Nib Holdings Ltd · ASX:NHF
Nib — FY2015 Earnings Presentation
24 slides from Nib's earnings presentation, Sep 7, 2015
Slide 1: FY15 Results Investor Roadshow Presentation cover letter
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 7 September 2015 The Manager Company Announcements Australia Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 2000 FY
Slide 2: Investor Roadshow Presentation September 2015
For personal use only Investor Roadshow Presentation* September 2015 * Comprises the 2015 Full Year Results Investor Presentation released on 24 August 2015, excluding the Appendix, with an update to the first bullet point on slide 20 (International & Complementary Business Outlook) and an expanded
Slide 3: Group Summary
GROUP SUMMARY • Group operating profit up 13.0% to $81.7m (FY14: $72.3m). For personal use only • Group premium revenue up 9.6% to $1.6b (FY14: $1.5b). • Australian Resident Health Insurance (arhi) operating profit up 26.0% to $71.8m – Net policyholders grew 4.7% (FY14: 3.1%) versus industry 2.5%. –
Slide 4: Performance: Premium Revenue and Operating Profit
PERFORMANCE METRICS For personal use only Group Premium Revenue ($b) Group Operating Profit ($m) 1.0 1.1 1.3 1.5 1.6 59.8 70.0 69.3 72.3 81.7 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 3
Slide 5: Performance: Return on Equity and EPS
PERFORMANCE METRICS For personal use only Return on Equity (%) Earnings Per Share (cps) 16.5% 21.7% 21.6% 20.8% 23.1% 13.7 14.8 15.3 15.9 17.3 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 4
Slide 6: Performance: Dividends and Net Promoter Score
PERFORMANCE METRICS For personal use only Dividends (cps) Net Promoter Score* Ordinary Special Capital Return NPS (Australia) NPS (NZ) * 30.0% 25.0 20.0% 20.0 10.0% 16.07 0.0% 15.0 9.0 -10.0% 5.0 -20.0% 10.0 -30.0% 11.0 11.5 5.0 9.25 10.0 8.0 0.0 FY11 FY12 FY13 FY14 FY15 * nib New Zealand acquired i
Slide 7: Performance: Operating Cash Flow and Total Shareholder Return
PERFORMANCE METRICS For personal use only Net operating cash flow ($m) Total Shareholder Return (%) nib delivered a ~7.6% total shareholder return in FY15 versus ~5.7% for the All Ords Index. 500 nib All Ords Accumulation Index 400 277% 300 200 59% 100 53.2 44.2 66.2 88.3 134.6 20.0 93.7 114.2 0 FY0
Slide 8: NPAT Summary
NPAT SUMMARY For personal use only Increase in operating profit of $9.4m 120.0 110.0 4.0 4.4 100.0 28.4 12.5 90.0 3.8 0.7 ($m) 1.2 3.9 1.7 80.0 5.2 0.7 4.9 75.3 70.0 69.8 60.0 50.0 • Group operating profit up 13.0% to $81.7m has underpinned 7.9% increase in NPAT to $75.3m. • Tax expense impacted by
Slide 9: arhi Key Metrics
arhi KEY METRICS For personal use only FY15 FY14 Change* Total policyholders 509,897 486,794 4.7% - Net policyholder growth (%) 4.7 3.1 1.7% Net new policyholders 23,103 14,530 59.0% Total customers (persons covered) 1,001,368 959,974 4.3% Total sales 89,095 71,060 25.4% - Sales rate (%) 18.3 15.0 3
Slide 10: arhi Key Financials
arhi KEY METRICS For personal use only ($m) FY15 FY14 Change* Premium revenue 1,429.5 1,314.5 8.8% - % of total Group 87.4% 88.1% (0.7)% Claims (including state levies, excluding risk equalisation) (1,053.4) (961.7) 9.5% Risk equalisation (185.5) (190.6) (2.7)% Claims including risk equalisation (1,
Slide 11: International (Inbound) Health Insurance Key Metrics
INTERNATIONAL (INBOUND) HEALTH INSURANCE KEY METRICS For personal use only ($m) FY15 FY14 Change* Total policyholders 71,783 45,284 58.5% - Net policyholder growth (%) 58.5% 66.6% (8.1)% Net premium revenue 54.9 38.0 44.6% - % of total GWP 3.4% 2.5% 0.9% Net claims expense (29.4) (16.9) 73.8% Gross
Slide 12: New Zealand Key Metrics
NEW ZEALAND KEY METRICS For personal use only (A$m) FY15 FY14 Change* Total policyholders 83,778 79,147 5.9% -Net policyholder growth (%) 5.9% (0.1)% 6.0% Premium revenue 150.4 139.2 8.1% - % of total Group 9.2% 9.3% (0.1)% Claims expense (96.8) (89.5) 8.1% Gross underwriting result (excluding PPB)
Slide 13: New Zealand Policyholder Growth
NEW ZEALAND KEY METRICS For personal use only 85,000 84,000 83,000 Number of inforce policies nib acquires 82,000 Tower Health 81,000 80,000 DTC Product launch 79,000 78,000 • nib New Zealand now growing strongly after a decade of losing policyholders, with policyholder growth of 5.9%. Direct-to-con
Slide 14: Other Income & Expenses
OTHER INCOME & EXPENSES For personal use only ($m) FY15 FY14 Change* Other income Complementary Insurance 2.4 2.2 13.1% nib options income 0.6 0.4 65.8% Agency fee (exc nib options) 0.3 0.2 26.9% Rental income 1.0 0.9 9.4% Sundry income 0.5 2.1 (76.5)% Digital Health Ventures licence fee income 0.3
Slide 15: Finance Costs & Gearing
FINANCE COSTS & GEARING For personal use only • Gearing ratio at 30 June 2015 of 15.6% (debt to debt plus equity). • Gearing of 32% (debt to debt plus equity) post WNG acquisition. • nib targets a long term average gearing ratio of 30%. In the event of a significant transaction gearing may be above
Slide 16: Investments
INVESTMENTS For personal use only 31.4 • Net investment return of 5.8% (FY14: 5.6%). • FY15 benefited ($5.4m) from sale of shareholding in Pacific Smiles Group (21 November 2014). Excluding the benefit from PSG sale our investment return would have been $26.0 million or 4.8%, reflecting lower cash r
Slide 17: Cash Flow
CASH FLOW For personal use only ($m) FY15 FY14 Change* Net cash inflow/(outflow) from operating 114.2 93.7 21.9% Net cash inflow/(outflow) from investing (48.9) (42.0) 16.3% Net cash inflow/(outflow) from financing (89.0) (46.3) 92.3% Net increase (decrease) in cash and cash equivalents (23.7) 5.4 (
Slide 18: Available Capital Position
AVAILABLE CAPITAL POSITION For personal use only ($m ) FY15 FY14 Opening available capital position above internal targets 18.7 14.8 Net profit after tax 75.3 69.8 (Increase)/Decrease in nib health funds capital (25.3) 49.0 (Increase)/Decrease in nib New Zealand capital (27.9) (11.8) Allow ance for
Slide 19: arhi Outlook
arhi OUTLOOK For personal use only We expect the market to continue to grow and to increase our market share and earnings. Policyholder growth • System growth will continue for a number of reasons, including inevitable funding shift from Government to nib Industry private sector. 6.0% • Above system
Slide 20: arhi Outlook: Claims Inflation
arhi OUTLOOK For personal use only Managing underlying claims inflation a top priority • Underlying claims inflation to continue in Benefits paid per person* the order of 5%-8%. Growing determination evident nib Industry amongst health insurers to rein in over-servicing, avoidable hospital admission
Slide 21: International & Complementary Business Outlook
INTERNATIONAL & COMPLEMENTARY BUSINESS OUTLOOK "Complementary" business will continue to make a major contribution to pre-tax For personal use only operating earnings and further opportunities are very real. • International (Inbound) Health Insurance business (students and workers) policyholder grow
Slide 22: Digital
DIGITAL For personal use only We will increase investment in our IT and digital strategy (including Whitecoat), especially recognising the potential of the "digital era" to disrupt the healthcare market and create opportunities. Whitecoat • Will help customers make more informed decisions around the
Slide 23: Travel Insurance (World Nomads Group)
TRAVEL INSURANCE (WORLD NOMADS GROUP) For personal use only • Third-largest distributor of travel insurance in Australia. • Specialises in the marketing, sale and distribution of travel insurance policies globally (Australia accounts for ~70% of GWP1). Business summary • Provides ancillary insurance
Slide 24: FY16 Outlook & Guidance
FY16 OUTLOOK & GUIDANCE • Above system arhi policyholder growth with stable net profit margin. For personal use only • International (inbound) health insurance policyholder growth but profitability may be weaker. • nib Options operating loss similar to FY15 ($3.8m) with profitability in FY17. • nib