NIB Holdings Ltd · ASX:NHF
NIB — Shareholder Meeting (October 2009)
33 slides from NIB's shareholder meeting presentation, Oct 28, 2009
Slide 1: Annual General Meeting 2009
NVAKSS(@) NB FOUNDATIONS Pwd Geneval Meeting 2007
Slide 2: Keith Lynch — Chairman
VARSS(@ IN Be FOUNDATIONS Keith Lynch— Chairman
Slide 3: Introduction: Directors & Executive
INTRODUCTION DIRECTORS & For personal use only EXECUTIVE Mark Fitzgibbon, g Managing g g Director and Chief Executive Officer Harold Bentley, Independent Non-Executive Director Brian Keane, Independent Non-Executive Director Dr Annette Carruthers, Independent Non-Executive Director Philip
Slide 4: Meeting Schedule
MEETING SCHEDULE For personal use only Chairman’s Address CEO’s Address Notice of Meeting Table the Financial Report for the financial year ended 30 June 2009 Reports of the Directors and the Auditor of the Company Re-election of Directors Proposed change to the nib Constitution Clos
Slide 5: Chairman's Year in Review
CHAIRMAN’S YEAR IN REVIEW For personal use only nib has not been immune the gglobal financial crisis Greatest impact on nib, like many other businesses, has been on investment returns. Overall O ll our portfolio tf li returns t were iin liline with ith relevant l tbbenchmarks, h k with ith th
Slide 6: Shareholder dividends
CHAIRMAN’S YEAR IN REVIEW For personal use only Shareholder dividends Earnings and capital strength have allowed for dividend payments totalling 7.4 cents per share, fully franked. Shareholders received final dividend of 4.4 cents per share, fully franked, on 9 October 2009. In addition to e
Slide 7: Industry consolidation
CHAIRMAN’S YEAR IN REVIEW For personal use only Industry consolidation Playing a key role in further industry consolidation remains a priority. Having the capital structure to allow nib to participate in industry consolidation was one of the key motives for listing on ASX. Since then three maj
Slide 8: Capital Management
CHAIRMAN’S YEAR IN REVIEW For personal use only Capital Management g was a key y focus in FY09 On market share buy-back Purchased and cancelled approximately 21.8 million shares at a total cost of $17 8 million.(Average $17.8 illi (A costt off $0 $0.82 82 per share). h ) We have calculated t
Slide 9: Unmarketable parcel sale facility
CHAIRMAN’S YEAR IN REVIEW For personal use only Unmarketable parcel sale facilityy nib offered a sale facility to registered holders of less than a marketable parcel of nib shares (parcel valued at $500 or less under the ASX Listing Rules). nib ib values l allll off itits shareholders, h h ld
Slide 10: Government policy and industry dynamics
CHAIRMAN’S YEAR IN REVIEW For personal use only Government policyy continues to playy an enormous role in industryy dynamics y Changes to the Medicare Levy Surcharge were distracting, though appeared to have minimal impact on nib. Means testing of 30% rebate was defeated in the Senate. Any fut
Slide 11: nib foundation
CHAIRMAN’S YEAR IN REVIEW For personal use only nib foundation nib donated $25 million to establish nib foundation in June 2008 as part of demutualisation. Primary goal of foundation to fund programs that redress health issues of regional or national relevance. Since October last year the ni
Slide 12: Focus for the business moving forward
CHAIRMAN’S YEAR IN REVIEW For personal use only Focus for the business movingg forward Grow premium and policyholder base above expected private health insurance system growth. Continue to explore M&A opportunities. Move into our long-term underwriting profit margin range of 5-6% and seek to s
Slide 13: Mark Fitzgibbon — Managing Director
VARSS(@ IN Be FOUNDATIONS Mark Fitzgibbon — Managing Director
Slide 14: Today's Agenda
TODAY’S AGENDA MANAGING DIRECTOR For personal use only MARK FITZGIBBON Headlines & financial snapshot Business fundamentals Market outlook, business strategy and key enterprise risks Capital management Summary 14
Slide 15: FY09 Headlines
FY09 HEADLINES For personal use only Net policyholder growth of 18,899 (5.2%) in difficult economic conditions. Premium revenue of $829.5 million up 9.4% on previous year. Pre-tax underwriting profit of $40.2 million up 21.8% on previous year . Consolidated profit of $23.8 million impacted b
Slide 16: Financial Snapshot
FINANCIAL SNAPSHOT For personal use only ($m) FY08* FY09 Change Premium revenue 758.2 829.5 71.3 111.2 122.0 Gross margin 10.8 14.7% 14.7% ( (78.2) ) ( (81.8) ) Management expenses (3 6) (3.6) 10.3% 9.9% 33.0 40.2 Net Margin 7.2 4.4% 4.8% 7.5 ( ) (1.8) Net investment return (9 3) (9.3) 1.6% (0.4)% O
Slide 17: Share price: we have outperformed the market
SHARE PRICE WE HAVE OUTPERFORMED For personal use only THE MARKET 200 180 ormance (%) 160 140 120 Relative perfo 100 80 60 R 40 20 0 28-Oct-08 28-Dec-08 28-Feb-09 28-Apr-09 28-Jun-09 28-Aug-09 nib All Ordinaries • Note: Share priced performance rebased to 100% to provide comparison on performance be
Slide 18: Growth was strong in difficult conditions
GROWTH WAS STRONG IN For personal use only DIFFICULT CONDITIONS (%) FY07 FY08 FY09 Net policyholder growth (nib) 8.8 11.1 5.2 Net policyholder growth rate (industry) 4.2 4.2 3.3 % of new sales new to category (nib) 74.4 78.2 67.4 % of new sales “under 40” (nib) 78.5 79.2 78.7 % of new sales online (
Slide 19: Claims experience is stable
CLAIMS EXPERIENCE For personal use only IS STABLE (%) FY07 FY08 FY09 Premium revenue 666.0 758.2 829.5 Claims expense (505.4) (554.0) (599.3) HBRTF/RETF Levy* (48.1) (73.1) (87.0) State levies (17.6) (19.9) (21.2) Net claims incurred (571.1) (647.0) (707.5) Gross underwriting result 94.9 111.2 122.0
Slide 20: Management expense ratio is reducing
MANAGEMENT EXPENSE RATIO For personal use only IS REDUCING ($m) FY07 FY08* FY08 FY09 Employment 37.1 36.2 35.7 Marketing 13.8 18.9 17.2 IT 5.1 5.6 5.7 Occupancy 4.9 4.6 8.7 Other 10.3 12.9 14.5 TOTAL 71.2 78.2 81.8* TOTAL MER (%) 10.7 10.3 9.9 * FY08 result was normalised to remove the impact of cos
Slide 21: Underlying earnings are increasing
UNDERLYING EARNINGS For personal use only ARE INCREASING ($m) FY07 FY08* FY09 Pre-tax underwriting results ($m) 23.7 33.0 40.2 Net underwriting margin (%) 3.6 4.4 4.8 * FY08 result was normalised to remove the impact of costs associated with nib’s demutualisation and listing, and “notional” tax .
Slide 22: Overall FY09 investment performance was very disappointing
OVERALL FY09 INVESTMENT PERFORMANCE For personal use only WAS VERY DISAPPOINTING ($m) FY07 FY08 FY09 Net investment return ($m) 31.3 7.5 (1.8) Net percentage return (%) 8.8 1.6 (0.4) Investment expenses for the period of $0.7m. Portfolio returns in line with relevant benchmarks with exception of
Slide 23: Initiatives underway to reduce holding company costs
INITIATIVES UNDERWAY For personal use only TO REDUCE HOLDING COMPANY COSTS ($m) FY08* FY08 FY09 Share registry costs - ongoing 1.1 2.2 Share registry costs – one off 0.0 1.3 Due diligence 14 1.4 13 1.3 Bid response 0.0 0.6 Other 1.9 2.6 TOTAL 4.3 7.9 * FY08 costs for November-June 08 only. Increas
Slide 24: Key profitability & performance metrics
KEY PROFITABILITY & For personal use only PERFORMANCE METRICS ($m) FY05 FY06 FY07 FY08* FY09 Profit before tax ($m) 26.8 69.5 52.9 37.6 31.6 NPAT ($m) 37.2 26.7 23.8 EPS (cps) 5.2 4.7 ROE (%) 7.0 6.6 TSR (%)1 (38.0) 58.2 * FY08 result was normalised to remove the impact of costs associated with nib’
Slide 25: Capital Management: movement in surplus capital
CAPITAL MANAGMENT For personal use only MOVEMENT IN SURPLUS CAPITAL ($m) Surplus capital at 30 June 2008: 105.6 Board’s revision to capital adequacy of 1.4x (31 Dec 2008) (1.5x 30 June 2008) 28.5 On-market O a e sshare a e buy buy-back bac ((17.8) 8) 2009 Full Year dividend – normal (50% payout rati
Slide 26: Balance sheet remains strong with no debt
BALANCE SHEET REMAINS STRONG WITH NO DEBT For personal use only ($m) FY07 FY08* FY09 H lth fund Health f d operating ti assets t Current assets 26.6 32.1 30.5 Non-current assets 40.0 71.6 62.0 Health fund operating liabilities Outstanding claims liabilities (OSC) (54.0) (62.3) (56.2) Unearned premiu
Slide 27: Market Outlook: industry & market fundamentals sound
MARKET OUTLOOK For personal use only INDUSTRY & MARKET FUNDAMENTALS SOUND System growth of GDP +1-2%. Growing competition for PHI market share and revenue diversification in adjacent markets. On balance, supportive government policy given national dependency ratio and budget deficit. Nationa
Slide 28: Health fund members prefer demutualisation
HEALTH FUND MEMBERS For personal use only PREFER DEMUTUALISATION Manchester nib ib MBF AHM Unity Members who voted 31% 40% 58% 78% Votes in support of the scheme 95% 98% 95% 99% SOURCE: Company announcements 28
Slide 29: Business Strategy
BUSINESS STRATEGY For personal use only Target <40s market segment, extend brand reach and improve retention to achieve above system organic growth. Maintain net underwriting margin in range of 5-6% with emphasis on reducing claims inflation. Increase ‘share of wallet’ from customer base throu
Slide 30: Key Enterprise Risks
KEY ENTERPRISE For personal use only RISKS MARKET Macro-economic environment Competitor activity Claims inflation SOVEREIGN Premium pricing 30% P Private i t H Health lth IInsurance R Rebate b t Medicare Levy Surcharge National Health and Hospital Reform Commission INVESTMENT M
Slide 31: Capital Management
CAPITAL MANAGEMENT For personal use only nib’s new prudential target (capital adequacy) is 1.4x. As at 30 September 2009, nib had approximately $150 million in capital surplus to its target (post final dividend). Continuing to seek a balance between being able to readily finance value creating
Slide 32: Summary
SUMMARY For personal use only Underlying earnings are growing powerfully. Better than system growth expected to continue. Net margin to improve in FY10 and then stabilise within target 5-6% % range. O Ongoing pressure on margins expected from claims inflation and pricing regulation. Surplus
Slide 33: For personal use only
NVAKSS(@) NB FOUNDATIONS Pwd Geneval Meeting 2007