Nib Holdings Ltd · ASX:NHF
Nib — FY2019 Earnings Presentation
33 slides from Nib's earnings presentation, Aug 19, 2019
Slide 1: 2019 full year results
2019 full year results 19 August 2019 2 0 1 9 fu l l y e a r r e s u l ts 1
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 2019 and an update on nib’s activities and is current at the date of preparation, being 19 August 2019. Further details are provided in nib’s full year accounts and
Slide 3: Mark Fitzgibbon, Chief Executive Officer & Managing Director
• CLICK TO EDIT MASTER TEXT STYLES Mark Fitzgibbon Chief Executive Officer & Managing Director 2 0 1 9 fu l l y e a r r e s u l ts 3
Slide 4: Our purpose: your better health
Our purpose: your better health 98,730 Launch of Amazon Alexa Skill (in AU) to Member1 eligibility 3,869,527 help members find a checks completed by Ancillary visits provider the Going to Hospital Tool 333,244 23,975 $1.8b Hospital Travel claims Total claims paid3 up 6.9% admissions processed2 Note:
Slide 5: Delivering on our purpose
Delivering on our purpose More than In excess of Largest claim 3,300 4,500 knee $310,000+ births and hip replacements Public hospital ~2,300 members Rehabilitation with claims admissions admissions ~35,000 ~50,000 >$50,000 Note: FY19, based on arhi members only. iihi largest claim ~$171,000, nib New
Slide 6: Your better health in a sustainable way
Your better health in a sustainable way economic leadership and development & community spirit and population health natural environment governance employment cohesion Conduct and culture 1.6m members covered participation in APRA’s risk 67% female NEDs First waste audit conducted $1.8m funded by go
Slide 7: FY19 Group results
FY19 Group results Total Group Non-arhi contribution Net investment NPAT1 revenue to Group UOP income $2.4b up 8.3% 25.9% down 340bps $36.1m up 22.0% $149.3m up 11.8% Underlying operating Statutory EPS2 Final dividend Net promoter profit (UOP) (fully franked) with score3 DRP available $201.8m up 9.2
Slide 8: Michelle McPherson, Chief Financial Officer & Deputy CEO
• CLICK TO EDIT MASTER TEXT STYLES Michelle McPherson Chief Financial Officer & Deputy CEO 2 0 1 9 fu l l y e a r r e s u l ts 8
Slide 9: Group revenue & underlying operating profit
Group revenue & underlying operating profit $2,421.6m $201.8m Group underlying revenue1 Group UOP2 up 8.3% up 9.2% arhi iihi arhi iihi $2,016.0m $110.8m $149.5m $34.9m up 7.6% up 17.0% up 14.4% up 17.9% nz nib Travel nz nib Travel $215.5m $74.5m $19.8m $6.6m up 8.8% up 12.7% down 15.4% down 18.5% 1.
Slide 10: Group underlying operating expenses
Group underlying operating expenses Group underlying operating expenses1 have increased $51.9m, due to: - M&A and building economies of scale and scope (▲$13.1m) and primarily includes GU Health (12mth v 8mth), nib foundation consolidation as well as new business development (niss, nib Travel EMGA e
Slide 11: Australian residents health insurance
Australian residents health insurance Financial performance ($m) FY19 FY181 Change Double digit earnings growth with UOP up more than 14% Premium revenue 2,013.2 1,871.2 7.6% • Premium revenue ▲7.6% due to policyholder growth, premium adjustments and full 12 month Claims expense excluding OSC2 (1,65
Slide 12: Gross margin (arhi)
Gross margin (arhi) 2 0 1 9 fu l l y e a r r e s u l ts 12
Slide 13: Claims inflation (arhi)
Claims inflation (arhi) Rolling 12 month change in revenue, total costs, hospital and ancillary benefits (actuarial incurred1) per person arhi (excluding GU Health) • Hospital a key contributor of total claims costs, driven by a number of top hospital procedures2, with hospital psychiatric service b
Slide 14: PHI reforms (arhi)
PHI reforms (arhi) Making health insurance even better and easier to understand for our members One of the first funds to adopt most of the PHI Reforms with all policyholders on compliant products from 1 April 2019. • Over 15,500 hospital policies now covered with a $750 front end deductible, compri
Slide 15: International (inbound) health insurance
International (inbound) health insurance Financial performance ($m) FY19 FY181 Change Impressive result with improvement across key performance metrics Premium revenue 110.1 93.3 18.0% • Net policyholders ▲19.5% with almost 190,000 international student and workers now Claims expense (42.4) (36.6) 1
Slide 16: New Zealand
New Zealand Financial performance ($m) FY19 FY18 Change Solid result with margin and earnings consistent with long term strategy Premium revenue 215.5 198.1 8.8% • Premium revenue ▲8.8% a function of premium adjustments, policyholder growth and new Claims (medical & PPB1) (129.7) (117.2) 10.7% busin
Slide 17: nib Travel
nib Travel Financial performance ($m) FY19 FY18 Change Improved 2H result with global sales showing positive trajectory Underwriting result (0.8) - n/a • Pleasing sales result ▲6.8%, driving improved GWP ▲7.5%, due to: Operating income 72.4 66.1 9.5% ● Domestic market showing some sales stabilisatio
Slide 18: UOP to SOP
UOP to SOP FY19 FY18 Change • Increase in amortisation of intangibles (arhi and iihi) due to full 12 month contribution of GU Health (FY18 was a 8 month result). Underlying operating profit (UOP) 201.8 184.8 9.2% Amortisation of acquired intangibles (9.2) (8.4) 9.5% • Increase in one-off transaction
Slide 19: Investments, gearing, cash flow & capital
Investments, gearing, cash flow & capital • Net investment income improvement (1H19: $1.5m) due to positive equity performance in our growth FY19 FY18 Change portfolio. Net investment income ($m) 36.1 29.6 22.0% • Increase in finance costs due to GU Health acquisition (FY18: 8 months with business a
Slide 20: Mark Fitzgibbon, Chief Executive Officer & Managing Director
• CLICK TO EDIT MASTER TEXT STYLES Mark Fitzgibbon Chief Executive Officer & Managing Director 2 0 1 9 fu l l y e a r r e s u l ts 20
Slide 21: Risk culture and governance
• CLICK TO EDIT MASTER TEXT Risk culture and STYLES governance • As part of a recent APRA Risk Governance Self-Assessment we identified continuous improvement actions that are already driving change through: • Purpose before profits (remuneration structure and sales incentives); • Ensuring fit for p
Slide 22: Business strategy
Business strategy Personalised Affordability and Grow the core (arhi) Economies of scope Racing the Red Queen healthcare sustainability (RRQ) Strive for above “system” Leverage existing Group Harness data science and Improve the affordability of organic growth with measured assets and capabilities t
Slide 23: Key focus areas
Key focus areas • Data science and “personalisation” capability. • Improved member experience, reduced out of pocket expenses for members and digital engagement. • Active disease prevention and management (including population health management). • Operating costs and efficiency (especially indirect
Slide 24: Outlook
Outlook arhi iihi New Zealand nib Travel China health insurance • Organic growth 2%-3% • Continued organic growth. • Continued organic growth. • Improved domestic sales • Further organic growth in per annum. performance. health management. • Strong insurance margins. • Insurance margins 8-9%. • Insu
Slide 25: Guidance
Guidance FY20 UOP forecast to be at least $200m Statutory operating profit (SOP) of at least $180m • FY20 arhi net margin likely to be in the order of 6% (long run target 5%-6%) • FY20 UOP and SOP benefit from AASB16 Leases Standard1 • Financial conditions and performance in other Group businesses a
Slide 26: Questions and answers
Questions and answers 2 0 1 9 fu l l y e a r r e s u l ts 26
Slide 27: Appendix
Appendix 2 0 1 9 fu l l y e a r r e s u l ts 27
Slide 28: Policyholder and other data
Policyholder and other data nib Group health insurance FY19 FY18 Total persons covered 1,577,540 1,524,6491 Australian residents health insurance 1,176,155 1,159,550 International (inbound) health insurance 188,324 160,1931 New Zealand 213,061 204,906 Total policyholders 889,866 841,6411 Australian
Slide 29: Detailed income statement (underlying underwriting result)
Detailed income statement (underlying underwriting result) ($m) FY19 FY18 Change Net premium revenue 2,340.8 2,162.6 8.2% - arhi 2,013.2 1,871.2 7.6% - iihi 110.1 93.3 18.0% - nz 215.5 198.1 8.8% - nib Travel 2.0 - n/a Net claims expense (1,547.6) (1,459.6) 6.0% - Hospital claims paid (arhi) (988.3)
Slide 30: Management expenses (underwriting businesses)
Management expenses (underwriting businesses) (commissions (commissions (commissions management management underwriting underwriting Amortisation of acquired intangibles amortised) marketing Marketing Marketing Marketing Marketing expenses expenses expenses expenses deferred) indirect indirect indir
Slide 31: Other income and expenses
Other income and expenses1 ($m) FY19 FY18 Change Other income Complementary insurances 2.7 2.6 3.8% nib foundation income2 1.1 - n/a Other 1.0 0.8 25.0% Total other income 4.8 3.4 41.2% Other expenses Complementary insurances expenditure (0.6) (1.2) (50.0)% Corporate and share registry costs (7.3) (
Slide 32: Investment asset allocation
Investment asset allocation nib foundation investment Consolidated Australian investment portfolio New Zealand investment portfolio portfolio Net return Net return Net return Net return1 Allocation Allocation Allocation Allocation Balance at 12 month Balance at 12 month Balance at 12 month Balance a
Slide 33: Glossary
Glossary Term Definition Term 1H Six months ended/ending 31 December of the relevant financial year Net premium revenue Premium revenue net of reinsurance 2H Six months ended/ending 30 June of the relevant financial year nib nib holdings limited APRA Australian Prudential Regulation Authority nib Tr