NIB Holdings Ltd · ASX:NHF
NIB — UBS Financial Services Conference 2008
29 slides from NIB's conference presentation, Jun 25, 2008
Slide 1: nib holdings limited - UBS Financial Services Conference
For personal use only nib holdings limited UBS Financial Services Conference Mark Fitzgibbon, MD & CEO 25 June 2008
Slide 2: Disclaimer
Disclaimer By attending this presentation, you agree that no part of this presentation or disclaimer may be disclosed, distributed or reproduced to any third party without the consent of nib holdings limited (“nib”). This presentation is being provided as part of UBS’ 2008 Financial For personal use
Slide 3: Today's agenda
Today’s agenda For personal use only Healthcare market and private health insurance Overview of nib Outlook Q&A 3
Slide 4: Healthcare market and private health insurance
For personal use only Healthcare market and private health insurance
Slide 5: The healthcare market is big and getting bigger
The healthcare market is big and getting bigger, growing at more than twice the rate of GDP For personal use only Total Australian healthcare expenditure During FY06, Australians spent approx. Total spending ($bn) (LHS) % GDP (RHS) $87bn on healthcare (public and private) 100 9.0% Spending repre
Slide 6: PHI plays a relatively small but important role in the healthcare economy
PHI plays a relatively small but important role in the healthcare economy For personal use only PHI represents only 7% of healthcare Total Australian PHI contributions of funding $11.2bn for FY07 The PHI industry’s value proposition: Other • access to private hospital and 8% avoiding waiting tim
Slide 7: The PHI industry is dominated by the top funds
The PHI industry is dominated by the top 5 funds For personal use only Top 5 PHI funds account for c80% of the At 30 June 2007 there were 39 PHI market registered health insurers, 37 of which conducted a health benefits fund, 23 of which were open membership Remaining health funds organisations Me
Slide 8: Potential for PHI growth is still significant
Even after the Government’s proposed changes to MLS, the potential for PHI growth is still significant... For personal use only Penetration1 by State is increasing Exposure to significant growth potential: Penetration Growth • almost 12m Australians do not 9 mths to Dec 06 Mar 08 31 Mar 08 have ho
Slide 9: Demand for PHI gaining momentum over the past years
...with demand for PHI gaining momentum over the past 4 years For personal use only Total industry policyholder growth Individual out-of pocket spending is a rate has been increasing significant opportunity 5% Dental services 20% 4.2% All other medications 20% 4% 3.1% Ambulance and community 3% heal
Slide 10: A number of Government policies support PHI
A number of Government policies support PHI A surcharge of 1% of taxable income is levied on those income For personal use only Medicare Levy surcharge earners (proposed – single earning more than $100,000 pa or a couple/family earning more than $150,000 pa) who do not have PHI with a low front en
Slide 11: Looking forward
Looking forward The PHI market and revenue will continue to grow over the medium term For personal use only (growth over 12 months to 31 March 2008 was 4.9%) given sound economic conditions, ongoing government initiatives, low confidence in public system and greater competition Industry wide cla
Slide 12: Overview of nib
For personal use only Overview of nib
Slide 13: nib snapshot
nib snapshot Australia’s 5th largest health insurer headquartered in Newcastle, NSW For personal use only Only ASX listed pure health insurer – added to ASX All Ordinaries Index on 20 March 2008 Approximately 360,000 policyholders, providing cover for approximately 726,000 people (as at 31 Mar
Slide 14: The nib proposition
The nib proposition nib provides value for money and easy to For personal use only understand private health insurance (PHI) PHI allows access to private hospitals, choice of specialist and provides ancillary cover nib’s product design, pricing, brand positioning and distribution is designed t
Slide 15: nib is capturing a large component of market growth
nib is capturing a large component of market growth We expect to achieve 35,000 net new policyholders in FY08 For personal use only Growing faster than top 5 funds over the 9 months to 31 March 2008, with second largest growth in number of total policyholders 60,000 3.5% 50,000 40,000 9.0% 30,000 4.
Slide 16: nib is capturing a large component of market growth
nib is capturing a large component of market growth nib policyholder numbers consistently Second largest growth in number of total For personal use only growing faster than top 5 funds policyholders over 1H08... ...as well as in “20-39” age group1 Success of organic growth strategy can be seen in
Slide 17: A number of factors have underpinned nib's strong growth
A number of factors have underpinned nib’s strong growth For personal use only Focus on target segment and “winning” culture Attractive products and value proposition • simplicity • ancillary bias • deductibles Price competitiveness • Basic Saver $9.95 • premium per Single Equivalent Unit (SEU
Slide 18: 1H08 results highlights
1H08 results highlights We expect normalised net margin to be above 3.0% for FY08 For personal use only (guidance provided at 1H08 results was “near” 3.0%) FY08 % of FY08 Prospectus Prospectus Normalised 1H08 forecast forecast Premium revenue $370.9m $750.7m 49.4% Gross underwriting result1 $51.8m $
Slide 19: We are exceeding all of our key tactical measures
We are exceeding all of our key tactical measures For personal use only 9 mths FY08 31 Mar Prospectus FY05 FY06 FY07 1H07 2H07 2008 Forecast Annualised growth in net 4.2% 3.9% 8.8% 6.6% 10.5% 11.9% 9.7% membership % of new sales new to 68.7% 70.8% 74.4% 75.9% 74.4% 79.9% n/a category % of new sales
Slide 20: Investment assets
Investment assets We are reassessing our investment portfolio mix with a view to For personal use only moving towards an 80:20 defensive / growth split Investment assets – $459.6m (at 31 Dec 07) Following the proposed MLS changes, we are reassessing our investment portfolio mix with a view to movi
Slide 21: Regulatory capital requirements
Regulatory capital requirements Approx. $110m capital above target requirements at 31 Dec 07 For personal use only Capital allocation (at 31 Dec 07) nib health fund total assets at 31 Dec 07 of $514.3m (30 June 2007 - $508.5m) Capital position of the health fund is very strong with capital adequ
Slide 22: Capital management and dividends
Capital management and dividends Strong balance sheet with no gearing and excess capital For personal use only Capital management In the absence of any strategic initiatives, the Board intends reviewing the capital position and gearing around the release of the FY08 results Dividends At the time
Slide 23: Outlook
For personal use only Outlook
Slide 24: Proposed MLS changes
Proposed MLS changes Proposed changes to Medicare Levy Surcharge (MLS): For personal use only • singles threshold up from $50,000 to $100,000 • families threshold up from $100,000 to $150,000 We believe these changes will have an adverse impact on future sales and lapse rates for the industry
Slide 25: Estimated impact of proposed MLS changes
Estimated impact of proposed MLS changes The results of nib’s analysis, which is broadly consistent with the report For personal use only released by the AHIA, indicate that: • FY09 ‘shock loss’ could be up to 6-8%, equating to a one-off loss of approx. 25,000 policyholders • future new sales grow
Slide 26: We have a clear view of what will drive earnings
We have a clear view of what will drive earnings We continue to target a net underwriting margin of 5% and ROE of at For personal use only least 15%, and expect to reach these targets within 4 years Organic growth (sales and retention) and product “buy-up” Managing ongoing claims inflation Imp
Slide 27: Summary
Summary The Australian healthcare economy is forecast to continue to grow at >GDP For personal use only Even after the Government’s proposed changes to MLS, there is significant potential to grow the PHI category • latent demand and increasing incomes • stabilising claims inflation and premiums
Slide 28: Q&A
For personal use only Q&A
Slide 29: nib holdings limited - UBS Financial Services Conference
For personal use only nib holdings limited UBS Financial Services Conference Mark Fitzgibbon, MD & CEO 25 June 2008
nib holdings — UBS Financial Services Conference 2008 on 6ix