Nib Holdings Ltd · ASX:NHF
Nib — Macquarie Australia Conference 2014
29 slides from Nib's conference presentation, May 7, 2014
Slide 1: ASX cover letter: Macquarie Australia Conference Presentation
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 Wednesday 7 May 2014 The Manager Company Announcements Australian Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 20
Slide 2: Macquarie Australia Conference May 2014
MACQUARIE AUSTRALIA CONFERENCE MAY 2014 = = © @ Q = © ‘= S Q — @ oe = © UL
Slide 3: Overview
OVERVIEW ¢ Healthcare context ¢ PHI in Australia (and New Zealand) ¢ About nib ¢ Outlook and investment thesis = = © @ Q = © ‘= S Q — @ oe = © UL
Slide 4: For personal use only
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Slide 5: Healthcare spending continues to rise
For personal use only HEALTHCARE SPENDING CONTINUES TO RISE Australian healthcare spending ($AU) NZ healthcare spending ($NZ) Growth in healthcare spending driven by 21.0 • Wealth effect • Cost of new technology 19.0 • Ageing • Supply induced demand ($ billion) • Rise of chronic disease • Informatio
Slide 6: In Australia, government still accounts for lion's share of spending
For personal use only IN AUSTRALIA, GOVERNMENT STILL ACCOUNTS FOR LION’S SHARE OF SPENDING Components of Australian healthcare spending Total Government spending has more than doubled in past 10 years - $42.4b in FY02 to $97.8b in FY12 2011-12 $140 billion Currently healthcare spending accounts for
Slide 7: But is level of government funding sustainable?
For personal use only … BUT IS LEVEL OF GOVERNMENT FUNDING SUSTAINABLE? Australian Treasury projections (Australian Government spending) 8% 2009-10 2049-50 Treasury projections of Australian 7% Government spending underscore the 6% need for health reform, like that outlined in National Commission of
Slide 8: PHI in Australia (and New Zealand)
PHI IN AUSTRALIA (AND NEW ZEALAND) = = © @ Q = © ‘= S Q — @ oe = © UL
Slide 9: PHI participation remains stable, but with plenty of opportunity to expand
For personal use only PHI PARTICIPATION REMAINS STABLE, BUT WITH PLENTY OF OPPORTUNITY FOR THIS TO EXPAND Australian PHI coverage (% of population) NZ PHI coverage (% of population) 35.0% 85.0% Medibank commenced on 1 Jul 1975 as a program of universal, non-contributory 32.5% health insurance 75.0%
Slide 10: What PHI covers in Australia & New Zealand
For personal use only WHAT PHI COVERS IN AUSTRALIA & NEW ZEALAND (NZ) Australia NZ Public Hospital (accommodation, theatre, etc), choice of specialist Private Hospital (accommodation, theatre, etc), choice of specialist Medical specialist (surgeon, anaesthetist ) in hospital Medical specialist (surg
Slide 11: National Commission of Audit
For personal use only NATIONAL COMMISSION OF AUDIT The National Commission of Audit Report (released last week) has outlined a number of recommendations aimed at reforming Australia’s healthcare system: Effective move towards compulsory PHI for those on higher incomes Expanded cover into primary
Slide 12: Industry structure (Australia)
For personal use only INDUSTRY STRUCTURE (AUSTRALIA) • At 30 June 2013 there were 34 private health insurers operating in Australia • Top five PHI players represent 82% of the polices nationally • For profit insurers make up around 70% of the industry • Direct to consumer accounts for ~85% sales • P
Slide 13: Annual net policyholder growth (Australia)
For personal use only ANNUAL NET POLICYHOLDER GROWTH (AUSTRALIA) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% FY09 FY10 FY11 FY12 FY13 Medibank BUPA/MBF HCF HBF nib Industry * Source: Private Health Insurance Administration Council – The Operations of Private Health Insurers Annual Report 2012-13 • nib h
Slide 14: For personal use only
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Slide 15: About nib
For personal use only ABOUT nib FY13 Group premium revenue of $1.3b, net profit after tax of $67.2m More than 750 employees in Australia and New Zealand Australia’s 4th largest private health insurer, New Zealand’s 2nd largest private health insurer (only ASX listed private health insurer) M
Slide 16: nib's business strategy is clear & focussed
For personal use only nib’s BUSINESS STRATEGY IS CLEAR & FOCUSSED Grow our Australian residents health insurance business (arhi) organically at circa 10% annual premium growth 1 (4-5% policyholder growth) through building national brand presence and with an emphasis on <40 market (Virgin Green), >55
Slide 17: FY14 first half results were solid
For personal use only FY14 FIRST HALF RESULTS WERE SOLID ($m) 1H14 1H13 %* Group premium revenue1 735.4 612.8 20.0 - Australian Resident Health Insurance (arhi) 649.7 586.7 10.7 - International Workers Health Insurance (iwhi)1 14.3 13.8 3.7 - International Students Health Insurance (ishi) 3.9 2.1 82
Slide 18: Key performance metrics
For personal use only KEY PERFORMANCE METRICS Earnings Per Share Return On Equity 21.7% 21.6% 15.3cps 14.8cps 13.7cps 16.3% 16.5% 12.4cps 7.8% 5.2cps 6.6% 4.7cps FY08* FY09 FY10 FY11 FY12 FY13 FY08* FY09 FY10 FY11 FY12 FY13 • Since FY08, nib’s EPS CAGR has been 24.1% • Since FY08, nib’s ROE CAGR has
Slide 19: Total shareholder return
For personal use only TOTAL SHAREHOLDER RETURN nib has delivered a strong shareholder return since listing, having substantially outperformed various accumulation indices Total shareholder return (rebased to 100) 500 nib All Ords Accumulation Index 375.7% 450 400 350 300 250 200 150 100 4.0% 50 0 No
Slide 20: Outlook and investment thesis
OUTLOOK AND INVESTMENT THESIS = = © @ Q = © ‘= S Q — @ oe = © UL
Slide 21: What we think industry will do
For personal use only WHAT WE THINK INDUSTRY WILL DO PHI system will continue to grow at circa 2% - 3% annually due to government “carrots and sticks”, favourable economic conditions and growing consumer lack of confidence in public health system Industry portability and continued heavy marketin
Slide 22: What we think nib will do
For personal use only WHAT WE THINK nib WILL DO Australian Residents Health Insurance Continued organic policyholder growth of ~ 4% for FY14 (consistent with target sustainable growth rate) and expected to be 1.5x industry. Ongoing strategy to target <40s (traditional direct to consumer distributi
Slide 23: What we think nib will do
For personal use only WHAT WE THINK nib WILL DO nib Options Launched in March, with initial efforts focussing upon cosmetic surgery (international and domestic) Value proposition centred around trustworthiness, safety and choice, with emphasis on clinical governance, quality and “after care prom
Slide 24: FY14 guidance
For personal use only FY14 GUIDANCE FY14 consolidated operating profit forecast continues to be in the range of $73m - $80m FY14 investment income forecast to be line with relevant internal benchmarks 23
Slide 25: Thank you
For personal use only THANK YOU 24
Slide 26: For personal use only
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Slide 27: Like Australia, NZ government accounts for bulk of healthcare spending
For personal use only LIKE AUSTRALIA, Components of NZ healthcare spendingNZ GOVERNMENT ACCOUNTS FOR BULK OF HEALTHCARE SPENDING NZ Governments funds ~80% of all healthcare spending 2011-12 NZ$20billion Currently NZ healthcare spending accounts for more than ~10% of GDP and is increasing at ~5% per
Slide 28: Like Australia, this (NZ) level of spending is not sustainable
For personal use only LIKE AUSTRALIA, THIS (NZ) LEVEL OF SPENDING IS NOT SUSTAINABLE NZ Treasury projections (Government spending) 12% 2010 2030 2060 10% The Treasury estimates NZ Government healthcare funding will go from 6.8% of 8% GDP in 2010 to 10.8% in 2060 % of GDP 6% 4% 2% By 2061, 20%-30% of
Slide 29: Industry structure (NZ)
For personal use only INDUSTRY STRUCTURE (NZ) • There are currently 10 registered health funds in NZ • Top 3 PHI players represent 87% of the industry by premium revenue • Majority of health insurance is sold through advisors or employer groups • Policies are risk rated (unlike Australia) * Source B