0 20.00% 25.0 10.00% 20.0 16.1 0.00% 15.0 9.0 -10.00% 10.0 5.0 -20.00% 5.0 5.0 9.3 10.0 11.0 7.0 8.0 -30.00% 5.5 2.1 2.4 0.0 FY08 FY09 FY10 FY11 FY12 F
Slide 8: Australian Residents Health Insurance (arhi)
AUSTRALIAN RESIDENTS HEALTH INSURANCE (arhi) Premium revenue ($m) Policyholder growth Half Year (1H) Full Year Industry growth (%) nib growth (%) 1,500.0 12.00% 1,000.0 8.00% 500.0 4.00% 000.0 0.00% FY08 FY09 FY10 FY11 FY12 FY13 FY14 1H15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Operating profit ($m) 1H15
Slide 9: arhi Outlook
arhi OUTLOOK Industry policyholder growth Industry policyholder growth (%) • Ongoing annual system policyholder growth circa 2%-3% with nib expected to grow in range 4%-5%. 300,000 6.0% Intense competition and churn the new “normal” with implications for net growth and required level 200,000 4.0% of
Slide 10: nib New Zealand (nib NZ)
nib NEW ZEALAND (nib NZ) Premium revenue ($m) Policyholder growth Half Year (1H) Full Year Launch of DTC in October 2013. Sales of DTC now account for 150.0 more than 50% of all sales. 80,000 100.0 75,000 50.0 0.0 FY13* FY14 1H15 70,000 * nib New Zealand acquired November 2012, FY13 represents 7 mon
Slide 11: New Zealand Outlook
NEW ZEALAND OUTLOOK • Focus will remain upon building business fundamentals: • nib brand awareness. • Improved operating model for wealth advisor sales and distribution. • Direct to Consumer (DTC) channel. • Competitive group offering. • Extracting synergies with Australia. • Profitability will cont
Slide 12: International Workers Health Insurance (iwhi)
INTERNATIONAL WORKERS HEALTH INSURANCE (iwhi) Premium revenue ($m) Policyholder growth Half Year (1H) Full Year iwhi growth (actual) iwhi growth (%) 30.0 3,000 20.0% 20.0 15.0% 2,000 10.0% 10.0 1,000 5.0% 0.0 FY11* FY12 FY13 FY14 1H15 0 0.0% FY11 FY12 FY13 FY14 * FY11 was a 9 month result, IMAN busi
Slide 13: iwhi Outlook
iwhi OUTLOOK International workers (iwhi) • 457 visa entries remain steady Number of 457 visas in Australia causing us to also focus upon other visa classes and distribution 100,000 possibilities. • Competition will see some insurance margin pressure 50,000 (yield), with strategies intended to more
Slide 14: International Students Health Insurance (ishi)
INTERNATIONAL STUDENTS HEALTH INSURANCE (ishi) Premium revenue ($m) Policyholder growth* Half Year (1H) Full Year ishi growth (actual) ishi growth (%) 10.0 20,000 350.0% 8.0 16,000 250.0% 6.0 12,000 150.0% 4.0 8,000 50.0% 2.0 4,000 0.0 0 -50.0% FY11 FY12 FY13 FY14 1H15 FY12 FY13 FY14 * FY11 ishi pol
Slide 15: ishi Outlook
ishi OUTLOOK International students (ishi) International student visas granted (500 class) in Australia • Powerful organic growth supported by clear business and distribution 300,000 strategy. • Saudi student business increases 200,000 annual GWP x 2 and is expected to contribute towards future earn
Slide 16: Other Business
OTHER BUSINESS nib Options Leverages nib’s brand reputation and distribution to support and grow the market for overseas cosmetic, dental and surgical treatment Initial efforts focus upon cosmetic surgery and dental Value proposition centred around trustworthiness, safety and choice Involves
Slide 17: FY15 Guidance
FY15 GUIDANCE • FY15 consolidated operating profit of $75m-$82m, with result likely to be at the lower end of this range. • FY15 investment income forecast to be in line with relevant internal benchmarks*. • Ordinary dividend payout ratio 60%-70% of full year NPAT. * Excluding gain on sale from Paci
Slide 18: High Quality, Independent Equity Research
HIGH QUALITY, INDEPENDENT EQUITY RESEARCH J.P. Morgan Siddharth Parameswaran (Insurance) Macquarie Securities Tim Lawson (Insurance) Goldman Sachs Ian Abbott (Health) Bank of America Merrill Lynch Toby Langley (Insurance) Deutsche Kieren Chidgey (Insurance) Citi Mark Tomlins (Insurance) Credit Suiss
Slide 19: nib Appendix
nib APPENDIX
Slide 20: About nib
ABOUT nib FY14 Group premium revenue of $1.5b, operating profit of $72.3m, net profit after tax of $69.8m More than 830 employees in Australia and New Zealand Australia’s 4th largest private health insurer, New Zealand’s 2nd largest private health insurer Market capitalisation ~$1.5b (439m s
Slide 21: PHI Covers
PHI COVERS Australia New Zealand Public Hospital (accommodation, theatre, etc), choice of specialist Private Hospital (accommodation, theatre, etc), choice of specialist Medical specialist (surgeon, anaesthetist ) in hospital Medical specialist (surgeon, anaesthetist ) outside hospital General Pract
Slide 22: nib's Business Strategy Is Clear and Focussed
nib’s BUSINESS STRATEGY IS CLEAR AND FOCUSSED Grow our Australian residents health insurance business (arhi) organically at circa 10% annual premium growth 1 (4-5% policyholder growth) through building national brand presence and with an emphasis on <40 market (Virgin Green), >55 market (Virgin Silv
Slide 23: Risk Equalisation – How It Works
RISK EQUALISATION – HOW IT WORKS The current Risk Equalisation Trust Fund (RETF), which has been in place since 1 April 2007, consists of two elements • Gross deficit (what we ‘get back’ from the pool) Consists of the Age Based Pool (ABP) and the High Cost Claims Pool (HCCP). The ABP makes up arou