Nib Holdings Ltd · ASX:NHF
Nib — 2016 Macquarie Australia Conference
15 slides from Nib's conference presentation, May 5, 2016
Slide 1: ASX cover letter: Presentation to 2016 Macquarie Australia Conference
nib holdings limited t 13 14 63 Head Office f 02 4925 1999 22 Honeysuckle Drive Newcastle NSW 2300 e [email protected] abn 51 125 633 856 w nib.com.au For personal use only 5 May 2016 The Manager Company Announcements Australia Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 2000 Presenta
Slide 2: Macquarie Australia Conference, 5 May 2016
For personal use only MACQUARIE AUSTRALIA CONFERENCE THURSDAY 5 MAY 2016 MARK FITZGIBBON MANAGING DIRECTOR
Slide 3: Key investment thesis for private healthcare
Key investment thesis for private healthcare For personal use only Australia’s health expenditure continues to grow Government cannot sustain its relative share Commonwealth spending Source: AIHW 2014 Health Expenditure Australia 2
Slide 4: PHI is riding the back of this growth with nib consistently doing better
PHI is “riding the back” of this growth and cost shift with nib consistently doing better For personal use only Policyholder growth (cumulative) Source: APRA and nib 3
Slide 5: But the market has softened and is skewing towards older customers
But the market has softened and is skewing towards older “customers” For personal use only Australian real GDP (annualised growth 10 yr average) Industry policyholder growth Source: ABS; via CP economics Source: APRA 4
Slide 6: And out of pocket is actually growing faster than PHI
And “out of pocket” is actually growing faster than PHI For personal use only Individual health expenditure LHS – Total individual expenditure ($b) RHS - Proportion (%) of total health expenditure 30.0 18.0 25.0 17.5 20.0 ($b) (%) 15.0 17.0 10.0 16.5 5.0 0.0 16.0 2008 2009 2010 2011 2012 2013 2014 S
Slide 7: Claims inflation has slowed in recent times
Claims inflation has slowed in recent times For personal use only Total benefits (hospital & ancillary) per person Hospital benefits per person inflation (industry) inflation (industry) 10.0% 8.0% Rolling 12 Month Increase % 10.0% 6.0% 8.0% 4.0% Rolling 12 Month Increase % 6.0% 2.0% 4.0% 0.0% 2.0% A
Slide 8: Resulting in improved profitability for insurers
Resulting in improved profitability for insurers For personal use only Gross margin (%) Underwriting margin (%) Industry (ex nib) nib 20.0% 8.0% Industry (ex nib) nib 16.0% 6.0% 12.0% 4.0% 8.0% 2.0% 4.0% 0.0% 0.0% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Source
Slide 9: But the cost of growing is increasing
But the cost of growing is increasing For personal use only Annualised (industry*) discontinued rate 11.0% 10.0% 9.0% 8.0% 7.0% * Insured persons Source: APRA 8
Slide 10: The future shape of PHI is by no means certain
The future shape of PHI is by no means certain For personal use only Duopoly Globalisation Third Pillar Hypothetical HMO Future Scenarios Life/Health Bundle Big Brands The Generals 9
Slide 11: Key PHI issues
Key PHI issues For personal use only • Inappropriate and unwarranted • Healthcare homes. treatment. • Health savings accounts. • Rampant price variation and • Outsourcing of Government medical gaps. programs (e.g. DVA, Medicare). • Prosthetic pricing. • Regulatory reform (pricing, risk equalisation,
Slide 12: Medical specialist cost variation
Services paid For personal use only 0 5 10 15 20 25 30 35 40 Source: nib Up to 1,500 1,501 to 2,000 2,001 to 2,500 2,501 to 3,000 3,001 to 3,500 3,501 to 4,000 4,001 to 4,500 Prostatectomies (CY15) 4,501 to 5,000 5,001 to 5,500 5,501 to 6,000 AMA Fee MBS Fee Item code Charge range MediGap offer 6,00
Slide 13: Prostheses cost variation
Prostheses cost variation For personal use only • Reforming medical device pricing could save $800 million in annual expenditure. Prostheses benefits payments comprise 14% of total PHI reimbursements in Australia. • There is significant variation in what private patients are charged compared to the
Slide 14: Whitecoat
Whitecoat For personal use only • Whitecoat’s purpose is to help consumers: • Make more informed decisions around their health. • Choose treatment options and healthcare providers (including cost). • Connect and transact with providers. • Improve engagement with providers and share experiences with
Slide 15: Outlook & guidance
Outlook & guidance 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. • Claims inflation taking a lower trajectory with opportunities to improve PHI affordability and stabilise margins. •