nib provides business update and full year outlook

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nib has provided an update on its unaudited performance for the nine months to 31 March 2021 and outlook for the financial year 2021 (FY21).

The company previously paused market guidance on its expected underlying operating profit (UOP) in 2020 due to the uncertainty created by COVID-19.

"The pandemic’s implications for market demand and healthcare treatment were profound and are continuing," said the company in a statement.

"Nevertheless, it is apparent nib’s core Australian Residents Health Insurance (arhi) business is performing well," it said, adding, "Total arhi policyholders were 641,804 (up 3.7% compared to 30 June 2020) while claims experience, especially risk equalisation, continues to be lower than expected."

nib’s said its unaudited Group UOP for the nine months to 31 March 2021 was $140.9 million.

The provision for deferred and suspended claims during the pandemic (COVID-19 provision) for arhi was $59 million (unaudited) compared to $70.7 million for the first half of FY21.

The company said the extent of 'catch-up' in the third quarter (Q3: 1 Jan 2021 to 31 March 2021) in healthcare treatment deferred during the COVID lockdown periods appears at this stage to be slower than that assumed at 31 December 2020.

"Forecasting claims experience remains problematic while the threat of COVID-19 continues and without clarity about attrition in deferred healthcare activity as well as longer-term consequences for underlying demand," it said.

"However, it is anticipated that nib will retain some of the remaining arhi COVID-19 provision at 30 June 2021, subject to actuarial analysis at that time."

The company said the strong performance of its arhi business is "more than offsetting COVID-19 inspired weakness in nib’s international inbound health insurance and travel insurance businesses.

"Given the arhi performance, nib will selectively increase investment in marketing, growth projects such as the Payer to Partner personalisation project, and business transformation with a focus on improving health services to its members and travellers," it said.

"Should business conditions remain similar to those in Q3 and noting uncertainty around the future 'catch-up' in deferred healthcare treatment and the related arhi COVID-19 provision, nib expects Group UOP for FY21 to increase from $86.9 million for the first half and be within the range of $200 million to $225 million."