Nib Holdings Ltd · ASX:NHF
Nib — Investor Presentation (September 2019)
34 slides from Nib's investor presentation, Sep 13, 2019
Slide 1: Correction of error in chart; no impact on FY20 guidance
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 13 September 2019 Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 nib holdings limited 2019 Full Year Results Investor Present
Slide 2: 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 3: 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 4: Mark Fitzgibbon
• 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 5: 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 the Ancillary visits provider Going to Hospital Tool 333,244 23,975 $1.8b Hospital Travel claims Total claims paid3 up 6.9% admissions processed2 Note:
Slide 6: 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 7: 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 8: FY19 Group results
FY19 Group results Total Group Non-arhi contribution to Net investment NPAT1 revenue 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 9: Michelle McPherson
• 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 10: 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 11: 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 (▲$13.1m) and primarily includes GU Health (12mth v 8mth), nib foundation consolidation as well as new business development (niss, nib Travel EMGA e
Slide 12: Australian residents health insurance
Australian residents health insurance Financial performance ($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 13: 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 14: 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 15: 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 $750 front end deductible, compri
Slide 16: International (inbound) health insurance
International (inbound) health insurance Financial performance ($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 17: New Zealand
New Zealand Financial performance ($m) FY19 FY18 Change Solid result with margin and earnings consistent with long term strategy Premium revenue 215.5 198.1 8.8% • Premium revenue ▲8.8% a function of premium adjustments, policyholder growth and new Claims (medical & PPB1) (129.7) (117.2) 10.7% busin
Slide 18: nib Travel
nib Travel Financial performance ($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 19: 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 20: 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 21: Mark Fitzgibbon
• 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 22: 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 23: 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 24: 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 25: 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 26: Guidance
Guidance FY20 UOP forecast to be at least $200m Statutory operating profit (SOP) of at least $180m • FY20 arhi net margin likely to be in the order of 6% (long run target 5%-6%) • FY20 UOP and SOP benefit from AASB16 Leases Standard1 • Financial conditions and performance in other Group businesses a
Slide 27: Questions and answers
Questions and answers 2 0 1 9 fu l l y e a r r e s u l ts 26
Slide 28: Appendix
Appendix 2 0 1 9 fu l l y e a r r e s u l ts 27
Slide 29: Policyholder and other data
Policyholder and other data nib Group health insurance FY19 FY18 Total persons covered 1,577,540 1,524,6491 Australian residents health insurance 1,176,155 1,159,550 International (inbound) health insurance 188,324 160,1931 New Zealand 213,061 204,906 Total policyholders 889,866 841,6411 Australian
Slide 30: Detailed income statement (underlying underwriting result)
Detailed income statement (underlying underwriting result) ($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 31: Management expenses (underwriting businesses)
Management expenses (underwriting businesses) Total marketing (commissions (commissions (commissions management management Amortisation underwriting underwriting of acquired intangibles amortised) Marketing Marketing Marketing expenses expenses expenses expenses Marketing deferred) indirect indirect
Slide 32: 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 33: 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 return1 Balance at Allocation at Balance at Allocation at Balance at Allocation at Balance at Allocation at 12 month to 1
Slide 34: 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
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