Nib Holdings Ltd · ASX:NHF
Nib — Shareholder Meeting (October 2014)
32 slides from Nib's shareholder meeting presentation, Oct 29, 2014
Slide 1: Cover letter: 2014 Annual General Meeting 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 29 October 2014 For personal use only The Manager Company Announcements Australia Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 2000 Sub
Slide 2: Annual General Meeting 2014
For personal use only ANNUAL GENERAL MEETING 2014 Wednesday 29 October 1 ANNUAL GENERAL MEETING 2014
Slide 3: Steve Crane, Chairman
For personal use only STEVE CRANE CHAIRMAN 2 ANNUAL GENERAL MEETING 2014
Slide 4: nib's Board & Executive
INTRODUCTION For personal use only nib’s BOARD & EXECUTIVE • LEE AUSBURN – Independent Non-Executive Director • HAROLD BENTLEY – Independent Non-Executive Director • DR ANNETTE CARRUTHERS – Independent Non-Executive Director • PHILIP GARDNER – Independent Non-Executive Director • CHRISTINE McLOUGHLI
Slide 5: Meeting Schedule
MEETING SCHEDULE For personal use only • Chairman’s address • Managing Director’s address • Notice of Meeting • Consideration of Reports for the financial year ended 30 June 2014 • Consideration of the Remuneration Report • Election of Independent Non-Executive Director, Ms Lee Ausburn • Re-election
Slide 6: Solid Group Results
SOLID GROUP RESULTS For personal use only • Strong top line consolidated premium growth at 15.6% to $1.5b. • Operating profit grew 4.3% to $72.3m. • Earnings per share grew 3.9% to 15.9 cents (FY13: 15.3c). • Return on equity remained very strong at 20.8%. 5 ANNUAL GENERAL MEETING 2014
Slide 7: Australian Residents Health Insurance
AUSTRALIAN RESIDENTS HEALTH INSURANCE For personal use only • Not all smooth sailing for the core Australian Residents Health Insurance (arhi) business in FY14. • High claims experience, in particular on a new extras only product dampened gross margin profitability. • This combined with growing poli
Slide 8: Adjacent Businesses
ADJACENT BUSINESSES For personal use only • Established non-arhi businesses all performed well in FY14. • International Workers (iwhi) grew earnings by 12.1% to $9.4m. • International Students (ishi) grew revenue by 110% posting a profit for the first time since being launched of $1.9m. • nib New Ze
Slide 9: Non-arhi Business Contribution
NON-ARHI BUSINESS CONTRIBUTION For personal use only • The performance of these businesses reflects a real determination to diversify and create enterprise value by leveraging our nib brand and existing assets and expertise. • We continue to explore additional business diversification opportunities
Slide 10: Net Investment Returns
NET INVESTMENT RETURNS For personal use only • Investment portfolio delivered strong returns above our annual internal benchmarks, primarily on the back of strong equity market performance. • Whilst exposure to equities is only 9.7%, net investment return for the 12-month period was $29.7m or 5.6%.
Slide 11: Other Key Performance Metrics
OTHER KEY PERFOMANCE METRICS For personal use only • NPAT: $69.8m • EPS: 15.9c • ROE: 20.8% 10 ANNUAL GENERAL MEETING 2014
Slide 12: Total Shareholder Returns
TOTAL SHAREHOLDER RETURNS For personal use only • Since listing in 2007, nib’s TSR has been more than 475%, compared to approximately 9% for the S&P/ASX200 for the same period. 11 ANNUAL GENERAL MEETING 2014
Slide 13: Dividends
DIVIDENDS For personal use only • The Board declared ordinary dividends totaling 11.0 cents per share, fully franked for FY14 (FY13: 10.0cps, fully franked). • The full year dividend represents a payout ratio of 69.2% of consolidated FY14 after tax earnings. This is consistent with our dividend poli
Slide 14: New Capital Standards & Capital Position
NEW CAPITAL STANDARDS & CAPITAL POSITION For personal use only • During FY14, industry regulator, PHIAC, announced new Australian capital standards. This resulted in a new capital target for Australian health insurance businesses and an increase in the nib Group’s available capital position. • As at
Slide 15: New Capital Standards & Capital Position
NEW CAPITAL STANDARDS & CAPITAL POSITION For personal use only • The remaining available capital of approximately $18.7m will be reserved for potential strategic investment opportunities, such as business acquisitions if they arise. • In the event that a strategic investment opportunity does not eve
Slide 16: nib foundation
nib foundation For personal use only • nib foundation has now contributed $12m in funding to aid the development and delivery of unique and practical initiatives. • It has made a positive difference to the lives of more than 45,000 Australians through its partnerships with 60 Australian charities at
Slide 17: FY15 & Beyond
FY15 & BEYOND For personal use only • Strong and profitable growth remains a key focus for the Board and management team. • The investment thesis for private health insurance, both in Australia and New Zealand are very positive. The combination of ever increasing healthcare spending and growing fisc
Slide 18: Mark Fitzgibbon, Managing Director
For personal use only MARK FITZGIBBON MANAGING DIRECTOR 17 ANNUAL GENERAL MEETING 2014
Slide 19: Broad Thematic
BROAD THEMATIC Australian healthcare spending1 For personal use only 1. We’re spending more and more on our healthcare. 2. Governments cannot sustain their relative funding share. 3. The private sector and private funding Australian Treasury projections2 will increasingly play an enhanced role. 4. G
Slide 20: PHI Industry Thematic
PHI INDUSTRY THEMATIC • PHI coverage will continue to grow For personal use only Australian PHI coverage 2%-3% pa. Persons covered with hospital cover (millions) - LHS 12.0 Industry premium revenue ($billion) - RHS 21.0 • Government will increasingly look Persons covered with hospital cover (million
Slide 21: Group Business Strategy
GROUP BUSINESS STRATEGY For personal use only 1 Organic arhi growth 2 nib New Zealand 3 International students & workers 4 nib Options & IPMI 5 Claims management 6 Innovation & technology 7 People 20 ANNUAL GENERAL MEETING 2014
Slide 22: Continued Strong Top Line Focus & Growth
CONTINUED STRONG TOP LINE FOCUS & GROWTH For personal use only GROUP PREMIUM REVENUE • Group premium revenue up 15.6% to $1.5b due to • arhi policyholder growth, higher API per sale and premium increases. • Strong performance of adjacent businesses, including full year contribution of nib New Zealan
Slide 23: And Disciplined Cost Control
AND DISCIPLINED COST CONTROL nib GROUP MER For personal use only • Group management expense ratio (MER) of 10.9%, up 1.1% includes investment in brand and growth in New Zealand. • arhi MER of 8.1% lowest since listing in 2007. nib arhi MER • arhi management expenses per average policy* (FY13): • nib
Slide 24: But With High Claims Experience (arhi)
BUT WITH HIGH CLAIMS EXPERIENCE (arhi) arhi CLAIMS EXPENSE For personal use only • Group claims expense up 15.2% to $1.3b (includes full year impact of nib New Zealand) • arhi claims expense up 11.9% to $1.2b $1.2b (including risk equalisation) versus premiums up 10.7%. • arhi gross margin of 12.3%,
Slide 25: arhi Remains Our Core Economic Engine
arhi REMAINS OUR CORE ECONOMIC ENGINE For personal use only arhi OPERATING PROFIT • arhi premium revenue of $1.3b, driven by policyholder growth, higher API per sale and premium increases. • For FY14, arhi generated more than 71,000 policyholder sales, with net annual growth of 3.1% (industry averag
Slide 26: Yet Established Adjacent Businesses Are Performing Well
YET ESTABLISHED ADJACENT BUSINESSES ARE PERFORMING WELL For personal use only • International Students Health Insurance (ishi) operating profit of $1.9m (FY13: $(0.1)m). • International Workers Health Insurance (iwhi) operating profit of $9.4m (FY13: $8.4m). • Other insurance commissions (non-underw
Slide 27: Group Earnings Continue to Grow
GROUP EARNINGS CONTINUE TO GROW For personal use only GROUP OPERATING PROFIT • Group operating profit up 4.3% to $72.3m. • Adjacent business accounted for 25.4% of FY14 Group operating profit. 26 ANNUAL GENERAL MEETING 2014
Slide 28: Business Innovation a Key Emphasis
BUSINESS INNOVATION A KEY EMPHASIS For personal use only nib Options provides Whitecoat allows Alliance with Apia whereby access to cosmetic and consumers to search and they sell a “whitelabelled” dental treatment in compare ancillary nib health insurance Australia or overseas. providers. Launched p
Slide 29: Outlook – arhi
OUTLOOK – ARHI ANNUAL NET POLICYHOLDER GROWTH • Total demand for private health insurance For personal use only expected to grow circa 2%-3% (net annual policyholder growth) - with nib continuing to do better. • Steps have and are being taken to restore net margin towards target 5.0%-5.5% range, inc
Slide 30: Outlook – Adjacent and New Businesses
OUTLOOK – ADJACENT AND NEW BUSINESSES For personal use only INTERNATIONAL BUSINESS SEGMENTS • iwhi and ishi markets forecast to grow with opportunities for nib to increase market share and profitability. • nib New Zealand investment to be maintained especially in relation to direct-to-consumer chann
Slide 31: Capital Management & FY15 Guidance
CAPITAL MANAGEMENT & FY15 GUIDANCE For personal use only • Dividend payout ratio of 60%-70% full year NPAT. • Capacity to better optimise nib’s capital structure with additional debt. • M&A opportunities although not clear, have been provided for in capital planning. • FY15 consolidated operating pr
Slide 32: For personal use only
For personal use only ANNUAL GENERAL MEETING 2014 Wednesday 29 October 31 ANNUAL GENERAL MEETING 2014