Nib Holdings has upgraded its FY16 guidance at its Annual General Meeting (AGM) today.
Nib Holdings’ NPAT increased 7.9% for FY15. Its Australian Resident Health Insurance (arhi) business has seen over 23,000 additional policy holders during FY15. It has surpassed the 1 million ‘customers covered’ mark in its arhi business. The company’s Non-arhi businesses accounted for 12.1% of its operating profit, down from previous year’s 21% contribution. The company says this is due to its improved arhi services.
Nib acquired World Nomads Group (WNG) in July 2015. This acquisition of Australia’s third largest travel insurance provider is estimated to generate at least $10 million in operating profits for FY16. The company holds investment assets totalling $600.8 million which have yielded Net Investment Returns of 5.8%.
Nib continues to outperform industry in terms of net policyholder growth. It holds a strong 10% market share in the ‘under 40s market’. The company has made efforts to improve their IT and digital strategy. It aims to help customers to make informed decisions around their general health, choose a treatment and provide patient reviews. The company also plans to improve the speed, reliability and cost efficiency of its health care delivery and payments transactions.
Nib Upgrades FY16 Guidance
Nib has provided an organic growth target of 5-5.5% net profit margin for FY16. The company sees inbound international health insurance growing but profit potential seems weaker. It sees continued growth in commissions from complementary insurance lines like Life, Bill Relief and Trauma.
According to the new guidance, the company’s statutory operating profit is expected to be between $90-$100 million and the underlying profit between $102 million - $114 million. The company has upgraded the operating profit guidance by 5.8% to 11%. The investment income is forecasted to be lower than FY15 due to a reduced capital base and M&A. The financing costs for FY16 have been indicated to be higher than the previous year due to the additional debt facility of $85 million as part of WNG acquisition. The ordinary dividend payout ratio is expected to be between 60%-70% of full year NPAT.
Author: Imran Valibhoy
Nov 04, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.