NIB share price in focus following FY 2020 results release

The NIB Holdings Limited (ASX:NHF) share price will be in focus today following the release of its full year results for FY 2020…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The NIB Holdings Limited (ASX: NHF) share price will be in focus today following the release of its full year results.

How did NIB perform in FY 2020?

For the 12 months ended 30 June 2020, the private health insurer reported a 3.4% increase in total revenue to $2.5 billion. This was driven by premium increases in 2019 and all of its health insurance businesses growing their membership numbers. The latter saw the company report policyholder growth of 1.9% for the year, compared to industry growth of 0.4%. This means NIB accounted for more than 41% of total industry growth for the year.

Things weren't as positive for its earnings due to a sizeable increase in claims expense. NIB's claim expense (including a deferred claims provision of $98.8 million) was up 6.7% to $1.9 billion in FY 2020. This ultimately led to its underlying operating profit falling 25.6% to $150.1 million for the year.

Also weighing on its profits were volatile markets, which led to net investment income falling 54% to $16.6 million over the period. This led to the company posting a net profit after tax of $89.2 million, down 40.3% on the prior corresponding period. According to CommSec, the market was expecting a net profit after tax of $95.02 million. So this profit result is a little short of expectations.

Despite the sizeable profit decline, the company has still declared a final dividend. It will pay shareholders a fully franked 4 cents per share final dividend, down from a final dividend of 13 cents per share last year. This brought its full year dividend to 14 cents per share, compared to 23 cents per share in FY 2019.

Outlook.

NIB advised that it continues to target net organic policyholder growth of 2% to 3% in Australian residents health insurance business. And while it is wary about macroeconomic threats, current market conditions look conducive.

In addition to this, it notes that the sector outlook in New Zealand is similar and market conditions in other businesses remain challenging. Though, for the latter, it feels the longer-term fundamentals are good.

The company's Managing Director, Mark Fitzgibbon, commented: "COVID-19 remains a confounding factor in our planning and forecasting. It's implication for sales, claims, expenses, investment income and earnings is enormous. Nevertheless, we have cause to have confidence in our arhi and New Zealand businesses and we're adjusting strategy in other parts of the Group to adapt to current circumstances,"

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Three businesspeople leap high with the CBD in the background.
Share Market News

Boom! ASX 200 blasts to new record highs

ASX 200 investors just sent the benchmark index into uncharted territory.

Read more »