NIB Holdings Ltd · ASX:NHF
NIB — Investor Presentation (June 2010)
47 slides from NIB's investor presentation, Jun 18, 2010
Slide 1: For personal use only
For personal use only
Slide 2: For personal use only
For personal use only 2
Slide 3: Introduction
Introduction For personal use only nib is Australia’s only listed health insurer Shares on issue – 495,431,427 , , Share price (17 June 2010) - A$1.32 Market capitalisation p ~ A$650m Australia’s fifth largest health fund Approximately 400,000 policyholders, providing cover for almost 79
Slide 4: Results so far have been impressive
Results so far have been impressive For personal use only nib FY07 FY08 FY09 1H10 Premium revenue ($m) 666.0 758.2 829.5 446.1 Net policyholder growth (%) 8.8 11.1 5.2 2.4 Gross margin (%) 14.3 14.7 14.7 16.0 Management expenses (%) 10.7 10.3 9.9 9.1 Net margin (%) 3.6 4.4 4.8 6.8 Investment return
Slide 5: nib's management team and structure
nib’s management team and structure For personal use only Managing Director / CEO Chief Marketing & Business Chief Operating & Technology Officer Chief Financial Officer / Deputy CEO Development Officer Products and Market Intelligence Strategic Procurement Claims Finance Provider Relations Group Ma
Slide 6: Our vision and mission
Our vision For personal use only nib is a leading financier of the nation’s healthcare spending with a reputation for innovative products, value for money, outstanding customer service, corporate social responsibility and strong shareholder returns Our mission To help people pay for their healthcare
Slide 7: Our business strategy
Our business strategy For personal use only Continue to grow organically through building national brand presence, targeting new to category under 40 demographic, enhancing distribution channels h l and d hi higher h policyholder li h ld retention t ti Mitigate claims inflation and continually i
Slide 8: New revenue and earnings
New revenue and earnings For personal use only Overseas workers Overseas students • Compulsory for temporary • Compulsory for all students skilled kill d workers k (i (ie 4 457 visa i holders) • Approximately 500,000 overseas students in Australia in FY10 • In FY10 estimated 310,000 visa holders
Slide 9: For personal use only
For personal use only 9
Slide 10: Organic growth
Organic g g growth For personal use only Continue organic growth investment to achieve above system net policyholder growth Support net policyholder growth efforts with improved retention Increase premium revenue through selling higher value and more appropriate products (net buy up) to curren
Slide 11: Industry growth has slowed
Industry growth has slowed For personal use only Industry's Contributor Growth by State 80,000 70,000 60,000 50 000 50,000 40,000 WA VIC 30,000 QLD Q NSW 20,000 10,000 0 During the GFC industry growth slowed from around 50,000 policies per quarter to around 30,000 policies per quarter However, r
Slide 12: Our target segment has also slowed
Our target segment has also slowed For personal use only Hospital persons Covered Growth 160,000 140,000 120,000 100,000 80,000 60 Plus 40‐59 60,000 20‐39 0‐19 40,000 20,000 0 Growth in our target segment has slowed more than any other segment Despite this this, our share of growth remains stron
Slide 13: But we continue to grow well above system
But we continue to grow well above system For personal use only FY10 to 31 P li h ld growth Policyholder th FY06 FY07 FY08 FY09 March 2010 nib 11,359 26,485 36,605 18.899 15,392 Industry 98,334 201,575 211,238 171,172 102,663 nib (%) 3.9 8.8 11.1 5.2 4.0 Industry (%) 2.1 4.2 4.2 3.3 1.9 % of growth
Slide 14: We continue to punch above our weight
We continue to punch above our weight For personal use only nib's Contributor Growth by State nib's Share of Industry Growth by State 16,000 35% 14,000 30% 12,000 25% 10,000 20% 8,000 WA NSW VIC 15% QLD 6,000 QLD VIC NSW 10% WA 4,000 2,000 5% 0 0% ‐2,000 ‐5% Significant inroads have been made into
Slide 15: Industry advertising spend has stabilised
Industry advertising spend has stabilised For personal use only Industry Advertising Spend ($ millions) 120 Estimated industry 100 advertising g spend p g grew 80 Other from $43m in FY06 to HBF 60 $100m in FY08 HCF/MU 40 Bupa/MBF p / The biggest growth has Medibank/ahm 20 nib been in the mid-tie
Slide 16: ROI on organic growth remains attractive
ROI on organic growth remains attractive For personal use only Effective Commission ‐ Rolling 6 months 30% 25% 20% 15% 10% 5% 0% p‐06 p‐07 p‐08 p‐09 Decc‐05 Decc‐06 Decc‐07 Decc‐08 Decc‐09 n‐06 n‐07 n‐08 n‐09 Marr‐06 Marr‐07 Marr‐08 Marr‐09 Marr‐10 Sep Sep Sep Sep Jun Jun Jun Jun Our cost to acqui
Slide 17: Sales mix has been impacted by GFC
Sales mix has been impacted by GFC For personal use only FY10 to 30 nib FY06 FY07 FY08 FY09 April 2010 Total sales 37,169 49,757 67,456 50,438 45,829 % of new sales “under under 40” 40 target segment 73 6 73.6 78 5 78.5 79 2 79.2 78 7 78.7 77 2 77.2 % of new sales outside core state of NSW/ACT 23.4
Slide 18: Despite GFC our lapse rate remains stable
Despite GFC and heightened competitor activity our lapse rate remains stable For personal use only FY10 to 30 Lapse (nib) FY06 FY07 FY08 FY09 April 2010 Lapse rate (%) 8.9 7.7 9.4 8.6 8.7* Total lapse 25,810 23,272 30,851 31,539 27,788 “U d 40 “Under 40s”” segmentt (%) 60 5 60.5 62 8 62.8 62 2 62.2
Slide 19: Forced migration has so far been the only meaningful migration tactic
Forced migration has so far been the only meaningful migration tactic For personal use only Forced Migrations Price Increases To date, we have achieved modest success with focused voluntary migration campaigns However, However the only meaningful impacts have been due to forcibly migrating custo
Slide 20: Increasing online engagement is a key element of marketing strategy
Increasing the level of online engagement is a key element of our marketing strategy For personal use only Video 1 – Health insurance explained Video 2 – Going g to hospital p PLANNED 20
Slide 21: For personal use only
For personal use only 21
Slide 22: Agenda
Agenda For personal use only Customer insights – growth of the nib brand Net Promoter Score – listening to customers Recent product innovation – continuous improvement and value creation Future F t innovation i ti 22 22
Slide 23: Customer insights
Customer insights For personal use only 72% of Australians are aware of the nib brand (in NSW 90%) • This is ahead of HBA (37%) (37%), HCF (58%) and on par with MBF(80%) Of those considering taking out PHI in the next 12 months, 47% will consider co s de jo joining g nib, b, tthis s is s seco se
Slide 24: nib ads are driving growth
nib ads are driving growth For personal use only 46% Australians recalled the ad 90% of those recalling the ad nationally knew it was nib Ad ti i health Advertising h lth (%) HCF M dib k Medibank MBF iS l t iSelect TV 32 22 14 20 Correct named brand (of those aware of ad) 68 74 25 76 Source: nib bra
Slide 25: Building the brand in WA
Building the brand in WA For personal use only Awareness remains stable at 34% (as at August 2009) Brand that is leading the way has increased from 36% to 47% (as at August 2009) Brand becoming more popular up from 23% to 34% (as at August 2009) Source: nib brand tracking research conducted 20
Slide 26: Customer satisfaction
Customer satisfaction For personal use only 48% of customers are extremely satisfied with nib 65% are loyal to nib 90% agree that nib has a range of covers that suit their needs 82% believe they are getting the best deal in their health insurance by being with nib Source: nib customer satisf
Slide 27: Net Promoter Score
Net Promoter Score For personal use only Net Promoter Score is a simple measure of customer advocacy obtained by asking customers two questions: (1) Would you recommend X to a friend or colleague?; (2) Why did you give that score? The percentage of detractors is subtracted from the percentage of
Slide 28: Net Promoter Score
Net Promoter Score For personal use only Net promoter score is positive and stable with overall satisfaction dipping in March 2010 primarily due to premium price adjustment notification and recovers quickly in April 28
Slide 29: Recent nib product developments
Recent nib product developments For personal use only Development Launch date Comments Nil Excess for Children April 2010 Introduction of nil excess for child dependants on nib family policies Our entry into the overseas student market. Currently focussed on OSHC J January 2010 developing effective
Slide 30: Travel insurance and life insurance sales
Travel insurance and life insurance sales For personal use only Life insurance sales have seen a steady increase since June 2009 Travel insurance sales have been declining however new relationship with Mondial should see a recovery Life and travel insurance commissions for FY10 are forecast to
Slide 31: Future innovation – provider portal
Future innovation – provider portal For personal use only The proposed provider portal web site will empower customers by containing information on providers such as cost and customer satisfaction As well as customer ratings and service charge comparisons the web site will also provide contact d
Slide 32: For personal use only
For personal use only 32
Slide 33: nib's distribution strategy
nib’s distribution strategy For personal use only To ensure that the group channels of nib can support the: Net growth ambitions (including both sales & retention) t ti ) Margin ambitions; and Product and brand aspirations of our business strategy through the appropriate mix of channels that d
Slide 34: Cross Channel Integration
Cross Channel Integration For personal use only Channel sales mix (FY10 at 30 April 2010) 5% 9% DS&S 40% Retail 31% Online Corp Other 15% 18 Retail nib.com.au Call Centre Centres Customer Multiple sites Channel claim mix M bil Mobile Support Online Sales (FY10 at 30 April 2010) Network Policy Online
Slide 35: Customer Care Centre
Customer Care Centre For personal use only Service Levels Circa 820,000 service calls per year answered within 50 secs Circa 88,000 sales calls per year Circa 104 104,000 000 Tele claims per year (3% of ancillary claims) Circa 15,000 outbound welcome calls per annum Average 92 sales per day (30% con
Slide 36: Retail & Corporate Sales
Retail & Corporate Sales For personal use only Service Levels Customer transactions reduced by 48% in 3 years across network Circa 8,000 sales per annum, 1,500 life insurance referrals & 1,200 travel insurance sales Average cost per customer transaction is $32 Approximately 20,000 corporate customer
Slide 37: Online
Online Service Levels For personal use only Approx1.5 million unique visitors to nib.com.au (50% increase on PY) Circa100,000 online quotes per annum (approx 18% conversion) Circa 18 18,000 000 join online per annum Average cost per customer transaction is <$1 Approx 57% of policy holders registered
Slide 38: Emerging sales & service channels
Emerging sales & service channels For personal use only
Slide 39: Cross channel integration
Cross channel integration For personal use only NPS */Customer Solution/Retention initiatives PMOC# email collected across channels (6000 current) Single view of all customer transactions in CRM tool Voice support for all electronic customer transactions * NPS = Net Promoter Score # PMOC = Preferred
Slide 40: Claims Management
Claims Management For personal use only Reducing Leakage Reducing Unwarranted Variation through analysis, profiling and education y Systemic j enhancement of adjudication rules Enhance product design and customer awareness to reduce preference sensitive care Improving Clinical Outcomes Continue to e
Slide 41: Operating Efficiencies
Operating Efficiencies For personal use only Automating Routine Transactions Healthstream inbound paperwork – claims and policy docs – 2500 to 4500 per day (700 STP and increasing), 30% saving i on b baseline li costt Healthstream outbound – routine outbound correspondence – 2000 per day PMOC 25% em
Slide 42: For personal use only
For personal use only 42
Slide 43: nib reaffirms FY10 guidance
nib reaffirms FY10 guidance For personal use only FY10 will be a positive year • Net policyholder growth in upper end of FY10 guidance range of 4-6% • Increased spending on organic growth as well as other business improvement investments will see full year management expense ratio in the range of
Slide 44: Year to date gross margin results on track to achieve FY10 guidance
Year to date gross margin results have nib on track to achieve FY10 guidance For personal use only Results for the 10 months to 30 April 2010: Reflecting g factors including: g • Net policyholder growth of 4.7% (FY10 • Net policyholder growth guidance 4-6%) • Product mix • Gross margin of 15.2%
Slide 45: Year to date results on track to achieve FY10 guidance
Year to date results have nib on track to achieve hi FY10 guidance id For personal use only Results for the 10 months to 30 April p 2010 • Management expense ratio of 9.7%, reflecting previously forecast increased spending on organic growth as well as other b i business iinitiatives. iti ti IIncre
Slide 46: Investments will contribute strongly to FY10 result
Investments will contribute strongly to FY10 result For personal use only Results for the 10 months to 30 April 2010 • Investment return (net of fees) of 10 10.6% 6% or $46 $46.5m 5m • Defensive/growth split of 81%/19% at 30 April 2010 • No additional exposure to growth assets in short/medium term
Slide 47: For personal use only
For personal use only