The NIB Holdings Limited (ASX: NHF) share price has gone up after the private health insurer announced its FY21 half-year result.
What numbers did NIB announce?
NIB said that total revenue was down 1.1% to $1.3 billion, but the group claims expense grew by 0.9% to $1 billion.
However, the group expenses fell by 14.1% to $172.1 million. This helped group underlying operating profit rise by 4.4% to $86.9 million. Net profit after tax (NPAT) rose by 15.9% to $66.2 million.
Despite all of the negative impacts on NIB because of COVID-19, the company was able to deliver growth. Remember that NIB has divisions which focus on international workers, students and travel insurance – so these areas have been very disrupted.
However, its membership of Australian resident health insurance (ARHI) increased by 2.7%, or 16,000 members. It also grew its premium income by 2.2% to $1.1 billion. The premium revenue growth would have been 4.2% if not for the six month postponement of the 2020 annual premium increase.
NIB said that ARHI profitability has been slightly distorted by COVID-19 and consequential delays in treatment and claims. ARHI’s underlying operating profit was up 42.2% to $89 million.
NIB also disclosed that of the growth, about 52% of policy sales were to members under the age of 40 with more than 45% of all sales new to private health insurance. There was also an increase in NIB’s member retention.
The private health insurer said that the above growth counters all the negative talk about the value of private health insurance and COVID-19 has clearly raised people’s awareness about the risk of disease and the need for protection.
NIB dividend
The NIB board announced a dividend, it’s 10 cents per share, the same as the prior corresponding period.
Management comments
NIB CEO and Managing Director Mark Fitzgibbon said: “ARHI has been slightly distorted by COVID-19 and consequential delays in treatment and claims which is still playing out.”
Talking about the travel insurance business, he said that: “It’s all a bit gloomy at the moment yet COVID-19 will pass and our travel business is well positioned for recovery and growth when travel restrictions are relaxed or borders re-open. The hiatus is actually providing us with an opportunity to recalibrate and modernise the business.”
Summary thoughts
It was nice to see that the business committed that NIB operations would be carbon neutral by the end of FY22.
It wasn’t yet able to provide earnings guidance for FY21 due to COVID-19. It was a solid result and I think NIB could be the pick of the insurance industry. Though I’m not really a fan of many insurance businesses, so that’s not saying too much.
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