The NIB Holdings Limited (ASX: NHF) CEO and Managing Director Mark Fitzgibbon has sold shares worth $532,000 on the market.
According to a market release, the private health insurer's boss sold 80,000 shares on the market on 21 May 2019 amounting to just over $532,000.
Many investors might worry when a key management figure sells shares, particularly the CEO. That's probably why the NIB share price is down a little more than 1% today.
NIB said that Mr Fitzgibbon sold the shares (which he owned directly) because the money was needed to meet a personal income tax obligation resulting from past awards of remuneration for his role in the form of NIB shares.
Selling $532,000 worth of shares is a lot, but Mr Fitzgibbon still owns a lot more. Even after the sale of 80,000 shares he still owns 1,609,623 shares directly and 690,621 indirectly. That means he still owns over $10.7 million in just his own name.
Mr Fitzgibbon seems to have been quite lucky that the Federal Election was won by the Liberals and Nationals as it meant he could sell at a higher price than the previous week.
The shorter-term outlook for private health insurers does seem better without Labor's private health insurance premium limits. But will households be able to afford the premiums any more easily? I don't think that part is as simple as some seem to think it is.
The private health system works best with young healthy people subsidising the older policyholders who need private health insurance for their operations and care.
Foolish takeaway
NIB is trading at just under 20x FY20's estimated earnings. This isn't bad value, and I like that NIB is diversifying away from Australian private health insurance earnings, but I feel quite cautious about NIB with the CEO choosing the current share price to sell at.
