NIB Holdings Ltd · ASX:NHF
NIB — Shareholder Meeting (October 2008)
28 slides from NIB's shareholder meeting presentation, Oct 28, 2008
Slide 1: Annual General Meeting
ANNUAL For personal use only GENERAL MEETING Newcastle Town Hall 2pm, 28 October 2008
Slide 2: Chairman Keith Lynch
For personal use only CHAIRMAN KEITH LYNCH
Slide 3: Introduction: Directors & Executives
INTRODUCTION For personal use only DIRECTORS & EXECUTIVES Mark Fitzgibbon, Managing Director & Chief Executive Officer Harold Bentley, Non-Executive Director Dr Annette Carruthers, Non-Executive Director Philip Gardner, Non-Executive Director Brian Keane, Non-Executive Director Michelle
Slide 4: Meeting Schedule
MEETING SCHEDULE For personal use only Chairman’s Address CEO’s Address Notice of Meeting Item 1: Consideration of Reports Resolutions and Voting Item 2: Remuneration Report Item 3: Re-election of Directors – Harold Bentley and Brian Keane Item 4: Appointment of Auditor – Pricewaterhouse
Slide 5: Year in Review
YEAR IN REVIEW For personal use only Demutualisation and ASX Listing • Overwhelming support from policyholders (95%) to demutualise and list on ASX • nib successfully listed on the ASX on 5 November 2007 • Policyholders crystallized their value in the company in the form of cash or shares nib Bo
Slide 6: Year in Review (cont)
YEAR IN REVIEW (cont) For personal use only nib Board declared a fully franked dividend of 2.1 cents per share in respect of the FY2008 results • Distributed to shareholders on 10 October 2008 • Equates to a payout ratio of 40.7% of normalised profits Established nib foundation 6
Slide 7: nib foundation Established
nib foundation ESTABLISHED For personal use only nib donated $25 million to establish nib foundation in June 2008 as part of demutualisation Prime Minister, Kevin Rudd announced the first nib foundation beneficiary on 19 October 2008 • $100,000 donated to The Black Dog Institute to aid mood diso
Slide 8: Focus for the Business Going Forward
FOCUS FOR THE BUSINESS For personal use only GOING FORWARD Creating shareholder value by • Business growth and development • Accountability and risk management • Capital management • Good corporate citizenship 8
Slide 9: Unsolicited Bid for nib
UNSOLICITED BID FOR nib For personal use only Confidential, unsolicited, non-binding and incomplete proposal for a third party to acquire a controlling stake in nib and establish a strategic alliance A$1.15 – A$1.20 per nib share subject to due diligence Board believes the proposal undervalues
Slide 10: Mark Fitzgibbon, Managing Director & CEO
MARK FITZGIBBON For personal use only MANAGING DIRECTOR & CEO
Slide 11: Our Mission and Business Strategy
OUR MISSION For personal use only nib’s mission is to shape the future of private healthcare funding in a way that increases participation, enhances health outcomes and creates enterprise value. OUR BUSINESS STRATEGY Grow the market and nib market share Target < 40’s market Build national bran
Slide 12: Performance Highlights: Policyholder Growth
PERFORMANCE HIGHLIGHTS For personal use only Strong policyholder growth due to continued success of organic growth strategy: • Net policyholder growth of 11.1% for FY2008 vs estimated 4.2% for industry • 36,605 net new policyholders – 114.7% of FY2008 Prospectus Forecast, and consistent with revis
Slide 13: Performance Highlights: Market Share
PERFORMANCE HIGHLIGHTS For personal use only With estimated market share of 7%1, nib accounted 70,000 for an estimated 17.3% of 60,000 50,000 national growth in FY2008 40,000 30,000 With estimated market 20,000 share of 9.5%1 in 20-39 age 10,000 group, nib accounted for 0 Medibank MBF BUPA HCF H
Slide 14: The Right Kind of Growth
PERFORMANCE HIGHLIGHTS For personal use only THE RIGHT KIND OF GROWTH FY08 Prospectus FY05 FY06 FY07 FY08 Forecast Annualised growth in net 4.2% 3.9% 8.8% 11.1% 9.7% membership % of new sales new to category 68.7% 70.8% 74.4% 73.2% n/a % of new sales “under 40” 71.7% 73.6% 78.5% 78.8% n/a % of new s
Slide 15: Performance Highlights: Premium Revenue
PERFORMANCE HIGHLIGHTS For personal use only Premium revenue continues to grow strongly through organic growth April 2008 price increases (4.99%) were in line with market increases 15
Slide 16: Performance Highlights: Claims Expense
PERFORMANCE HIGHLIGHTS For personal use only Total claims expense for FY2008 of $647 million, up $75.9 million (or 13.3%) on previous year Total drawing rate of inflation (ex risk equalisation) has stabilised Risk equalisation continues to reduce the benefit of our successful acquisition of yo
Slide 17: Performance Highlights: Management Expenses
PERFORMANCE HIGHLIGHTS For personal use only Management expenses $78.2 million for FY2008 largely reflects significant investment ($18.9 million) in growth (advertising and sponsorship) MER, including increased investment in growth was down on FY2007 and below FY2008 Prospectus Forecast of 11.1%
Slide 18: Performance Highlights: Underwriting Margin
PERFORMANCE HIGHLIGHTS For personal use only Our strong operating performance is reflected in our normalised net underwriting margin of 4.4%. Normalised net underwriting result of $33.0 million, up $9.3 million or 39.2% on FY2007. We continue to target a net underwriting margin of 5% and expec
Slide 19: Performance Highlights: Investment Earnings
PERFORMANCE HIGHLIGHTS For personal use only Volatile investment markets have resulted in low net investment earnings for the full year of $7.5 million, down from $31.3 million FY2007. We are carefully moving our target investment asset allocation to reduce investment earnings volatility Retur
Slide 20: Performance Highlights: Return on Equity
PERFORMANCE HIGHLIGHTS For personal use only Normalised ROE of just 7% for the year driven by a combination of lower profitability as a result of volatile investment returns and a sub-optimal balance sheet Capital management continues to be a significant priority We continue to target a ROE of
Slide 21: Capital Management & Investment
CAPITAL MANAGEMENT & INVESTMENT For personal use only Investment assets of $440.9 million at 30 September 2008 with a 74% defensive / 26% growth mix We have a strong capital position: • Approximately $112 million in excess capital at 30 September 2008 above our internal target (1.5x), after allo
Slide 22: Innovation Product Development
INNOVATION PRODUCT DEVELOPMENT For personal use only During FY2008 we introduced a number of new product initiatives • Products for single parent families • Introduction of ancillary-only product – Just Extras New products in pipeline are expected to be introduced during FY2009. Launched a lif
Slide 23: Market Outlook: Market Fundamentals Are Sound
MARKET OUTLOOK For personal use only MARKET FUNDAMENTALS ARE SOUND Government will remain supportive of PHI given increasing dependency ratio Claims inflation will be between 5%-10% (subject to MLS impact) More rationale and certain premium setting policy likely to emerge Industry growth pos
Slide 24: Market Outlook: Private Sector Role in Healthcare Funding
MARKET OUTLOOK For personal use only Why the government must allow the private sector to play a greater role in healthcare funding… 24
Slide 25: Growth Potential Still Significant
MARKET OUTLOOK For personal use only GROWTH POTENTIAL STILL SIGNIFICANT Penetration1 has been increasing 52% <40 40+ Total Even after the Government’s 48% changes to MLS, the potential for 44% PHI growth is still significant: 40% • considerable latent demand 36% Jun-04 Jun-05 Jun-06 Jun-07 Jun-08
Slide 26: We Have a Clear View of What Will Drive Earnings
WE HAVE A CLEAR VIEW OF WHAT WILL For personal use only DRIVE EARNINGS We continue to target a net underwriting margin of 5% and ROE of at least 15% and expect to reach these targets in the near term Earnings and ROE Continue to target 5% net underwriting margin Increase market penetration and v
Slide 27: FY2009 Guidance
FY2009 GUIDANCE For personal use only nib revised its FY2009 guidance on 17 October 2008 following Senate’s passing and subsequent legislation of the Medicare Levy Surcharge (MLS) Threshold Bill nib’s updated guidance is based on income threshold limits being $70k for singles, $140k for couples/
Slide 28: nib's Share Price Performance
nib’s SHARE PRICE PERFORMANCE We believe that the current share price does not reflect the true value of For personal use only the organisation. P/E 9.9x – NTA 1.021. Share price has been affected by macro economic factors and MLS issue. Priority within the business is to grow the share price to