Nib Holdings Ltd · ASX:NHF
Nib — H1 2016 Earnings Presentation
31 slides from Nib's earnings presentation, Feb 22, 2016
Slide 1: Half Year Presentation
HALF YEAR ¢ PRESENTATION —_
Slide 2: Disclaimer
Disclaimer For personal use only The material in this presentation is a summary of the results of nib holdings limited (nib) for the 6 months ended 31 December 2015 and an update on nib’s activities and is current at the date of preparation, 22 February 2016. Further details are provided in nib’s ha
Slide 3: Half Year Results 2016
HALF YEAR RESULTS 2016
Slide 4: First Half Highlights
First Half Highlights On track to deliver strong full year result For personal use only • Total Group revenue grew 15.2% driven by strong growth across the Group and pricing (as well as Improved Group operating performance first-time inclusion of World Nomads). • Underlying operating profit grew 46.
Slide 5: Financial Summary
Financial Summary Improved performance across key metrics despite weaker investment return For personal use only 1H16 1H15 Change Total Group revenue ($m) 927.1 805.0 +15.2% Underlying operating profit ($m) 66.4 45.4 +46.1% Amortisation of acquired intangibles & one-off costs ($m) (7.1) (3.4) +109.8
Slide 6: Group Underlying Operating Profit
Group Underlying Operating Profit arhi remains core earnings driver with adjacent businesses growing For personal use only Underlying operating profit by segment ($m) • arhi continues to be primary contributor to Group 70.0 $66.4m 6% underlying operating profit. 60.0 12% • Strategy to leverage core
Slide 7: Organic growth
Organic growth All underwriting segments continue to grow For personal use only International (inbound) health insurance policyholder growth arhi policyholder growth (%) 70.0 (%) 50.0 Growth from 8.0 nib Industry Saudi business 30.0 7.0 6.0 10.0 5.0 -10.0 CY11 CY12 CY13 CY14 CY15 4.0 New Zealand pol
Slide 8: arhi claims inflation
arhi claims inflation Moderating claims inflation improved gross margin and earnings For personal use only Annual drawing rate inflation nib versus industry (Rolling 12 months average - figures to 30 September 20151) (%) nib² Industry • Moderating claims inflation 10.0% contributed to a 170bps impro
Slide 9: Improved nib NZ performance
Improved nib NZ performance Growth has business performing to expectations For personal use only Policyholder growth versus industry since acquisition Underlying operating profit (1H) since acquisition (%) nib Industry ($m) 35.0 10.0 25.0 8.0 Growth from 6.0 OnePath policies 15.0 4.0 2.0 5.0 Organic
Slide 10: World Nomads Group (WNG)
World Nomads Group (WNG) Maiden contribution of $4.2m in line with expectations For personal use only WNG Sales (Policies) 1H162 WNG Gross Written Premium by Region 300,000 295,461 290,378 2% 2% 278,918 5% 7% Australia 200,000 United States Europe (ex. UK) 7% 100,000 United Kingdom New Zealand 14% 6
Slide 11: Multi-channel strategy
Multi-channel strategy Continuing to expand our distribution reach For personal use only 11
Slide 12: Michelle McPherson, Chief Financial Officer & Deputy CEO
Michelle McPherson CHIEF FINANCIAL OFFICER & DEPUTY CEO HALF YEAR RESULTS 2016
Slide 13: Total Group Revenue
Total Group Revenue Strong track record of double-digit top line growth For personal use only ($m) Total Group revenue up 15.2% to $927.1m due to: 1,000.0 $927.1m • arhi premium revenue up 10.5% due to combination of policyholder growth, product mix 800.0 $805.0m and pricing. Accounted for 84.3% of
Slide 14: Group Underlying Operating Profit
Group Underlying Operating Profit Gross margin accretion key to improved operating profit result For personal use only • Increase in Group underlying operating profit up ($m) 46.1% driven by: Increase in underlying operating profit of $21.0m • Favourable arhi gross underwriting result 70.0 ($23.4m).
Slide 15: Australian Residents Health Insurance (arhi)
Australian Residents Health Insurance (arhi) Strong sales and gross margin improved underwriting performance For personal use only 1H16 1H15 Change • Underlying operating profit result up 37.6%: • Sales volume remains strong (nib net growth of Policyholder growth (%) 1.8 0.9 +0.9% 1.8%2). Premium re
Slide 16: International (Inbound) Health Insurance (iihi)
International (Inbound) Health Insurance (iihi) Powerful policyholder growth with gross margin challenges being redressed For personal use only 1H16 1H15 Change • Policyholder growth driven by strong pipeline of Policyholder growth (%) 14.5 22.3 -7.8% direct international students sales, Saudi contr
Slide 17: nib New Zealand
nib New Zealand Improved result underpinned by leveraging scale and scope For personal use only 1H16 1H15 Change • Underlying operating profit reflects strong policyholder growth of 25.2%1, success of Policyholder growth (%) 25.21 3.3 +21.9% PPB2 settlement campaign and lower than Premium revenue ($
Slide 18: World Nomads Group
World Nomads Group World Nomads maiden contribution in line with expectations For personal use only 1H161 • World Nomads Group (WNG) underlying operating profit of $4.2m, with 1H16 a 5 month Gross Written Premium ($m)2 51.8 result (business acquired 31 July 2015). Operating income ($m) 22.0 • WNG tr
Slide 19: Investments, Gearing & Capital
Investments, Gearing & Capital More efficient balance sheet following M&A For personal use only 1H16 1H15 Change • Target capital and gearing is in line with stated internal policies. Net investment income ($m) 6.5 20.0 -67.5% • Lower available capital due to M&A in 1H16 Finance costs ($m) (2.6) (1.
Slide 20: Half Year Results 2016
HALF YEAR RESULTS 2016
Slide 21: Outlook
Outlook FY16 outlook remains positive For personal use only • Real healthcare spending will continue to grow circa GDP + 2%1. • Expect PHI reforms will be a net positive: • Prosthetic pricing • Risk equalisation • Primary care and MBS Review • New funding devices (e.g. health savings accounts) • Hos
Slide 22: Whitecoat
Whitecoat Showcases the potential of the “digital era” to empower customers For personal use only • Whitecoat’s purpose is to help consumers: • Make more informed decisions around their health. • Choose treatment options and healthcare providers. • Connect and transact with providers. • Improve enga
Slide 23: FY16 Guidance
FY16 Guidance Guidance maintained with result likely to be at upper end of range For personal use only ($m) FY16 (Guidance) • FY16 consolidated underlying operating profit Statutory operating profit 90 – 100 of $102m – $114m (statutory operating profit of $90m – $100m), with result likely to be at O
Slide 24: Questions & Answers
Questions & Answers HALF YEAR RESULTS 2016
Slide 25: Appendix
» Aopendix HALF YEAR RESULTS 2016
Slide 26: nib Policyholder & Other Data
nib Policyholder & Other Data For personal use only nib Group 1H15 1H16 Total policyholders 628,488 706,227 − Australian Residential Health Insurance 491,381 519,107 − International (inbound) Health Insurance 55,372 82,206 − nib New Zealand 81,735 104,914 nib New Zealand (Persons covered) 159,955 20
Slide 27: arhi Lapse Comparison
arhi Lapse Comparison For personal use only • nib has recently changed the way it reports lapse to be in line with other industry participants. • Lapse is now calculated as: • Discontinued1/Average (opening policyholder balance, closing policyholder balance) Whereas previous nib method was: • Lapse2
Slide 28: Detailed Income Statement
Detailed Income Statement For personal use only ($m) 1H16 1H15 Change Net premium revenue1 902.7 802.3 +12.5% – arhi 781.3 706.9 +10.5% – iihi 41.5 22.5 +84.7% – nibnz 79.9 72.9 +9.6% Net claims expense1 (638.8) (560.6) +13.9% – arhi claims incurred (554.5) (503.6) +10.1% – iihi claims incurred (27.
Slide 29: Detailed Management Expenses (Underwriting segments)
Detailed Management Expenses (Underwriting segments) For personal use only (Commissions (Commissions (Commissions Management Employment Occupancy amortised) Marketing Marketing Marketing Marketing Expenses deferred) Indirect Indirect Indirect Direct Other Paid) Total IT ($m) Australian Residents Hea
Slide 30: Investment Asset Allocation
Investment Asset Allocation For personal use only Consolidated Australian Investment Portfolio New Zealand Investment Portfolio Balance ($m) at Allocation (%) Net return ($m) Allocation (%) at Net return ($m) Allocation (%) 31/12/15 at 31/12/15 6 months to 31/12/15 31/12/15 6 months to 31/12/15 at 3
Slide 31: Half Year Presentation
HALF YEAR ¢ PRESENTATION —_