How are Australia’s Insurance Players ASX:MPL and ASX:NHF Placed After FY20?

  • November 09, 2020 08:32 PM AEDT
  • Team Kalkine
How are Australia’s Insurance Players ASX:MPL and ASX:NHF Placed After FY20?

Summary

  • COVID-19 has presented a mixed bag of challenges and opportunities for the insurance sector with the rising need for protection.
  • Medibank Private Ltd has delivered against its overarching strategy and introduced access to telehealth services.
  • nib Holdings Limited rode out the COVID-19 storm with good progress.
  • While COVID-19 presented a challenging scenario for business globally, there are significant opportunities identified by the insurance sector players.
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The past year has been a crucial one for the insurance players in Australia due to rising claims stemming from losses driven by the COVID-19 pandemic and extended bushfire season. However, the industry also witnessed a preference for insurance, to remain financially healthy in case of future pitfall.

Against that backdrop, we will be discussing two ASX-listed insurance stocks operating in Australia.

These companies reported significant progress over the year and have presented a positive and robust picture of the Australian health and insurance sector. Moreover, the companies also identified several opportunities amid the highly challenging times dominated by COVID-19.  

Medibank Private Ltd (ASX:MPL)

An integrated healthcare company, Medibank Private Ltd (ASX:MPL) offers private health insurance across Australia. Notwithstanding the challenges presented by the COVID-19, MPL made significant progress while transitioning towards an extensive healthcare company and delivering better outcomes for its customers as well as shareholders.

The Company managed to increase policyholders’ numbers, grew market share, and witnessed improvement in customer advocacy.

The Company has delivered against its overarching strategy with a view to stand apart and expand its private health insurance business as well as transform into an extended healthcare business. Some of the highlights from the Company’s recent progress over the past year include the following:

  • Providing $9.5 million in community projects and partnerships
  • Expenditure of $400,000 with Indigenous businesses, up from $25,000 three years ago
  • Allotting $1.2 million to finance 17 external health research projects

A breakthrough offering that the Company introduced was access to telehealth services. Moreover, MPL created COVID-19 Health Assist, which is a comprehensive health and support program for its customers. For creating this, the Company put together its homecare, telehealth, analytics and health design capabilities.

Telehealth services experienced increased demand due to COVID-19 as people were unable to visit their doctors due to restrictions placed by the Government.

Being a leading private health insurer, MPL has over 40 years of experience delivering a range of health services in Australia, including mental health support, preventative and better-integrated primary, care and after-hours health support.

Medibank has a diverse business with a range of services including life, pet and travel insurance, and telephone health lines that complement its core private health insurance retail business.

MPL believes that there is a huge potential for telehealth and has over 1,500 health professionals offering care to people at home, online, on the phone as well as in the community.

MPL has been making consistent efforts to deliver on its purpose of Better Health for Better Lives and maintain differentiation while growing its private health insurance business. Moreover, the Company is optimistic about its positioning for the future, given strong advocacy from its customers.

MPL share closed at $2.820, up by 3.676% from the previous close on 09 November 2020, with a market capitalisation of $7.49 billion.

nib Holdings Limited (ASX:NHF)

nib Holdings Limited (ASX:NHF) is an international health partner that offers health and medical insurance to more than 1.6 million residents across Australian as well as New Zealand. Moreover, the Company is the third-largest travel insurer and international supplier of travel insurance through its nib Travel business.

Over the year, nib has been riding out the COVID-19 storm with good progress and funded more than 350,000 hospital admissions and almost 3.6 million dental, optical and other ancillary visits. During FY20,

  • nib’s flagship Australian Residents Health Insurance (arhi) business increasing policyholders by 1.9% driving the Company’s premium revenue growth by 3.4% to $2.5 billion
  • revenue for NZ also grew by 11.4% and policyholders 7.4% to cover more than 225,000 people
  • Despite the 6-month postponement of the 1 April 2020 premium increase, arhi premium revenue grew by approximately 3% to over $2.1 billion
  • An increase of 11.8% to $123.1 million was noted in iihi premium revenue
  • A growth of 11.4% to $240.1 million was noted in NZ premium revenue, becoming NZ’s second-largest health insurer

However, nib’s international students and workers (iihi) business was severely impacted due to the restrictions on foreign entry into Australia, and its nib Travel operations were also significantly disrupted due to the international impacts of COVID-19.

NHF believes that the Company has navigated well through the difficulties of COVID-19 and implemented a broad range of initiatives.

On the one hand, the pandemic has undoubtedly triggered the risk of disease throughout the community, and on the other hand, there is an increasing need for protection against the pandemic. This has further triggered NHF to accelerate its plans to better predict disease risk and is compelling the Company to pace up its investment in digital health.

NHF also took the decision to make a fully franked final dividend of 4.0 cents per share, representing 71% of net profit after tax.

NHF stock settled at $4.540, up by 3.890% from the previous close, with a market capitalisation of $1.99 billion on 09 November 2020.

Disclaimer: All the currencies are in Australian Dollar, unless specified.

 

 


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