NIB Holdings Ltd · ASX:NHF

NIB — Citi Australian Investment Conference 2014

29 slides from NIB's conference presentation, Oct 15, 2014

1. Slide 1: ASX cover letter: Presentation to Citi Australian Investment Conference

   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 15 October 2014 The Manager Company Announcements Australia Securities Exchange Limited Level 4, Bridge Street SYDNEY NSW 2000 Pre

2. Slide 2: Citi Australian Investment Conference 2014

   CIT] AUSTRALIAN INVESTMENT CONFERENCE 2014 OCTOBER 2014 = = © @ Q = © ‘= S Q — @ oe = © UL

3. Slide 3: Overview

   OVERVIEW ¢ Healthcare in Australia (and New Zealand) ¢ The role and structure of Private Health Insurance (PHI) ¢ About nib ¢ Results to date ¢ Outlook and investment thesis “Australian and New Zealand healthcare expenditure is growing at a rate well beyond GDP Private health insurance will play an

4. Slide 4: Healthcare in Australia (and New Zealand)

   HEALTHCARE IN AUSTRALIA (AND NEW ZEALAND) = = © @ Q = © ‘= S Q — @ oe = © UL

5. Slide 5: Healthcare spending continues to rise

   Healthcare spending continues to rise Australian healthcare spending ($AUD) NZ healthcare spending ($NZ) For personal use only 150.0 21.0 140.0 20.0 130.0 19.0 120.0 ($ billion) 18.0 ($ billion) 110.0 17.0 100.0 16.0 90.0 15.0 80.0 14.0 70.0 13.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201

6. Slide 6: We're spending upon private hospitals

   We’re spending upon Australian health care spending Private hospital spending is increasing ($AUD) For personal use only $8.0 $6.0 ($b) $4.0 $2.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * Source: PHIAC All private hospital benefits paid by health insurers • Th

7. Slide 7: In Australia government still accounts for lion's share of spending

   In Australia government still accounts for lion’s share of spending… but is it sustainable? For personal use only Components of Australian healthcare spending Australian Treasury projections 8% 2009-10 2049-50 7% 6% 5% % of GDP 4% 3% 2% 1% 0% Graph above relates to Australian Government spending * S

8. Slide 8: It is a similar circumstance in New Zealand

   It is a similar circumstance in New Zealand (NZ) For personal use only Components of NZ healthcare spending NZ Treasury projections 12% 2010 2030 2060 10% 8% % of GDP 6% 4% 2% 0% Graph above relates to NZ Government spending * Source: The Treasury – Affording our Future (2013) Government spending =

9. Slide 9: The role and structure of Private Health Insurance (PHI)

   THE ROLE AND STRUCTURE OF PRIVATE HEALTH INSURANCE (PHI) = = © @ Q = © ‘= S Q — @ oe = © UL nib

10. Slide 10: PHI covers

    PHI covers Australia New Zealand For personal use only Public Hospital (accommodation, theatre, etc), choice of specialist Private Hospital (accommodation, theatre, etc), choice of specialist Medical specialist (surgeon, anaesthetist ) in hospital Medical specialist (surgeon, anaesthetist ) outside

11. Slide 11: PHI industry structure (Australia and NZ)

    PHI industry structure (Australia) For personal use only • At 30 June 2013 there were 34 private health insurers operating in Australia • Top five PHI players represent 82.3% of the polices nationally • For profit insurers make up around 70% of the industry • Direct to Consumer (DTC) accounts for ~8

12. Slide 12: PHI coverage – percentage of Australian and NZ population with health insurance

    PHI coverage – percentage of Australian and NZ population with health insurance Australian industry For personal use only Australian PHI coverage (% of population) growth drivers 85.0% Medibank commenced on 1 Jul 1975 as a program of universal,  Increasing wealth and non-contributory health insuran

13. Slide 13: PHI in Australia is heavily regulated

    PHI in Australia is heavily regulated For personal use only Product • Minimum prescribed benefits • Community rated Price • Government premium increase approval • Government Rebate • Lifetime Health Cover (LHC) loading • Risk Equalisation Prudential • Minimum capital requirement Government surcharge

14. Slide 14: About nib

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15. Slide 15: About nib

    About nib  FY14 Group premium revenue of A$1.5b, operating profit of $A72.3m, net profit after For personal use only tax of $A69.8m  More than 780 employees in Australia and New Zealand  Australia’s 4th largest private health insurer, New Zealand’s 2nd largest private health insurer (only ASX lis

16. Slide 16: nib's business strategy is clear and focussed

    nib’s business strategy is clear and focussed For personal use only 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), >

17. Slide 17: Australian Residents Health Insurance and nib New Zealand

    Australian Residents Health Insurance (arhi) For personal use only  Registered Australian private health insurer (established 1952)  Provider of hospital, medical and ancillary health insurance to more than 950,000 Australians  Market share of approximately 8%  FY14 premium revenue of A$1.3b, op

18. Slide 18: International Workers and Students Health Insurance

    International Workers Health Insurance (iwhi)  Entered international workers space through acquisition of IMAN (specialist provider of For personal use only health insurance to skilled migrant workers) in September 2010 for approximately A$26m  Provider of health and medical insurance to skilled m

19. Slide 19: nib Options and nib Global

    nib Options  Leverages nib’s brand reputation and distribution to support and grow the market for cosmetic, For personal use only dental and surgical treatment both overseas and in Australia  Initial efforts focus upon cosmetic surgery  Value proposition centred around trustworthiness, safety and

20. Slide 20: Results to date

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21. Slide 21: FY14 results

    FY14 results • Operating profit of A$72.3m up 4.3% on FY13 with premium revenue up 15.6% to A$1.5b1 For personal use only • Net profit after tax up 3.9% to A$69.8m (FY13: A$67.2m) • FY14 EPS of 15.9c up 3.9% (FY13: 15.3c). Return on equity 20.8% (FY13: 21.6%) • Group operating profit hampered by wea

22. Slide 22: Group premium revenue, operating profit, ROE and EPS

    Group premium revenue Group Operating Profit Group operating profit arhi contribution to Group operating profit $72.3m For personal use only $70.0m $69.3m $59.8m $42.5m $59.8m $64.6m $59.0m $57.0m $47.1m $0.9b $1.0b $1.1b $1.3b $1.5b FY10 FY11 FY12 FY13 FY14 FY10 FY11 FY12 FY13 FY14 Return on Equity

23. Slide 23: Dividend and capital management; total shareholder return

    For personal use only Dividend and Capital Management* Total Shareholder Return* Ordinary Dividend Special Dividend Capital Return 700 nib S&P/ASX 200 Accumulation Index 600 475.2% 500 16.07cps 400 9.0cps 300 5.0cps 200 10.0cps 11.0cps 8.8% 8.0cps 9.25cps 100 7.0cps 0 FY10 FY11 FY12 FY13 FY14 Nov-07

24. Slide 24: FY15 guidance

    FY15 guidance For personal use only • FY15 consolidated operating profit in the range of $75 million to $82 million • FY15 investment income forecast to be line with relevant internal benchmarks* * Internal Investment benchmarks • Australian Regulatory capital (80/20 defensive/growth) - target for p

25. Slide 25: Outlook and investment thesis

    OUTLOOK AND INVESTMENT THESIS = = © @ Q = © ‘= S Q — @ oe = © UL

26. Slide 26: Investment thesis

    1. Australian healthcare spending per capita has increased 6.7% CAGR past 10 years and expected to continue. Australians For personal use only currently spend about A$6,300 per person per annum 2. We expect PHI in Australia will play a necessary expanded role  PHI coverage will continue to grow at

27. Slide 27: High quality, independent equity research

    High quality, independent equity research For personal use only Citi Mark Tomlins (Insurance) J.P. Morgan Siddharth Parameswaran (Insurance) Goldman Sachs Ian Abbott (Health) Macquarie Securities Tim Lawson (Insurance) Deutsche Kieren Chidgey (Insurance) Credit Suisse Andrew Adams (Insurance) CBA Ro

28. Slide 28: Appendix

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29. Slide 29: Risk equalisation – how it works

    Risk equalisation – how it works For personal use only • The current Risk Equalisation Trust Fund (RETF), which has been in place since 1 April 2007, consists of two elements • Gross deficit (what we ‘get back’ from the pool)  Consists of the Age Based Pool (ABP) and the High Cost Claims Pool (HCCP

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