Nib Holdings Ltd · ASX:NHF
Nib — FY2020 Earnings Presentation
33 slides from Nib's earnings presentation, Aug 25, 2020
Slide 1: Updated 2020 Full Year Results Investor Presentation
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 25 August 2020 Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 Updated 2020 Full Year Results Investor Presentation nib holdin
Slide 2: FY20 full year results
FY20 full year results 24 August 2020
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 2020 and an update on nib’s activities and is current at the date of preparation, being 24 August 2020. Further details are provided in nib’s full year accounts and
Slide 4: Mark Fitzgibbon
Chief Executive Officer & Managing Director Mark Fitzgibbon FY20 full year results 3
Slide 5: Acknowledgement of Country
Acknowledgement of Country We would like to acknowledge the Traditional We would like to acknowledge the Traditional Custodians of the lands we all live and work on and Custodians of the lands we all live and work on and recognise their continuing connection to Lands, Waters recognise their continui
Slide 6: Our purpose: your better health
Our purpose: your better health Supporting our members through COVID-19 6,657 575 3 month suspensions 30 day waivers 2,233 469 6 month suspensions 60 day waivers - CV19 support package to date more than $45m. - Across the Group, six month premium postponement (arhi and nib NZ) represents $38.5m in f
Slide 7: Our purpose: your better health
Our purpose: your better health Supporting our employees and the community through COVID-19 Donation of 100,000 face masks Food relief to international students Hygiene packs to international students $500,000 to support Lifeline FY20 full year results 6
Slide 8: FY20: Group results
FY20: Group results $2.5b $150.1m $16.6m total Group revenue Group UOP net investment income up 3.4% down 25.6% down 54.0% Statutory operating profit $118.1 down 36.0% $89.2m 19.8cps 4.0cps NPAT statutory EPS final dividend down 40.3% down 40.0% down from 13.0cps 14.5% 34.8 $57.0m ROE Group NPS avai
Slide 9: FY20: Summary observations
FY20: Summary observations Business fundamentals remain strong Business silver linings - arhi policyholder growth of 1.9% (accounted for 41.5% of total - Group remains well capitalised with $57.0 million in available industry net growth) with premium revenue ▲2.9% and net capital above internal targ
Slide 10: Nick Freeman
Group Chief Financial Officer Nick Freeman FY20 full year results 9
Slide 11: Group income statement
Group income statement ($m) FY20 FY19 Change Net premium revenue 2,439.6 2,340.8 ▲4.2% Key drivers of result Net claims incurred1 (1,955.3) (1,829.8) ▲6.9% - CV19 impact on claims and pricing. Other underwriting revenue 3.5 3.6 ▼2.8% - Other CV19 impacts especially on nib Travel as well as iihi. Und
Slide 12: Group gross profit drivers FY19 – FY20
Group gross profit drivers FY19 – FY20 FY19 Group gross profit ($m) 529.4 - Premium revenue growth has been impacted by postponement of price Policyholder growth 28.1 increases due to CV19 and continued downgrading. Premium revenue 89.1 - Premium increases not sufficient to offset claims inflation,
Slide 13: Australian residents health insurance
Australian residents health insurance Financial performance ($m) FY20 FY19 Change Strong membership growth, challenging operating conditions Premium revenue 2,072.3 2,013.20 ▲2.9% - Premium revenue ▲2.9% with postponement of 2020 pricing increase impacting Claims expense excluding risk premium reven
Slide 14: arhi: underlying operating profit
arhi: underlying operating profit ($m) 250.0 59.1 200.0 150.0 12.5 0.9 1.0 0.1 133.6 80.0 5.5 100.0 149.5 50.0 - FY20 full year results 13
Slide 15: International (inbound) health insurance
International (inbound) health insurance Financial performance ($m) FY20 FY19 Change Sound operating performance impacted by COVID-19 in Premium revenue 123.1 110.1 ▲11.8% 2H20, margins consistent with 1H20 Claims expense (61.8) (42.4) ▲45.8% – Premium revenue (▲11.8%), with slowing policyholder gro
Slide 16: New Zealand
New Zealand Financial performance ($m) FY20 FY19 Change Positive operating performance with business showing strong Premium revenue 240.1 215.5 ▲11.4% revenue and earnings trajectory Claims1 (146.1) (130.0) ▲12.4% - Premium revenue ▲11.4% boosted by strong policyholder growth and price adjustments M
Slide 17: nib Travel
nib Travel Financial performance ($m) 1H20 2H20 FY20 FY19 1 Change Business significantly impacted by CV19 and travel Operating income 47.8 6.3 54.1 72.4 ▼25.3% restrictions Acquisition costs (22.2) (4.9) (27.1) (32.2) ▼15.8% - UOP loss of $19.7m with operating income ▼25.3% and operating Marketing
Slide 18: Investments, gearing, cash flow and capital
Investments, gearing, cash flow and capital ($m) FY20 FY19 Change Consolidated cash flow ($m) FY20 FY19 Change Net investment income ($m) 16.6 36.1 ▼54.0% Operating cash inflows 2,635.1 2,548.7 ▲3.4% Net investment return (%) 1.7 3.8 ▼210bps Operating cash outflows (2,423.5) (2,364.2) ▲2.5% Funds in
Slide 19: Capital summary
Capital summary nib health funds ($m) FY20 FY19 Total assets nib health funds limited (excluding - The current CV19 environment has been considered in setting internal capital 1,193.7 842.5 targets with an increase in target. unclosed business contributions - unearned) Capital adequacy requirement 7
Slide 20: Mark Fitzgibbon
Chief Executive Officer & Managing Director Mark Fitzgibbon FY20 full year results 19
Slide 21: Business strategy
Business strategy Personalised Affordability and Grow the core Economies Racing the Red healthcare sustainability (arhi) of scope Queen (RRQ) FY20 full year results 20
Slide 22: Key focus areas
Key focus areas Ongoing CV19 response and business adaptation Personalisation business transformation strategy Market growth and share Claims and operating cost efficiency and pricing Regulatory reform and opportunities (eg. risk equalisation) Minimise travel impact and losses FY20 full year results
Slide 23: Community rating, an ageing cohort and risk equalisation
Community rating, an ageing cohort and risk equalisation Threatening the viability of community rating and affordability of cover PHI participation by age (as at 30 June) Premium flagfall (calculated deficit per SEU) 60% 2,000 55% 1,800 1,600 50% 1,400 45% 1,200 40% 1,000 $ 35% 800 30% 600 25% 400 2
Slide 24: Outlook: arhi
Outlook: arhi - Target annual net organic policyholder growth 2% - 3% - Unpredictable claims trajectory given CV19 - Net margin circa 6% - Ever present premium pricing risk - Prudent capital management - Managing health risk and digital health - Opportunistic M&A FY20 full year results 23
Slide 25: Outlook
Outlook iihi New Zealand nib Travel China Honeysuckle Health - Slow recovery in - Positive market - Slow recovery in - Sell health - Development of market conditions fundamentals market conditions insurance in China data science capability - Positive medium- - Expansion of iwi - Focus upon - Ongoing
Slide 26: August 2020 snapshot
August 2020 snapshot Sales Lapse Net growth Year to 14 August 2020 2019 2020 2019 2020 2019 arhi1 17,901 16,415 (10,703) (12,408) 7,198 4,007 iihi1 5,646 14,396 (8,269) (9,307) (2,623) 5,089 NZ2 2,476 6,231 (1,366) (1,610) 1,110 4,621 nib Travel Domestic 198 103,785 International 6,796 54,022 Week t
Slide 27: Questions and Answers
Questions and Answers FY20 full year results 26
Slide 28: Appendix
Appendix FY20 full year results 27
Slide 29: Policyholder and other data
Policyholder and other data nib Group health insurance 1H20 FY20 1H19 FY19 Total persons covered 1,612,683 1,613,984 1,547,801 1,577,540 Australian residents health insurance 1,186,159 1,186,805 1,168,358 1,176,155 International (inbound) health insurance 200,988 200,254 172,771 188,324 New Zealand
Slide 30: Detailed Group gross underwriting result
Detailed Group gross underwriting result ($m) FY20 FY19 Change Net premium revenue 2,439.6 2,340.8 4.2% - arhi 2,072.3 2,013.2 2.9% - iihi 123.1 110.1 11.8% - nz 240.1 215.5 11.4% - nib Travel 4.1 2.0 105.0% Net claims expense (1,649.9) (1,547.6) 6.6% - Hospital claims paid (arhi) (960.2) (988.3) (2
Slide 31: Management expenses (arhi, iihi and nz)
Management expenses (arhi, iihi and nz) 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 indir
Slide 32: 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 12 months Balance at Allocation at 12 months Balance at Allocation at 12 months Balance
Slide 33: Glossary
Glossary Term Definition Term Definition 1H Six months ended/ending 31 December of the relevant financial year nib nib holdings limited 2H Six months ended/ending 30 June of the relevant financial year nib Travel nib Travel is a travel insurance distributor APRA Australian Prudential Regulation Auth