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Why NIB Holdings is the top Performer on the ASX 200 Today?

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

NIB Holdings (ASX: NHFis an insurance company, with rising revenue and margin expansion highlighting a successfully executed growth strategy. They announced their annual results a few weeks ago, but recently noticed a mistake in their presentation which was announced to the ASX. The mistake related to cost increases. The change in both total costs and hospital benefits was positive for investors, which highlighted margin expansion was greater than investors realised.

NIB Holdings3
NIB holdings grew profits last year at a faster rate than most of the industry (Credit: NIB)

One key recent initiative was the launch of Amazon Alexa Skill, which helps members find a healthcare provider. This works in favour of smaller providers, because it allows them to attract customer attention in ways which they would not otherwise be able to do. The company increased net profits by 11.8% to $149.3m, while also boosting their net investment income by $36.1m. Net interest income is an important aspect of insurance companies, because they have a large amount of capital reserves that they can gain investment income from. While insurance companies typically invest most of their assets in safe asset classes like bonds, investment performance can be a big differentiator across the business.

The company is focussing heavily on the transition from what the company calls “sickcare” to healthcare. By this, they are catering to consumers who want solutions that are engaging and help them decide what they want to do. One example is biometric devices, which can monitor factors like heart rates and blood pressure to predict and avoid heart attacks and strokes before they happen. Identifying and preventing health problems before they happen also helps the insurance company minimise large claims, allowing them to charge prices lower than what competitors are offering. NIB is also trying to develop a sustainable competitive advantage from a machine learning platform which can predict health risk and price insurance accordingly.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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