Nib Holdings Ltd · ASX:NHF
Nib — H1 FY2023 Earnings Presentation
41 slides from Nib's earnings presentation, Feb 20, 2023
Slide 1: FY2023 half year results
FY2023 half year results 20 February 2023
Slide 2: 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 3: Disclaimer
Disclaimer The material in this presentation is a summary of the results of nib holdings limited (nib) for the 6 months ended 31 December 2022 and an update on nib’s activities and is current as at the date of preparation, being 20 February 2023. Further details are provided in nib’s 2023 interim re
Slide 4: Mark Fitzgibbon
Mark Fitzgibbon Chief Executive Officer & Managing Director
Slide 5: Your better health and wellbeing
Your better health and wellbeing • Deliver deep insight and guidance about how to best achieve personal health and wellbeing goals and manage disease risk. • Customise and connect with a wide ecosystem of health and wellbeing products, services programs and providers relevant to personal goals and r
Slide 6: 1H23 delivering on our purpose
1H23 delivering on our purpose >12,000 enrolments in 208,154 Hospital Support Program hospital admissions since program inception 2 ~16% reduction in unplanned hospital readmission 1,912,325 460 members benefited ancillary visits from Clinical Partners 9,648 Purpose scorecard travel claims1 nearing
Slide 7: 1H23 performance overview
1H23 performance overview • Organic growth across the Group is impressive especially as COVID-19 wanes. Market outlook across all businesses is favourable and Payer to Partner (P2P) strategy is gaining momentum. • As planned, arhi net margins are moving towards target 6-7% coinciding with improved p
Slide 8: 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% 100% 80% 53.6% 60% Industry CAGR: 2.2% 40% 20% 0% FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Slide 9: 1H23 Group financial highlights
1H23 Group financial highlights Strong result – with great progress across existing businesses and acquisitions Total Group revenue1 Group UOP Net investment income Net profit after tax $1.5b $125.1m $22.2m $91.6m ▲13.3% ▲47.0% ▲12.8% ▲9.3% 125.1 81.2 91.6 1.5 22.2 110.4 15.1 1.4 1H22 1H23 1H22 1H23
Slide 10: Nick Freeman
Nick Freeman Group Chief Financial Officer
Slide 11: Group income statement
Group income statement Key drivers of result Financial performance ($m) 1H23 1H22 Change • Premium revenue increase driven by strong Net premium revenue 1,434.1 1,356.1 ▲5.8% policyholder growth across arhi, iihi and NZ. Net claims incurred1 (1,119.2) (1,067.0) ▲4.9% • 1H23 member giveback impact of
Slide 12: Group gross profit drivers
Group gross profit drivers Financial performance ($m) 1H22 1H23 Movement • Member growth across all segments driving 1H22 Group gross profit 298.2 +$21.9m gross profit on pcp. Policyholder growth 21.9 • Favourable sales mix in arhi during 1H23 with Premium rev enue 64.6 continued reduction in downgr
Slide 13: Earnings symmetry returning
Earnings symmetry returning UOP ($m) 2H20 1H21 2H21 1H22 2H22 1H23 arhi operating segment 67.8 88.4 125.8 124.8 115.7 106.6 arhi net margin 6.5% 8.2% 11.1% 10.6% 9.9% 8.6% iihi 9.9 0.3 (6.2) (7.4) 6.3 7.9 nz 12.3 10.5 13.6 9.2 13.5 16.7 travel (21.4) (7.8) (5.8) (7.9) 0.5 6.4 Other developed operati
Slide 14: Australian residents health insurance
Australian residents health insurance Financial performance ($m) 1H23 1H22 Change Strongest 1H policyholder growth in 8 years driven by partner performance, nib initiatives5 and switching. Premium revenue 1,201.0 1,151.0 ▲4.3% • Premium rev enue up 4.3% (6.2% without impact of member 1 Claims expens
Slide 15: arhi claim experience
arhi claim experience nib monthly claiming, % above or below pre-COVID trend Catch-up Delta/Omicron 1st wave Hospital Ancillary
Slide 16: International inbound health insurance
International inbound health insurance Post pandemic rebound continues with strong top line growth Financial performance ($m) 1H23 1H22 Change and improving margins Premium revenue 71.3 59.9 ▲19.0% • First half UOP of $7.9m a significant turnaround on pcp, Claims expense1 (44.0) (47.9) ▼8.1% and fur
Slide 17: New Zealand
New Zealand 1H23 Change Another strong result, partially assisted by 1H23 excl Financial performance ($m) 1H23 excluding 1H22 one-offs life & living life & living 1 v 1H22 • UOP up 66.3% (excluding life and living), or Premium revenue 160.1 154.6 144.4 ▲7.1% 15.2% excluding one-off DAC adjustment. C
Slide 18: nib Travel
nib Travel Financial performance ($m) 1H23 1H22 Change Strongest ever half-year profit as travel “takes off” Underwriting result (0.2) (0.1) ▲100.0% • 1H23 policy sales up 286.6% with border restrictions releasing and 1H22 impacted by COVD-19 Operating income 51.3 8.2 ▲525.6% lockdowns. Acquisition
Slide 19: Capital management
Capital management nib Group nib health funds nib Group ($m) 1H23 1H22 Change net tangible assets1 ($m) net tangible assets1 ($m) Net assets 946.0 731.2 ▲29.4% 372.9 395.2 Net tangible assets1 381.4 266.4 ▲43.2% 381.4 358.9 306.9 Debt 232.7 233.5 ▼0.3% 266.4 256.2 238.8 Leverage ratio (debt/EBITDA)
Slide 20: Cash flow
Cash flow • Relativ ely low operating cash flow due to increased Consolidated cash flow ($m) 1H23 1H22 Change member giv eback, price deferral, timing of claims Operating cash inflows 1,539.7 1,398.1 ▲10.1% incurred v s claims paid and tax payments. Operating cash outflows (1,525.5) (1,299.7) ▲17.4%
Slide 21: Roslyn Toms
Roslyn Toms Group Executive Legal & Chief Risk Officer
Slide 22: Sustainability – 1H23 highlights
Sustainability – 1H23 highlights Over 10,000 members enrolled in health management programs, (84% of Renewed nib foundation's Aboriginal 1H23 target)* including over 650 Māori Health Partnerships. rōpū (Māori group members). Over 10,000 member health checks Launched Deadly@nib, our affinity (Health
Slide 23: Sustainability focus areas for 2H23
Sustainability focus areas for 2H23 Population health • Continue to invest in health management programs to support our members living with chronic conditions • Support members through a range of general wellbeing support programs Natural • Conduct a new climate change scenario analysis to assess ou
Slide 24: Mark Fitzgibbon
Mark Fitzgibbon Chief Executive Officer & Managing Director
Slide 25: 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, as well as equip them with integrated digital tools for seamless engagement with us and the healthcare system (pers
Slide 26: With the nib app your health is in your hands
With the nib app your health is in your hands
Slide 27: NDIS is a critical part of the nation's social capital
• NDIS is a critical part of the nation's social capital, and we believe we can make a positive and meaningful contribution. • Significant marketplace ~$29 billion in FY22 with plan management and support coordination over $1 billion1. • nib has long and deep experience in connecting buyers and sell
Slide 28: Martin Adlington
Martin Adlington Chief Executive - nib Thrive
Slide 29: NDIS strategy progressing strongly
NDIS strategy progressing strongly 3 acquisitions ~22,000 ~$13.3m EBITDA2 totaling ~$108m1 participants (annualised) • Successful capital raise of $158.1 million in 1H23 ($135.0m institutional, $23.1m SPP) to fund nib’s NDIS investment strategy. • First acquisition, Maple Plan (~7,400 participants),
Slide 30: Mark Fitzgibbon
Mark Fitzgibbon Chief Executive Officer & Managing Director
Slide 31: Outlook
Outlook Positive business momentum expected to continue arhi New Zealand • Net policyholder growth 3-4%. • Net policyholder growth 3-5% for core health • Hospital claims expected to remain subdued book (exc. students & workers) in FY23. into 2H23. • Completing transition of life and living business.
Slide 32: Questions and answers
Questions and answers a:nib
Slide 33: Appendix
Appendix
Slide 34: Policyholder data
Policyholder data nib Group policyholders (#) 1H23 FY22 1H22 Total persons covered 1,758,976 1,715,081 1,659,159 Australian residents health insurance 1,283,930 1,255,265 1,235,420 International (inbound) health insurance 191,941 181,181 185,372 New Zealand1 283,105 278,635 238,367 Total policyholde
Slide 35: Detailed Group gross underwriting
Detailed Group gross underwriting Underwriting result ($m) 1H23 1H22 Change Net premium revenue 1,434.1 1,356.1 ▲5.8% arhi 1,201.0 1,151.0 ▲4.3% iihi 71.3 59.9 ▲19.0% nz 160.1 144.4 ▲10.9% nib travel 1.7 0.8 ▲112.5% Net claims expense (974.7) (926.9) ▲5.2% Hospital claims paid (arhi) (575.4) (531.0)
Slide 36: Management expenses – arhi, iihi & NZ
Management expenses – arhi, iihi & NZ Marketing indirect Other Total MER Amortisation Total MER total Marketing Total ($m) Commissions Commissions Commissions management underwriting underwriting of acquired management management (direct) marketing paid deferred amortised expenses expenses expenses
Slide 37: Investments, gearing and capital
Investments, gearing and capital Change Funds invested 1H23 1H22 $m 1H23 1H22 1H23 v 1H22 Defensive Net investment income 22.2 15.1 ▲47.0% Net investment income 11.1 (1.7) Net investment return (%) 1.7 1.3 ▲40bps Net investment return (%) 1.1 (0.2) Funds invested 1,260.6 1,128.2 ▲11.7% Funds investe
Slide 38: Investment asset allocation
Investment asset allocation Consolidated Australian investment portfolio New Zealand investment portfolio nib foundation investment portfolio Net return Net return Net return Net return Balance as Allocation Balance as Allocation Balance as Allocation Balance as Allocation 6 months 6 months 6 months
Slide 39: Other income and expenses
Other income and expenses Change Other incomes and expenses ($m) 1H23 1H22 1H23 v 1H22 Ot her income 59.4 10.5 ▲465.7% Ot her expenses (63.9) (25.4) ▲151.6% Total (4.5) (14.9) ▼69.8% Net other income & expenses by 1H23 1H23 1H23 1H22 1H22 1H22 Change segment ($m) income expense net income expense ne
Slide 40: Midnight Health is a key component of nib's P2P strategy
• Midnight Health is a key component of Financial performance ($m) 1H23 FY22 nib’s P2P strategy and ecosystem adding Rev enue 3.8 n/a value proposition and serving as a source Expenses (9.9) n/a of market differentiation. Share of net profit/(loss) of joint v entures n/a (1.5) • Includes a range of
Slide 41: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year NDIS National Disability Insurance Scheme 2H Six months ended/ending 30 June of the relevant financial year Net claims expense Claims expense net of reinsurance APRA Australian Prudential R