nib holdings limited
Head Office
22 Honeysuckle Drive
Newcastle NSW 2300
abn 51 125 633 856
t 13 14 63
f 02 4925 1999
e nib@nib.com.au
w nib.com.au
1 October 2021
Company Announcements Office
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
2021 Annual Report - nib holdings limited
Please find attached nib’s 2021 Annual Report which was distributed to nib
shareholders today.
nib’s 2021 Annual Report can also be viewed online at nib.com.au/shareholders.
Yours sincerely,
Roslyn Toms
Company Secretary
For further information please contact:
Amber Jackson
Head of Investor Relations
M: +61 (0)402 210 817
E: a.jackson@nib.com.au
This announcement has been authorised for release by Roslyn Toms, nib Company
Secretary.
annual
report
2021
table of
contents
Group Performance Highlights
Operating and Financial Review
Directors’ Report
Auditor’s Independence Declaration
Remuneration Report
Corporate Governance Statement
Financial Report
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members
Shareholder Information
Corporate Directory
1
4
13
20
21
43
44
45
46
47
48
49
50
111
112
119
121
nib holdings limited
ABN 51 125 633 856
Group Performance Highlights
group
performance
highlights
Total underlying revenue
$m
Underlying operating profit
$m
2,004.5
2,235.1
2,421.6
2,503.2
2,576.7
2.9%
153.7
184.8
201.8
146.9
204.9
39.5%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Net profit after tax
$m
120.2
133.5
149.3
87.0
160.5
84.5%
Net investment income
$m
28.6
29.6
36.1
16.6
51.8
212.0%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Statutory EPS
cps
Dividends
cps
27.2
29.4
32.9
19.3
35.2
82.4%
19.0
20.0
23.0
14.0
24.0
71.4%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Return on invested capital1
Group NPS
%
22.7
19.5
19.1
11.2
19.1
23
29
32
35
27
790
bps
8
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
1 ROIC calculated using average shareholders' equity including non-controlling interests and average interest-bearing debt over a rolling 12 month period.
nib holdings limited | Annual Report 2021 1
business
strategy
our purpose
your better health
Personalisation
We apply data science in developing deep insight into the health risk of individuals and how it is
best managed as well as equip them with integrated digital tools for engagement with us and the
healthcare system.
PHI expansion
Expand our value proposition and differentiate in existing PHI markets by making
membership as much about supporting good health as it is the treatment of sickness
and injury. We grow the PHI market and our share.
New markets
Enter and grow new markets with a non-PHI membership offering, treatment
packages specific to a wide range of conditions and needs, and differentiate and
grow our travel product.
Claims cost effectiveness
Better contain treatment and claims cost inflation through more precise and effective
disease prevention and management, which is then passed through to members and
travellers in the form of more competitive premiums and/or improved service and
benefits.
Honeysuckle Health
Revenue through Honeysuckle Health and its wide range of health risk management
products and services.
Government programs
Aspire to improve health outcomes and the health care of discrete populations on
behalf of Government and other healthcare payers.
Organisational capability
We continue to develop organisational talent and advanced technological capability across the Group.
Sustainability
We approach our environmental, social and governance responsibilities with sincerity, conviction
and effectiveness.
2 nib holdings limited | Annual Report 2021
Ongoing support for members, employees
and the community through COVID-19
As the pandemic has continued to evolve, so has the support we’ve provided to our members, employees and the general
community, which to date totals more than $45 million.
As announced with our FY21 results, we will also return an additional $15 million of claims savings to eligible members. The member
and community support package includes expanded coverage for COVID-19 related treatment for all members, financial relief in the
form of premium credits, delayed premium increases, waivers or suspensions, and access to telehealth services on an ongoing basis
so members can continue to look after their health from the comfort of home.
Together with nib foundation, we also provided $1.5 million in funding to community and clinical initiatives dedicated to supporting the
mental health and wellbeing of Australians and Kiwis.
In addition, nib Group employees were given up to two weeks special paid leave, an ergonomics package to support their work from
home set up as well as access to a number of health and wellbeing initiatives to help keep them connected and healthy while working
from home.
Learn more about our full COVID-19 member and community support package at nib.com.au/covid19
Sustainability
We recognise that how we go about our business, including the examples we set, directly
and indirectly impact the communities in which we operate and their sustainability.
We profoundly believe the prosperity and sustainability of nib depends upon that of the communities we serve. And that commercial
returns follows only our success both in fulfilling our purpose and community expectations.
We approach our social and environmental responsibilities with sincerity, conviction and effectiveness. And we’ve done exactly that
during the financial year despite the many challenges posed by COVID-19.
Highlights include:
• Transitioning to renewable energy at all nib-
controlled locations and commitment to be carbon
neutral by the end of FY22.
• Supporting Ngãti Whãtua Õrãkei iwi members
through health management programs and
introduction of Kaiãrahi (iwi health navigators).
•
Introducing our first-ever Diversity and Inclusion
Action Plan to foster a sense of community where
everyone is welcome, contributes and belongs.
• Development of nib’s Responsible Investment
Policy which has enhanced our SRI screening of
our investment portfolio.
• Launching our Reflect Reconciliation Action Plan
(RAP).
• Rethinking how our people work through Life at nib
– our new distributed work policy which focuses on
hybrid working.
• Publishing our inaugural Modern Slavery
Statement and undertaking supplier questionnaire
assessments using a risk-based approach.
• Over $2.7 million in total community funding
including $1 million nib foundation investment
towards chronic disease prevention.
• Kicking off our Payer to Partner (P2P) journey as
we seek to become a true health partner for our
members.
You can read more in our FY21 Sustainability Report
which will be available at nib.com.au/shareholders/
company-profile/sustainability from October 2021.
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nib holdings limited | Annual Report 2021 3
Operating and Financial Review
operating and
financial review
Chairman’s report
for the year ended 30 June 2021
I was honoured to be elected Chairman of the company in July
this year. nib is a wonderful organisation with a long and proud
history of innovation, growth and achievement since its inception
in 1952. Together with my fellow directors, our Executive
Management team and everyone at nib, I’m excited to be part
of the company’s continued progress and expansion. There is a
‘buzz’ across the company that augers well for the future.
Yet the potential for us having the greatest impact on the health
of our society lies ahead in the form of more deliberate and
precise population health management. We intend to play a
more active role in improving community health outcomes and
redressing terrible gaps in care, especially between indigenous
and non-indigenous people, whilst always maintaining the
primacy of our members’ choice of healthcare provider.
Overall, the nib Group is in very good shape. We continue to
grow with increased profitability, we are well capitalised and
there is no shortage of opportunity ahead. Your Board declared
a final dividend of 14.0 cents per share, fully franked, bringing
the full year dividend to 24.0 cents per share.
I want to acknowledge and farewell our long-serving Chairman,
Steve Crane, who retired from the Board in July 2021. Steve
made an extraordinary contribution to the company over the
past decade and will be very much missed. I also welcome
Peter Harmer as a new independent Non-Executive Director.
Peter brings over 40 years’ experience in the Australian and
international insurance and financial sectors.
Finally, my sincere thanks and gratitude to our people, from
our employees on the frontline and our team leaders, to our
Executive Management team and my fellow Board colleagues,
for all their hard work and persistence in such an extraordinary
year. nib is built on its people and we are fortunate to have a truly
great team.
David Gordon
Financial year 2021 (FY21) will of course be remembered as
a year in which we all felt the full impact of the COVID-19
pandemic. Absent the kind of devastating armed conflicts of
the first half of last century, for most of us it is easily the most
significant global event in our lifetimes. While its implications for
the nib Group and businesses generally are too vast to cover
here, I will attempt to provide some insight into what the Group
has had to deal with and how.
I should highlight that, from the pandemic’s outset, our focus
has been, and continues to be, on the health and wellbeing of
our members, travellers, communities and employees. To date
nib has provided $45 million in COVID-19 support in the form of
deferred premium increases, waived or suspended premiums,
additional COVID-19 related coverage and multiple community
donations. In addition, as announced with our FY21 results, we
will return $15 million of claims savings to eligible members as
part of our ongoing member and community support package.
We anticipate further support while ever the pandemic persists.
Importantly, the dire conditions didn’t prevent us from meeting
the healthcare needs of our members. In FY21 we funded
378,900 hospital claims and over 3.9 million dental, optical,
and other ancillary claims across the Group with a total value
of $2.0 billion compared to $1.9 billion in FY20. The pandemic
certainly didn’t slow the momentum we’re building towards
making the value proposition for members as much about their
good health and wellbeing as it is their financial protection.
Indeed, FY21 marked a milestone in the transformation of nib
into a good health focussed business. Mark covers this in a little
more detail in his Managing Director’s report.
Group commercial and financial performance was strong despite
some parts of the business taking strain under the pressures
of the pandemic and restrictions on international travel.
Mark makes mention of the headline financial numbers and this
report provides further details. Shareholders, I believe, can take
confidence from the resilience shown across the Group and our
expectation of a positive outlook for private health insurance,
and that as the pandemic passes, those affected businesses
will recover quickly.
In the fullness of time, I think FY21 will also mark a point when
our social and environmental responsibilities to the communities
we serve became all the more poignant. Already we are very
committed to the well established principles of sustainability, and
have much to show for our efforts including our Reconciliation
Action Plan (RAP), our Diversity and Inclusion Plan and over
$2.7 million in funding for numerous community health initiatives,
including through our hard working nib foundation.
4 nib holdings limited | Annual Report 2021
Another significant development related to the pandemic
has been our shift to our distributed working strategy ‘Life at
nib’. Essentially, our 1,200 people now work wherever they
choose and are only required to attend a workplace ‘hub’ when
necessary, such as induction, training, business planning, project
collaboration, and celebration. I deliberately say pandemic
‘related’ because underneath the change is the power of modern
technology to automate activity and connect people.
Our members, travellers, shareholders, and other key
constituents, such as doctors, should all look forward to further
progress in bringing P2P to life and nib supporting a better
healthcare system and outcomes for people and communities.
As David observes, there is no better opportunity for us to
contribute to society. Done well, this will all translate into further
commercial success and increased enterprise value.
Mark Fitzgibbon
Managing Director’s report
The extraordinary disruption and tragedy for so many brought
on by the pandemic didn’t stop us posting another strong result
in FY21. Group underlying revenue grew 2.9% to $2.6 billion,
underlying operating profit by 39.5% to $204.9 million and
earnings per share by 82.4% to 35.2 cents. Return on invested
capital (ROIC), my favoured measure, was an impressive 19.1%.
In relation to earnings and year on year comparisons, it’s worth
me highlighting the impact of the pandemic on business activity
and accounting. Neither FY21 nor FY20 can be considered
‘normal’ given the ‘see sawing’ of healthcare treatment and
claims experience as well as extraordinary initiatives taken to
support members which David has already described.
Nevertheless, accounting principles have done their job well
and the commercial results reliably reflect good progress in our
preeminent aim of ‘your better health’. In our flagship Australian
Residents Health insurance (arhi) we added over 26,000
policyholders at a growth rate of 4.2% and in New Zealand over
5,500 policyholders (excluding international students) at a growth
rate of 5.0%. While it wasn’t as positive for our international
students and workers and travel businesses, we’re very
confident they will bounce back post-pandemic. Pre-pandemic
these two businesses combined contributed $41.5 million UOP
in FY19. In FY21 they incurred losses of $19.5 million. It speaks
of opportunity ahead.
FY21 will come to be known as the foundation year for
transforming our business and becoming as much about
good health and preventing the risk of disease, as it is about
supporting people once they’re already sick or injured.
Our ‘Payer to Partner’ (P2P) strategy saw developments on many
fronts across the Group, none more evident than the escalating
effort and investment in Honeysuckle Health. Honeysuckle
Health is a joint venture with global healthcare company, Cigna.
It is deploying advanced data science (big data, machine
learning, digital engagement) to predict risk at an individual and
population level and then more precisely prevent, manage or
treat the risk. Honeysuckle Health’s potential to change the way
we think about healthcare and the place of ‘prevention over cure’
cannot be overstated.
Nobody celebrates the havoc and misery of the pandemic.
If there is any silver lining it is the heightened community
awareness of disease risk and the need to better manage that
risk, as well as its influence in accelerating investment in data-led
insight, improved practice and the technology of the kind we’re
embracing. Importantly, we have the will and capacity to invest in
P2P and relevant technology.
Through our joint venture with Chinese pharmaceutical company,
Tasly, we now have a licence to sell health insurance in China
and made our first sales in July. It’s a small but crucial step, and
while the business won’t be profitable for another year or two,
the medium to long term opportunity is considerable.
nib holdings limited | Annual Report 2021 5
nib Group
$2.6b
total Group revenue
up 2.9%
$160.5m
NPAT
up 84.5%
$204.9m
Group UOP
up 39.5%
35.2cps
statutory EPS
up 82.4%
$51.8m
net investment income
up 212.0%
24.0cps
full year dividend
up 71.4%
In a challenging year impacted by the pandemic, nib has
delivered a strong financial result while continuing to support its
members, travellers, employees and communities.
nib Group reported an underlying operating profit (UOP)
of $204.9 million compared with $146.9 million last year.
The increase is largely due to the strong growth of our Australian
residents health insurance (arhi) business, coupled with
nib New Zealand’s stable performance. However, both the
international inbound and travel businesses were significantly
impacted by border closures, each reporting a loss despite
cost reduction and business efficiency measures implemented
through the year.
Group UOP includes a reassessment of the COVID-19 deferred
claims liability provision set aside last year to account for current
and future catch up and risk equalisation experience. Given
continuing uncertainty related to the pandemic, a $34.0 million
provision has been retained for further expected claims catch-up.
Since the onset of COVID-19, nib has continued to support its
members and travellers with a broad range of initiatives and
ongoing programs, including financial support, new health
services, expanded coverage for COVID-19 related treatment
and other community health programs. As highlighted in last
year’s Annual Report, the initial support package totalled
$45 million (across the FY20 and FY21 financial years) and
nib has announced a further $15 million in FY22.
In line with government health requirements, nib successfully
shifted its workforce worldwide from office to remote working
without interruption to service delivery and operations. nib
subsequently has embraced the opportunity of a distributed
working model providing employees with support and flexibility
of workplace.
nib continued to focus on business transformation through
investment in technology, automation, and consolidation of
operating centres to further enhance our member and traveller
services and improve business efficiency. This resulted in the
removal of some roles and functions, notably in nib Travel and
the closure of the arhi retail network. Employees impacted by
the change were offered redeployment or supported in the
transition to alternative employment. Given the devastating
impact of COVID-19 on the travel sector, nib Travel qualified and
received $4.2 million in government wage subsidies ($3.8 million
JobKeeper in Australia, $0.4 million in Ireland), noting that,
despite this assistance, the business still made a UOP loss of
$13.6 million (FY20 loss $19.7 million).
The increase in nib Group net profit after tax (NPAT) to
$160.5 million (up 84.5%) also benefited from strong investment
income of $51.8 million (up 212.0%), which recovered from the
volatile investment market conditions last year.
The Board declared a final dividend of 14.0 cents per share fully
franked resulting in a full year dividend of 24.0 cents per share,
representing a payout ratio of 68.2% of FY21 NPAT. The final
dividend will be payable on 5 October 2021 with a record date
of 3 September 2021. The Dividend Reinvestment Plan (DRP) is
available to eligible shareholders.
6 nib holdings limited | Annual Report 2021
operating andfinancial reviewfor the year ended 30 June 2021 Australian residents health insurance | arhi
$2.2b
premium revenue
up 4.9%
$211.8m
UOP
up 62.4%
25
net promoter score
down 10
nib’s core arhi business, delivered a strong result. The increase
in UOP to $211.8 million (up 62.4%) was primarily driven by
policyholder growth and favourable claims impacts related to
COVID-19 compared with last year, including lower industry
claims experience, favourable risk equalisation and a partial
release of the COVID-19 claims provision established last year.
This contributed to a higher net margin of 9.7% compared with
6.2% last year.
Net policyholder growth of 4.2% was well above the industry
average growth rate of 3.1%. This was in part driven by
heightened community awareness of the need for financial
protection and risk of disease as a result of the pandemic,
resumption of previously suspended policies, and the benefits
of arhi’s diversified and multi-channel distribution strategy. arhi’s
645,152 policyholders represent 1.22 million members and more
than 9% of Australians with private health insurance.
Total claims expense increased by 0.9% to $1.7 billion, impacted
by lower risk equalisation contribution and a $55.9 million partial
release of the COVID-19 provision, offset by a 12.5% increase in
nib member claims expense. While there was some catch-up of
deferred healthcare treatment during FY21, this was lower than
initially assumed. Ongoing pandemic concerns and measures
to limit transmission of the virus, such as lockdowns, appear to
have further delayed treatment, especially in the aged population
as reflected in lower industry risk equalisation. While forecasting
future claims remains difficult at this time, a $34.0 million
provision has been retained for further catch-up of deferred
claims in relation to COVID-19.
nib has announced a $15 million ex-gratia payment to be
provided to arhi members in FY22. This is in addition to the
ongoing financial hardship assistance and broader coverage
for COVID-19 related treatment provided to members at
no additional cost. Other offerings provided during the
year, including telehealth consultations, online classes and
personalised wellbeing digital applications, are continuing to
assist members’ access to healthcare support at home.
Management expenses of $223.1 million include investment in
personalisation initiatives and operational efficiencies. nib will
continue investment in these growth and business transformation
projects with a focus on improving health services to its members.
Our NPS was impacted by the price increase deferral,
with multiple member pricing notifications during the year
and work is underway to enhance members experience
and improve affordability.
Payer to Partner (P2P), our organisational transformation to move
towards a health partner, was mobilised in the second half of
FY21 commencing with a strategic planning phase identifying
key streams of work aligned with the business strategy.
Although in its preliminary stage, P2P has delivered a number of
health programs to assist nib members with chronic conditions,
including the Limber pilot, a physical therapy digital application.
International inbound health insurance | iihi
$115.5m
premium revenue
down 6.2%
$(5.9)m
UOP
down 126.6%
36/45
net promoter scores
workers/students
down 11/up 2
The iihi business, comprising international students and workers,
continues to be heavily impacted by COVID-19 with border
closures limiting growth and contributing to a step-up in claims.
Premium revenue decreased by 6.2% to $115.5 million, which is
reflective of the 6.5% net decline in policyholders, driven by lower
student numbers and partially offset by some growth in workers.
Despite the decline in policyholders, claims expense increased
by 38.8% on last year, largely due to a step-up in claims by
students. With the sharp reduction in voluntary repatriation of
students during study breaks, the use of health care services
has increased, including certain higher-cost services such as
pregnancy. The limited intake of new students has also shifted
the tenure mix.
We continue to support our international members impacted
by COVID-19 with financial hardship assistance, coverage for
telehealth services and COVID-related treatment. Through the
nib foundation we have partnered with Batyr to develop and
deliver educational mental health programs designed specifically
for international students in universities across the country.
The pandemic has highlighted the importance of international
students and temporary migration for the Australian economy.
As borders reopen, we expect international students and
workers to again return, although the timing is uncertain. The iihi
business remains well positioned to address the current claims
experience, capitalise on future growth, and further improve the
efficiency and quality of services through digitisation.
nib holdings limited | Annual Report 2021 7
nib New Zealand
$258.6m
premium revenue
up 7.7%
$24.1m
UOP
up 3.0%
34
net promoter score
up 1
nib New Zealand delivered another good result, reporting a UOP
of $24.1 million, 3.0% above last year (which was itself a strong
year) and despite uncertainties and disruptions due to COVID-19.
The result includes the full release of the $8.4 million COVID-19
provision, matching the expected claims catch-up for deferred
health treatment.
Measures were implemented at the onset of the pandemic to
provide a range of support services to members, including
financial hardship assistance. During the year, the business
remained focused on improving operating performance
and system efficiency, requiring a step up in technology
infrastructure investment.
The increased premium revenue of $258.6 million (up 7.7%)
was driven by policyholder growth and premium adjustments.
Net policyholders grew by 1.6% impacted by the decrease
in international students due to COVID-19 travel restrictions.
Excluding students, policyholders grew by 5.0%, supported
by the performance of channels including group, adviser and
whitelabel partner, the New Zealand Automobile Association.
Net Promoter Score growth reflects the ongoing improvements
in the member journey experience.
nib New Zealand continues to work with its key partners and
members on rolling out population health initiatives to deliver
significant health and wellness benefits to the community.
This includes ‘BodyWOF’ which provides health check and
health information as part of our drive to encourage proactive
wellbeing.
nib Travel
$17.0m
GWP
down 86.9%
($13.6)m
UOP
down 31.0%
58
Sales NPS
down 6
nib Travel continues to be impacted by the pandemic and
associated border closures and travel restrictions. The business
made a UOP loss of $13.6 million, which was a 31.0%
improvement on last year’s loss as the business moved quickly
to right size its cost base and adapt products in response to
the pandemic. Pleasingly, as conditions improved in last quarter
of FY21, notably in the US, nib Travel’s revenue also strongly
rebounded compared to the experience in previous quarters,
albeit at considerably lower levels than pre-COVID conditions.
The significant decline in sales was partially offset by cost saving
initiatives implemented during the year, including workforce
reduction and efficiency improvements, which resulted in lower
operating expenses by over 50%.
Disruptive travel in the current environment contributed to
the fall in Net Promoter Score as customers are less likely
to recommend a travel insurer in times of heightened travel
restrictions.
During the year, and in preparation for return to travel next
year, products were updated with additional COVID-19 cover.
The focus for FY22 continues to be cost discipline, operating
efficiency improvements through digitisation, and agility with
resources as offshore regions start to reopen.
8 nib holdings limited | Annual Report 2021
operating andfinancial reviewfor the year ended 30 June 2021 Principal risks and uncertainties
nib has established policies and systems for the oversight and management of material business risks. Further information regarding
how nib recognises and manages risk is detailed in Principle 7 of our Corporate Governance Statement, which is available on our
website at nib.com.au.
nib continues to closely monitor the uncertainty and impacts of COVID-19 on its risk profile. As this uncertainty continues into
FY22, nib will carry on making enhancements to its control systems in order to optimise outcomes related to both financial and non-
financial risks.
Further to the Sustainability risks and approaches detailed on our website at nib.com.au/shareholders, principal risks and
uncertainties that could affect nib’s operations, strategies and overall performance are listed in the table below.
Insurance risks
Risk description
Risk management strategies
Claims inflation and affordability
The risk of rapidly inflated claims
costs derived from health service
providers (including hospitals,
ancillary providers and medical
specialists). Impacts could include
lower affordability of health
insurance products, weaker financial
margins and profitability.
nib has structured management systems for monitoring claims behaviours and experience.
Included are processes to validate timely and accurate payment of claims in accordance
with policy conditions. A high priority is placed upon the negotiation, establishment and
renewal of key provider contracts, to ensure acceptable terms, service utilisation rates and
claiming processes are in place.
nib recognises the importance of improving product value and affordability for Members,
resulting in ongoing strategic investments in initiatives including: development of provider
networks to improve price certainty and value, tools to assist members in making informed
financial decisions and a Payer to Partner (P2P) strategy to target chronic conditions through
Health Management Programs. A strong focus also exists on premium affordability through
the annual pricing submission process. Further details on claims inflation risk are included in
Notes to the Consolidated Financial Statement 3a).
Government policies and
regulations
Risks relating to potentially
significant and/or unexpected
changes to the regulatory policy
settings and incentives for
private health insurance. e.g.
risk equalisation arrangements
supporting the community rating
principle, PHI Rebates and Life Time
Health Cover Loading. Financial
impacts resulting from this risk
could be either positive or negative.
nib actively monitor early developments in PHI policy via industry, media and government
circulars, channels and forums. nib is an active contributor to PHI reforms consultation
processes conducted by regulators including Australian Prudential Regulation Authority
(APRA) and the Department of Health, in order to help shape improved outcomes for nib
Members. nib’s risk analysis processes include impact assessment of potential changes
arising from government policy and resulting changes to products e.g. sustainable premium
pricing. nib is represented within industry forums including Private Healthcare Australia
(PHA) and seeks to work collaboratively with other industry stakeholders to present
practical solutions. As reforms go-live, nib maintain appropriate resources for external
communications (members, strategic partners, media, investor relations) to ensure effective
communication and understanding of changes to targeted audiences. nib invest in rapid
implementation of initiatives to improve customer value and lower costs e.g. early adoption
of age-based discounts.
Pricing risk
Financial risks
There are operational risks associated with pricing and forecasting involving process, people
and systems. Control failures could negatively impact pricing decisions, financial performance
and regulations such ASX Continuous Disclosure obligations. COVID-19 has created
additional challenges for our pricing processes in Australia and New Zealand. Further details
on pricing risk are included in Notes to the Consolidated Financial Statement 3a).
Risk description
Risk management strategies
Investment and capital
management
Risks related to the performance of
nib’s investment portfolio, impacting
profitability, financial position and
ensuring stakeholder expectations
are fulfilled.
nib’s Investment Committee provides oversight of this risk. The Committee considers the
investment strategy and investment risk management practices, investment performance in
order to meet Return on Investment (ROI) objectives and outlook, and compliance with the
investment component of nib’s Capital Management Plan.
nib holdings limited | Annual Report 2021 9
Principal risks and uncertainties continued
Financial risks continued
Risk description
Risk management strategies
General economic conditions
The environment in which
nib operates may experience
challenging conditions as a result
of general uncertainty about
future Australian and international
economic conditions.
Strategic risks
nib recognises that its performance is impacted by the broader Australian economic
conditions such as inflation, interest rates, exchange rates, credit markets, consumer and
business spending and employment rates which are outside nib’s control. nib monitor
economic conditions and complete regular stress testing of key variables to validate capital
management planning processes.
Risk description
Risk management strategies
The industry-specific impacts of COVID-19 on nib’s travel and inbound international health
insurance are an example of this risk in practice. The key risk mitigation strategies for this
diversification strategy involve detailed financial analysis, monitoring and leveraging from
establishing capital management systems and capabilities. Furthermore, compliance with
regulatory capital management requirements for Australian residents health insurance
provides mitigation against contagion risks i.e. in the event of prolonged periods of financial
stress impacting the adjacent businesses. In terms of the latest strategic initiatives, nib is
pursuing aligned transformation opportunities including P2P, digitisation, and enhanced
organisation capability. These risks are controlled by strategic planning and prioritisation
processes that are overseen and approved by the Board. Adjacent business opportunities
involve detailed analysis on risk opportunities – considering potential upside and downside.
Risk management strategies
nib invests in highly resilient practices, systems, providers and people. A business continuity
management framework is in place and overseen by Senior Management and the Board
Risk & Reputation Committee. The COVID-19 pandemic is an example of a significant
business continuity event that has required nib to activate its mitigation strategies to ensure
effective continuity of service.
Similarly, for other notable types of operational risks such as data management,
outsourcing, fraud, people, and health and safety risks – nib oversees the management of
these risks by management, divisional risk committees, the Executive Risk Committee and
the Board Risk and Reputation Committee.
As part of nib’s increased investment and reliance on technology to conduct an efficient and
cost effective business, nib has similarly invested in a proportionate cyber security controls
systems and framework.
nib’s approaches and governance practices for cyber security risks have been developed
in accordance with relevant international technology standards, taking consideration of
applicable industry and regulatory standards. Oversight is provided by the Executive Risk
Committee and the Board Risk and Reputation Committee.
Performance of adjacent (non-
Australian Residents Health
Insurance) businesses
In addition to its Australian
regulated health insurance business,
nib has diversified its business
and identified adjacent earnings
opportunities, such as International
(Inbound) Health Insurance, New
Zealand health insurance, and nib
Travel insurance. The performance
of these adjacent businesses
impacts on nib’s overall operating
result and profits.
Operational risks
Risk description
Business continuity
Risks of events such as natural
disasters or a major failure
or inadequacy in information
technology systems, have an
adverse impact on nib’s earnings,
assets and reputation.
Cyber security
This risk involves a failure to
mitigate/manage a cyber attack
or major security incident. Such
an issue could result in adverse
impacts to nib’s members,
disruption to business continuity,
non-compliance with regulations
and data standards and negative
reputational effects.
10 nib holdings limited | Annual Report 2021
operating andfinancial reviewfor the year ended 30 June 2021 Operational risks continued
Risk description
Risk management strategies
nib has structured approaches to risk management including a compliance management
framework incorporating: compliance strategy, culture and governance practices. nib’s
program includes systems and processes for identifying compliance obligations as well
as monitoring and measuring of compliance performance. Oversight is provided by the
Executive Risk Committee and the Board Risk and Reputation Committee.
Regulatory compliance and legal
risks
Risks relating to failure to comply
with specific regulations as part
of conducting health insurance
business and meeting listing
requirements of the ASX. Non-
compliance with regulatory
requirements can lead to a
range of impacts including
financial penalties, cancellation
of authorisations and/or negative
reputational impacts. Legal risk
could involve civil proceedings in
courts of various jurisdictions. nib
may also be exposed to litigation in
the future over claims.
Climate change risk
In FY19, nib conducted a climate change scenario assessment in line with the Task Force on Climate-related Financial Disclosures
(TCFD) framework to understand the climate-change related risks and opportunities for our business based on potential future
climate scenarios. The analysis identified a number of transition and physical risks for nib Group, including a number of risks
specific to our health and travel insurance products. Subsequently, each year Environmental, Social, Governance (ESG) and
climate change have been considered as part of nib’s Annual Key Enterprise Risk (KER) Review.
Due to materiality and time horizon (versus the strategic plan), climate change risk was not determined to be a KER for our
business. However, it has been incorporated into the Group risk management framework (RMF) to ensure appropriate ongoing
oversight and management. This includes integrating climate change in business unit risk assessments and establishing a
‘bottom-up’ risk register.
We are also committed to limiting our impact on the environment by reducing our overall carbon emissions and have made a
commitment to become carbon neutral by the end of FY22.
nib holdings limited | Annual Report 2021 11
Five year summary
Consolidated Income Statement
Net premium revenue
Net claims incurred1
Gross margin
Other underwriting revenue
Management expenses
Underwriting result
Other income
Other expenses
Share of net profit/(loss) of associates and joint ventures
Underlying operating profit
Amortisation of acquired intangibles
Impairment of intangibles
One-off transactions, merger, acquisition and new business
implementation costs
Statutory operating profit
Finance income and costs
Net investment income
Profit before tax
Tax
NPAT
Consolidated Balance Sheet
Total assets
Equity
Debt
Share Performance
Number of shares
Weighted average number of shares – basic
Weighted average number of shares – diluted
Basic earnings per share
Diluted earnings per share
Share price at year end
Dividend per share – ordinary
Dividend payout ratio – ordinary
Other financial data
ROIC2
Group underlying operating revenue
Operating cash flow
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
2,548.8
2,439.6
2,340.8
2,162.6
1,943.1
(1,985.5)
(1,933.4)
(1,811.4)
(1,694.3)
(1,545.8)
563.3
3.8
(337.4)
229.7
24.1
(44.1)
(4.8)
204.9
(8.0)
(8.8)
(2.1)
186.0
(6.8)
51.8
231.0
(70.5)
160.5
506.2
3.5
(332.2)
177.5
60.1
(86.7)
(4.0)
146.9
(10.4)
(8.0)
(13.6)
114.9
(9.7)
16.6
121.8
(34.8)
87.0
529.4
3.6
(329.1)
203.9
77.2
(78.3)
(1.0)
201.8
(9.2)
(1.0)
(7.0)
184.6
(7.7)
36.1
213.0
(63.7)
149.3
468.3
3.0
(287.1)
184.2
69.5
(68.4)
(0.5)
184.8
(8.4)
–
(7.4)
169.0
(6.3)
29.6
192.3
(58.8)
133.5
397.3
1.0
(242.1)
156.2
60.4
(62.6)
(0.3)
153.7
(7.6)
–
4.5
150.6
(4.8)
28.6
174.4
(54.2)
120.2
1,702.8
1,677.8
1,554.1
1,447.5
1,136.1
706.2
232.3
457.7
457.2
457.2
35.2
35.2
6.51
24.00
68.2
603.1
232.9
456.8
456.1
456.1
19.3
19.3
4.61
14.00
71.0
632.2
233.9
455.6
455.4
455.4
32.9
32.9
7.67
23.00
70.0
557.8
230.6
454.8
450.6
450.6
29.4
29.4
5.73
20.00
68.5
427.6
153.2
439.0
439.0
439.0
27.2
27.2
5.75
19.00
70.0
19.1
2,576.7
108.7
11.2
2,503.2
207.6
19.1
2,421.6
184.5
19.5
2,235.1
179.9
22.7
2,004.5
171.7
m
m
m
cps
cps
$
cps
%
%
$m
$m
1 Net incurred claims differs to the face of the Consolidated Income Statement and Segment Reporting as this table includes claims handling expenses in management expenses.
2 ROIC calculated using average shareholders’ equity including non-controlling interests and average interest-bearing debt over a rolling 12 month period.
12 nib holdings limited | Annual Report 2021
operating andfinancial reviewfor the year ended 30 June 2021
Directors’ Report
directors’
report
for the year ended 30 June 2021
The Directors of nib holdings limited (Company) present their
report on the consolidated entity (Group) consisting of nib
holdings limited and the entities it controlled at the end of,
or during, the year ended 30 June 2021.
Directors
The following persons were Directors of nib holdings limited
during the whole of the financial year and up to the date of
this report:
David Gordon Mark Fitzgibbon
Lee Ausburn
Jacqueline Chow
Anne Loveridge Donal O’Dwyer
Steve Crane retired as Chair and Director on 29 July
2021, and Christine McLoughlin retired as a Director on
25 September 2020.
Peter Harmer was appointed a Director on 29 July 2021.
Principal activities
Dividends
Dividends paid to shareholders during the financial year were as
follows:
Final dividend for the year ended 30 June
2020 of 4.0 cents (2019 – 13.0 cents)
per fully paid share paid on 6 October 2020
Interim dividend for the year ended 30 June
2021 of 10.0 cents (2020 – 10.0 cents) per
fully paid share paid on 6 April 2021
2021
$m
2020
$m
18.3
59.2
45.6
63.9
45.5
104.7
In addition to these dividends, since the end of the financial year
the Directors have recommended the payment of a fully franked
final dividend of $64.1 million (14.0 cents per fully paid ordinary
share) to be paid on 5 October 2021 out of retained profits at
30 June 2021.
The principal activities of the nib Group during the financial year
were as a private health insurer in Australia and New Zealand,
whereby it underwrites and distributes private health insurance
to Australian and New Zealand residents as well as international
students and visitors to Australia. Through its nib Travel
business, it also specialises in the sale and distribution of travel
insurance policies globally.
Matters subsequent to the end of the financial
year
In July 2021, the Board approved the return of $15.0 million in
additional claims savings to members due to COVID-19 impacts
by way of an ex gratia payment on their next premium payment
between the period 1 September and 31 December 2021.
The Group also undertakes specialist health care data science
services through its joint venture with Cigna, Honeysuckle Health.
No other matter or circumstance has arisen since 30 June 2021
that has significantly affected, or may significantly affect:
a)
the Group’s operations in future financial years; or
b)
the results of those operations in future financial years; or
c)
the Group’s state of affairs in future financial years.
Environmental regulation
The Group is not subject to any specific environmental regulation
and has not breached any legislation regarding environmental
matters.
Review of operations
Information on the operations and financial position of the
Group and its business strategies and prospects is set out in
the Operating and Financial Review on pages 4 to 12 of this
Annual Report.
Significant changes in the state of affairs
There were no other significant changes in the state of affairs
of the Group during the financial year.
Likely developments and expected results from
operations
Additional comments on expected results on operations of the
Group are included in this Annual Report under Operating and
Financial Review on pages 4 to 12.
Further information on likely developments in the operations of
the Group have not been included in this Annual Report because
the Directors believe it would be likely to result in unreasonable
prejudice to the Group.
nib holdings limited | Annual Report 2021 13
Information on Directors
Details of the qualifications, experience, special responsibilities and interests in shares and performance rights of the Directors are as follows:
David Gordon
– Chair
LLB (University of NSW),
BCom (University of NSW),
MAICD
Age: 60
Independent
Non-Executive Director
David was appointed to the Board of nib holdings limited in
May 2020 and Chair since 29 July 2021. He is also a member
of the Nomination Committee.
He is also a Director of nib health funds limited.
Industry experience
David has over 20 years’ experience as a director of both
public and private companies and has spent more than
30 years working in corporate advisory roles to Australian and
international organisations. He brings extensive knowledge of
mergers and acquisitions, as well as capital raisings, IPOs and
joint ventures.
David also has a proven track record in guiding businesses to
grow and harness their digital capability to successfully explore
and develop new products and markets.
Other business and market experience
David has held a number of senior roles with Freehills (Partner)
and boutique investment bank Wentworth Associates
(acquired by Investec in 2001). In addition, he founded
independent corporate advisory and investment firm,
Lexicon Partners in 2001.
Directorships of listed entities
David is currently Chair of Accent Group Limited.
Former directorships of listed entities in the past three years
None.
Other commitments
David is Chair of Ordermentum Pty Ltd, Shippit Pty Ltd,
Genesis Capital Manager 1 Pty Ltd, and General Homecare
Holdings Pty Ltd.
He is also a Non-Executive Director of Stilmark Holdings Pty
Ltd and international not-for-profit organisation, High Resolves
Pty Ltd.
Interests in shares and performance rights
Direct: 30,000 shares in nib holdings limited.
14 nib holdings limited | Annual Report 2021
Mark Fitzgibbon
– Chief Executive Officer
and Managing Director
MBA (University of Technology Sydney),
MA (Macquarie University), ALCA
(Charles Sturt University), FAICD
Age: 61
Executive Director
Mark joined nib in October 2002 as Chief Executive Officer.
In 2007 as Managing Director, he led nib through its
demutualisation and listing on the Australian Securities Exchange
(ASX) being admitted to the S&P/ASX 100 in 2019.
Mark is a Director of nib health funds limited, as well as many
other nib holdings limited’s subsidiaries. He is also a member of
nib holding’s Nomination Committee.
Industry experience
Mark has held executive positions at a number of large
Australian organisations, including local government councils
and peak bodies.
Leading nib for almost 20 years, Mark has transformed the
business from a regionally based (Newcastle, NSW) private
health insurer into one of Australia’s fastest growing and
innovative health funds.
As Managing Director, Mark’s strategic focus has been to grow
and diversify nib’s business and with that earnings by leveraging
nib’s capability, systems and people. This has seen nib grow
significantly in recent years organically and inorganically, both in
existing and new markets.
Other business and market experience
Mark has previously served as CEO of both the national and
NSW peak industry bodies for licensed clubs, as well as holding
several General Manager positions in local government.
Directorships of listed entities
None.
Former directorships of listed entities in the past three years
None.
Other commitments
Mark is currently a Director of Private Healthcare Australia.
Interests in shares and performance rights
Direct: 1,739,708 ordinary shares in nib holdings limited.
Indirect: 824,621 ordinary shares in nib holdings limited held by
Fitzy (NSW) Pty Ltd.
• 222,298 performance rights under FY18-FY21 Long Term
Incentive Plan which may vest from 1 September 2021.
• 215,962 performance rights under FY19-FY22 Long Term
Incentive Plan which may vest from 1 September 2022.
• 200,632 performance rights under FY20-FY23 Long Term
Incentive Plan which may vest from 1 September 2023.
• 314,792 performance rights under FY21-FY24 Long Term
Incentive Plan which may vest from 1 September 2024.
directors’ reportfor the year ended 30 June 2021 Lee Ausburn
MPharm (University of Sydney),
BPharm (University of Sydney),
Dip Hosp Pharm (University of
Sydney), FAICD
Age: 67
Jacqueline Chow
BSc (Hons) (University of New
South Wales),
MBA (Northwestern University,
Chicago), GAICD
Age: 49
Independent
Non-Executive Director
Independent
Non-Executive Director
Lee was appointed to the Board of nib holdings limited in
November 2013. She is Chair of the People and Remuneration
Committee and a member of the Risk and Reputation Committee
and Nomination Committee.
She is also a Director of nib health funds limited.
Industry experience
With more than 30 years’ experience in the pharmaceuticals
industry, Lee has a wealth of knowledge in the global health
industry.
Lee is a pharmacist with experience in retail and hospital
pharmacy, as well as in academia. She had a long career in the
pharmaceutical industry with Merck Sharp and Dohme (Australia)
Pty Ltd and was previously Vice President – Asia for Merck and
Co Inc with responsibility for the company’s operations across
nine countries.
At Merck and Co Inc, Lee built high performing organisations
with enhanced ethical and compliance frameworks, across the
Asia Pacific region. She also has extensive marketing experience
with customer centric approaches that had proven results with
the region growing strongly under her leadership. Operating in a
highly regulated industry, Lee also developed strong regulatory
and government relations skills.
She also has experience operating joint ventures, including
chairing the Far East Operating Board.
Other business and market experience
Lee was previously a member (2010-2015) and President (2015-
2017) of the Pharmacy Foundation at the University of Sydney.
In NSW, she was a Board member of NSW Health’s Clinical
Excellence Commission and the Agency for Clinical Innovation
(2010-2014), established to enhance quality and safety in
NSW hospitals.
Lee is currently a Mentor for Women on Boards.
Directorships of listed entities
Lee is currently a Director of pharmaceutical wholesaling
and pharmacy retail business, Australian Pharmaceutical
Industries Ltd.
Former directorships of listed entities in the past three years
Director of medical device company, SomnoMed Ltd.
Interests in shares and performance rights
Indirect: 20,000 ordinary shares in nib holdings limited held
by Leedoc Pty Ltd and 30,885 ordinary shares in nib holdings
limited held by MIML Pension Consolidator (Lee Ausburn).
Jacqueline was appointed to the Board of nib holdings
limited in April 2018. She is Chair of the Risk and Reputation
Committee and a member of the Nomination Committee,
Audit Committee, People and Remuneration Committee and
Investment Committee.
She is also a Director of nib health funds limited.
Industry experience
Jacqueline has more than 20 years’ experience working with
global blue-chip consumer product multinationals in a range of
executive and non-executive positions in general management,
strategy, marketing as well as technology and innovation.
Her early career concentrated on business analytics, brand
equity and marketing.
With a reputation for driving growth and performance in global
businesses, she is passionate about unlocking value through
the entire value chain by growing consumer demand through
disruptive technologies, innovation and digital platforms.
Other business and market experience
Jacqueline has significant global experience driving strategic
growth and innovation across customer and consumer
brands for the likes of Fonterra, Campbell Arnott’s and the
Kellogg Company.
She was previously Deputy Chair of Global Dairy Platform and
a Director of Fisher & Paykel Appliances in New Zealand, Dairy
Partners Americas, the Riddet Institute (Massey University NZ)
and The Arnott’s Foundation.
In her role with McKinsey & Company RTS, she advises clients
across resources, retail, financial services, telecommunications
and consumer sectors on organisational change and high
performance culture.
Directorships of listed entities
Jacqueline is currently a Non-Executive Director of Coles Group
Limited and Charter Hall Group.
Former directorships of listed entities in the past three years
None.
Other commitments
Jacqueline is a Non-Executive Director of the Australia-Israel
Chamber of Commerce and a senior advisor with McKinsey &
Company RTS. She is also a member of Chief Executive Women.
Interests in shares and performance rights
Direct: 50,000 shares in nib holdings limited.
nib holdings limited | Annual Report 2021 15
Information on Directors continued
Peter Harmer
Harvard Advanced Management
Program
Age: 60
Anne Loveridge
BA (Hons) (University of Reading),
FCA, GAICD
Age: 59
Independent
Non-Executive Director
Independent
Non-Executive Director
Peter was appointed to the Board of nib holdings limited in
July 2021. He is a member of Risk and Reputation Committee,
People and Remuneration Committee, Investment Committee
and Nomination Committee.
Anne was appointed to the Board of nib holdings limited in
February 2017. She is the Chair of the Audit Committee and
a member of the Investment Committee, Risk and Reputation
Committee and Nomination Committee.
He is also a Director of nib health funds limited.
Industry experience
Peter has over 40 years’ experience in the Australian and
international insurance and financial sectors, including over
30 years in a senior executive capacity.
He has a deep understanding of the global insurance and
reinsurance markets and has driven the improvement of
business and customer experiences through digital innovation.
During his career, Peter accelerated digital engagement through
re-examining customer journeys to understand pain points and
introduced the right tools and technology to help improve the
overall customer experience.
In addition, he has been focused on the development and design
of agile working methodologies combined with Human Centred
Design thinking to ensure best practice in employee productivity,
performance, health and wellbeing.
Other business and market experience
Peter was formerly Chief Executive Officer of Insurance Australia
Group (IAG), CGU Insurance, Aon Limited UK, Aon Risk Services
Australia Pacific and Aon Re Australia and has successfully
lead business’ growth agendas, major acquisitions, and industry
roll-ups.
Prior to his role as Chief Executive Officer at IAG, he took up
a secondment role as Chief Digital Officer to help drive IAG’s
digital strategy. This included building a centralised capability to
improve the customer experience through the utilisation of new
technology and data insights.
Directorships of listed entities
Peter is currently Director of Commonwealth Bank of Australia
and AUB Group Limited.
Former directorships of listed entities in the past three years
Executive Director of Insurance Australia Group (IAG).
Other commitments
Peter is Non-Executive Director of Lawcover Pty Ltd. He is also
a member of the Advisory Council for Bain & Company, and an
Executive Mentor with Merrick & Co ANZ.
Interests in shares and performance rights
None.
She is also Chair of nib nz holdings limited’s Board, Audit, Risk
and Compliance Committee.
In addition, Anne is a Director of nib health funds limited and
nib nz holdings limited’s subsidiaries.
Industry experience
Anne has over 35 years of experience in the highly regulated
financial services sector, including health insurance.
She has extensive knowledge of financial and regulatory
reporting, risk management and compliance frameworks.
She also has over five years’ experience as a Non-Executive
Director for ASX-listed entities in the financial services sector.
Through senior leadership roles, Anne also has championed
the role of leadership, performance and culture in successfully
driving change.
Formally trained as a Chartered Accountant, Anne has a breadth
of experience in financial reporting, auditing, risk, ethics and
regulatory affairs following her 31 years with PwC in the UK and
Australia, where she was a Senior Partner and Deputy Chair of
the Australian Firm.
Anne is entitled to receive a retirement benefit from PwC as
part of her retirement plan. The amount of the payment was
determined at the time of retirement, in 2015, based on role and
tenure with the firm. The benefit is not impacted by the revenue,
profits or earnings of PwC. Anne has declared her previous
relationship with PwC to the nib Board and the Board is satisfied
that it does not affect her independence as Non-Executive
Director and does not constitute a conflict of interest. The nib
Board has in place mechanisms to manage conflicts of interest
where they arise.
Directorships of listed entities
Anne is a Non-Executive Director of Platinum Asset Management
and a Non-Executive Director of National Australia Bank Limited.
Former directorships of listed entities in the past three years
None.
Other commitments
Anne is Chair of Bell Shakespeare Limited and Non-Executive
Director of Destination NSW. She is also a Member of Chief
Executive Women.
Interests in shares and performance rights
Direct: 23,885 shares in nib holdings limited.
16 nib holdings limited | Annual Report 2021
directors’ reportfor the year ended 30 June 2021 Donal O’Dwyer
MBA (Manchester Business
School), BE (University College,
Dublin)
Age: 68
Independent
Non-Executive Director
Donal was appointed to the Board of nib holdings limited in
March 2016. He is Chair of the Investment Committee, and a
member of the Risk and Reputation Committee, People and
Remuneration Committee and Nomination Committee.
He is also a Director of nib health funds limited.
Industry experience
Donal has a deep knowledge of the health industry globally,
after more than 35 years in senior executive and Non-Executive
Director roles within the healthcare products and medical device
sectors.
Starting his career as a qualified civil engineer, he went on to
gain experience in business, science, engineering, manufacturing
and management. During his tenure with Baxter Healthcare, he
rose through the ranks from plant manager to President of the
Cardiovascular Group Europe, gaining a sound understanding of
the inner workings of business strategy and fiscal management,
from the floor of the factory through to the boardroom. He
then worked for Cordis (the cardiovascular device franchise of
Johnson & Johnson) – initially as European President and later,
when he located to the US, he served as Worldwide President.
In his role as Chair of the Investment Committee, Donal has a
strong interest in environmental, social and governance factors
and how these performance indicators can help promote
long-term financial success.
Directorships of listed entities
Donal is a Non-Executive Director of Cochlear Ltd, Mesoblast
Ltd and Fisher & Paykel Healthcare Corporation Ltd.
Former directorships of listed entities in the past three years
Chair of CardieX Limited (formerly AtCor Medical Holdings
Limited).
Interests in shares and performance rights
Indirect: 41,485 ordinary shares in nib holdings limited held by
Dundrum Investments Pty Ltd.
Former Directors
Steve Crane retired from the Board on 29 July 2021. Steve had
been a Chair and Non-Executive Director since September 2010.
Christine McLoughlin retired from the Board on 25 September
2020. Christine had been a Non-Executive Director since
March 2011.
nib holdings limited | Annual Report 2021 17
Company Secretaries
Ms Roslyn Toms LLB (UNSW), BA Comms (Hons) (UCAN/UTS), GAICD was appointed Company Secretary on 29 April 2013.
Ms Toms is also Group Executive – Legal and Chief Risk Officer and is responsible for managing legal, risk, compliance, governance,
community and sustainability across the nib group businesses in Australia and its global operations. Ms Toms is a member of the Law
Society of NSW and the Governance Institute. She is also Director of the nib foundation and is a graduate of the Australian Institute of
Company Directors (AICD).
Mr Jordan French (BSc (Hons) LLB (Macquarie)) was appointed Company Secretary on 15 August 2017. Mr French also acts in the
role of Senior Corporate Counsel for the nib Group, as well as the Company Secretary for nib foundation Ltd.
Meetings of Directors
The number of meetings of nib holdings limited’s Board of Directors and of each Board committee held during the year ended
30 June 2021, and the numbers of meetings attended by each Director are noted below. All directors may attend Committee meetings
even if they are not a member of a Committee. The table below excludes the attendance of Directors at Committee meetings where
they were not a Committee member*.
Board
Audit Committee
Risk and Reputation
Committee
People and
Remuneration
Committee
Investment Committee Nomination Committee
Held3
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
15
15
15
15
15
15
5
15
15
15
15
14
15
15
5
15
–
–
–
6
6
6
2
–
–
–
–
6
6
6
2
–
–
–
5
5
–
5
2
5
–
–
5
5
–
5
2
5
–
–
6
6
6
–
–
6
–
–
6
6
6
–
–
6
–
–
–
4
–
4
–
4
–
–
–
4
–
4
–
4
2
2
2
2
2
2
n/a
2
2
2
2
2
2
2
n/a
2
Name
S Crane
M Fitzgibbon
L Ausburn
J Chow1
D Gordon
A Loveridge
C McLoughlin2
D O’Dwyer
* Committee memberships changed in July 2021 following the retirement of Steve Crane and appointment of Peter Harmer.
1. J Chow was appointed to the Investment Committee on 27 August 2020.
2. C McLoughlin retired as a director on 25 September 2020. The stated number of meetings held for Ms McLoughlin are those that were convened during the financial year prior to her retirement.
No meetings of the Nomination Committee were held in the financial year prior to her retirement.
3. Includes four unscheduled board meetings called at short notice.
Remuneration Report
The Remuneration Report is set out on pages 21 to 42 of the Annual Report and forms part of this Report.
Shares under performance rights
Unissued ordinary shares of nib holdings limited under performance rights at the date of this report are as follows:
Date performance rights granted
15 December 2017
23 November 2018
11 December 2019
28 February 2020
27 November 2020
8 April 2021
Expiry date
1 September 2021
1 September 2022
1 September 2023
1 September 2023
1 September 2024
1 September 2024
Issue price
of shares
Number under
performance
right
nil
nil
nil
nil
nil
nil
459,149
422,078
380,171
32,836
714,784
2,134
Shares may be issued or acquired on-market at the election of the Company. It is anticipated that the performance rights will be
satisfied through on-market share purchases administered by the nib Holdings Ltd Share Ownership Plan Trust.
No performance right holder has any right under the performance rights to participate in any other share issue of the Company or
any other entity.
18 nib holdings limited | Annual Report 2021
directors’ reportfor the year ended 30 June 2021 Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the Group are important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services during the year are
disclosed in Note 32 – Remuneration of Auditors.
The Board of Directors has considered the position and, in accordance with advice received from the Audit Committee, is satisfied
that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out in Note 32,
did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit Committee to ensure that they did not impact the impartiality and
objectivity of the auditor;
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Insurance of officers
During the financial year, the Group paid a premium in respect of a contract insuring the Directors and Officers of the Group against
liability incurred as such a Director or Officer, other than conduct involving wilful breach of duty in relation to the Group, to the extent
permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of
the premium.
Auditor’s independence declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 20.
Rounding of amounts
The Company is of a kind referred to in Instrument 2016/191, issued by the Australian Securities and Investments Commission,
relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off to the
nearest hundred thousand dollars in accordance with that Instrument.
This report is made in accordance with a resolution of the Directors.
On behalf of the Board
David Gordon
Director
Newcastle, NSW
20 August 2021
Anne Loveridge
Director
nib holdings limited | Annual Report 2021 19
Auditor’s Independence Declaration
auditor’s independence
declaration
for the year ended 30 June 2021
Auditor’s Independence Declaration
As lead auditor for the audit of nib holdings limited for the year ended 30 June 2021, I declare that to
the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of nib holdings limited and the entities it controlled during the period.
SK Fergusson
Partner
PricewaterhouseCoopers
Newcastle
20 August 2021
PricewaterhouseCoopers, ABN 52 780 433 757
Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300
T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
20 nib holdings limited | Annual Report 2021
Remuneration Report
remuneration
report
for the year ended 30 June 2021
MESSAGE FROM THE BOARD
Dear Shareholder
On behalf of the Board, I am pleased to present our 2021 Remuneration Report.
The nib Group delivered strong results for the financial year 2021 (FY21), despite the ongoing impact of the COVID-19 pandemic,
in particular on our iihi and travel businesses. Our total shareholder return (TSR) for the year was 45.0% compared to 27.8% for the
ASX200. Statutory earnings per share grew to 35.2 cents, a pleasing result which compares favourably to our pre-pandemic earnings.
Our purpose of ‘your better health’ continues to guide our decision-making. We maintained our focus on business transformation
through investment in technology and automation as we seek to enhance our member and traveller services, as well as ensure we can
deliver on our purpose and help our members and travellers live healthier lives.
During the year, we made a number of organisational changes which saw the consolidation or removal of some roles across the
Group. This was particularly evident within our retail network following its closure and our travel business given travel restrictions
associated with the pandemic. To support these employees, we explored all possible avenues to redeploy them to other roles across
the nib Group or support their transition into alternative employment.
nib Travel qualified for and received $4.2 million in government wage subsidies ($3.8 million JobKeeper in Australia, $0.4 million in
Ireland) which was excluded from results when determining Executive short term incentives (STI) outcomes for FY21. This support
enabled us to retain many of our nib Travel employees and assist our customers while the COVID-19 pandemic caused significant
disruption to their travel plans.
While nib Travel’s profitability was significantly impacted by the pandemic, nib’s core businesses performed well. We did not apply for
government assistance for the remainder of the nib Group, which makes up more than 99% of underlying revenue.
Aligning remuneration with shareholder interests
Our executive remuneration and reward strategy remains consistent with previous years. We continue to consult with a range of
stakeholders, including major shareholders and shareholder interest groups, to ensure it supports our business objectives, is market
competitive, sustainable and aligned to shareholder interests. The Board was pleased that shareholders again voted overwhelmingly
in favour of our Remuneration Report and Managing Director’s Long-Term Incentive (LTI) Plan at last year’s Annual General Meeting.
Our approach to remuneration is simple and underpinned by a strong governance framework:
1. our philosophy needs to be fit for purpose and aligned to our organisational strategy;
2. our shareholders need to understand what we pay our people and they need to know how performance is measured and
rewarded – transparency is key; and
3. remuneration must be linked to short and long-term shareholder value creation; the two are inextricably linked.
Throughout the year, the regulatory environment continued to evolve, in particular with regard to governance and remuneration
arrangements as outlined in APRA’s draft new prudential standards on remuneration (CPS 511) and the draft Financial Accountability
Regime (FAR) recently released by Treasury. We continue to support the intent of these regulatory changes and believe that
strengthening the link between remuneration and accountability is a good thing for consumers and shareholders alike.
In FY21 we took another step forward in aligning our Executive remuneration framework with the proposed regulatory changes by
introducing an equal balance of financial and non-financial measures into our STI plan, recognising the important role of non-financial
value drivers in delivering long-term shareholder value. This is in addition to the progress we have made in recent years including:
• deferral and escrow arrangements for remuneration relating to nib’s STI and LTI Plans respectively;
• clearly defined clawback and malus conditions within our STI and LTI Plans; and
• applying a ‘risk gate’ assessment for our STI Plan where our People and Remuneration and Risk and Reputation Committees
together with our Chief Risk Officer evaluate our risk culture and risk management to confirm Executive performance warrants
reward.
As the FAR and CPS 511 regulatory changes are finalised over the coming year, we will continue to review our remuneration and
governance frameworks to ensure they remain appropriate and continue to drive strong outcomes for shareholders.
Executive changes
Following the executive departures highlighted in the FY20 report, we were pleased to promote three of our existing senior leaders to
positions on the executive team effective from 1 October 2020. Martin Adlington, James Barr and Anna Gladman all bring extensive
experience in their respective areas of responsibility and have already made a strong contribution to the executive team during the
past year.
It is pleasing that we were able to fill these key leadership positions internally which is a testament to the strong succession pipeline
and growth culture we celebrate at nib. We believe in giving our people opportunities and the Board is confident that we have the right
executive team in place to lead the organisation and deliver sustainable and strong returns for shareholders in the years to come.
nib holdings limited | Annual Report 2021 21
Executive reward in FY22
As indicated to shareholders in last year’s Remuneration Report, there was no increase to the Managing Director/Chief Executive
Officer’s (MD/CEO) remuneration in FY21 and generally no increases for our Executive Management team and Business Unit Heads,
except for minor adjustments to reflect changes in responsibility for some individuals. Likewise, Non-Executive Director fees remained
at FY20 levels given the market conditions and general uncertainty created by COVID-19.
In setting remuneration arrangements for FY22, the Board considered remuneration benchmarking data, along with company
performance, the external competitive market and shareholders’ views. As a result, the Board approved fixed remuneration increases
for Executives ranging between 2.5% and 8.6% to ensure that remuneration levels remain competitive and appropriately reflect the
responsibility of each Executive. Non-Executive Director fees will be increased by 2.5%, with the exception of the NZ Chairman who
will receive a 7% increase to reflect movement in the NZ market.
Culture, diversity and inclusion
At nib, we are committed to promoting an inclusive culture where individual differences are valued and our people can bring their
authentic selves to work and feel empowered to offer new ideas and perspectives. In March 2021, we launched our inaugural
Diversity and Inclusion Action Plan which defines our three year commitment and actions to deliver on our vision; to foster a sense
of community where everyone is welcome, contributes and belongs.
We also launched our nib Reflect Reconciliation Action Plan in October 2020, which has provided an opportunity for us to reflect,
listen and learn what it means to genuinely reconcile and build meaningful and trusted relationships with our Aboriginal and Torres
Strait Islander communities.
Our most recent employee engagement survey highlighted nib’s strong and stable engagement with an overall score of 69%. This was
a pleasing result given the uncertainty, disruption and pressures our employees have faced over the past year due to COVID-19.
While COVID-19 has presented its challenges, it’s also given us a unique opportunity to redefine the way our employees work at nib.
Unlike some companies who have directed their employees to return to the office, we believe there will be no return to our past work
practices beyond the pandemic. We’ve committed to and embraced a culture that gives our employees flexibility and choice about
where, when and how they work, while ensuring we provide meaningful opportunities to come together for connection, innovation
and creativity.
Board changes
As highlighted in the incoming Chairman’s report, we bid farewell to Steve Crane after 10 years as Chairman of the Board. Steve was
instrumental in nib’s growth over the last decade and has always been a strong supporter of our people helping to develop a strong
culture at nib. The Board is thankful for Steve’s extraordinary contribution to the company and we wish him every success in his
future endeavours.
We also welcomed Peter Harmer as an Independent Non-Executive Director in July 2021. Peter brings over 40 years’ experience in
the Australian and international insurance and financial sectors, including over 30 years in a senior executive capacity. Peter’s addition
to the Board ensures we continue to have the right mix of skills, diversity and experience to build further on nib’s success.
Peter became a member of the People and Remuneration Committee from August 2021.
On behalf of the Board I thank our employees for their continued commitment to our members, travellers and the organisation.
As always, we welcome your feedback on our 2021 Remuneration Report.
Lee Ausburn
Chair
People and Remuneration Committee
22 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 contents
Key terms used in this report
Remuneration overview
Key management personnel
Our remuneration governance
Executive remuneration structure
Executive remuneration mix
Executive remuneration for the financial year ended 30 June 2021
Linking remuneration with performance
Executive employment conditions
Non-executive director remuneration
Detailed disclosure of executive remuneration
Detailed disclosure of non-executive remuneration
Equity instruments held by key management personnel
23
24
25
26
27
28
32
35
35
36
38
40
41
Key terms used in this report
FY20
FY21
FY22
AGM
Financial year ended 30 June 2020
Financial year ended 30 June 2021
Financial year ended 30 June 2022
Annual General Meeting
Group
nib holdings limited consolidated entity
KMP
KPI
LTI
LTIP
NPAT
Key Management Personnel (those Directors and Executives who have responsibility for planning,
directing and controlling the activities of nib, either directly or indirectly)
Key Performance Indicator
Long-Term Incentive
Long-Term Incentive Plan
Net Profit After Tax
PARCO
People and Remuneration Committee
STI
TFR
TSR
Short-Term Incentive
Total Fixed Remuneration
Total Shareholder Return
nib holdings limited | Annual Report 2021 23
Remuneration overview
our remuneration principles
Aligned to
shareholder value
creation
Rewards
sustainable
performance
Market
competitive
Simple and
transparent
Recognises the role
of non-financial
value drivers
Supports prudent risk
management
and conduct
Fixed Remuneration (FR)
Short-Term Incentive (STI)
Long-Term Incentive (LTI)
l
e Provides market competitive
a
n
o
i
t
a
R
remuneration to attract and retain high
calibre talent. Reflects role size and
accountability.
e Base salary, superannuation
r
u
and short- term benefits
t
c
(e.g. insurance cover)
u
r
t
S
h Reviewed annually against relevant
c
a
o
r
p
p
A
comparator group remuneration
benchmarks.
For Australia-based Executives the
comparator groups are:
• ASX listed companies with a market
capitalisation 50-200% of nib
• ASX listed companies within the
financial services and healthcare
sectors with a market capitalisation
33-300% of nib
For the CEO nib NZ, the primary
comparator group is a select group of
listed and unlisted companies within the
financial services sector in NZ.
Rewards Executives for achievement
against predetermined financial and
non-financial performance measures.
Rewards Executives for creating
sustainable, long-term shareholder
value.
50% paid in cash
25% deferred into shares,
restricted 1 year
25% deferred into shares,
restricted 2 years
Rights to shares with no dividend
equivalent payments. Vesting is subject
to performance over a four year period,
with 50% of the award held in escrow
for a further 2 years.
Quantum
Quantum
• Maximum opportunity of 125% of
FR for the CEO (between 30% and
100% for other Executives)
• Maximum face value allocation of
125% of FR for the CEO (between
20% and 60% for other Executives)
Performance Measures
Performance Measures:
• 50% financial measures (30%
• Relative TSR (50%)
• Statutory EPS (50%)
See page 31 for further information on
the LTI Plan.
for the GELCRO), being revenue
growth, profitability and cost
control.
• 50% non-financial measures (70%
for the GELCRO), being member/
traveler satisfaction, employee
engagement, safety and other
role-specific measures.
See page 30 for further information on
the STI Plan.
Remuneration outcomes – FY21 snapshot
Fixed Remuneration Increase
0%
MD/CEO
Other Executives
0%*
STI awarded
77% of maximum
68% to 78% of maximum
LTI which reached the end of its
performance period on 30 June 2021
64% of the award vested, being:
• 58% vesting for the TSR hurdle
• 71% vesting for the EPS hurdle
* The Group Executive Legal and Chief Risk Officer received a 6.5% increase to fixed remuneration following organisation structure changes that resulted in increased scope and responsibility.
24 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 Key management personnel
This Report presents the remuneration arrangements for nib’s key management personnel.
Name
Chairman
Steve Crane
Position
Chairman
Chair, Nomination Committee
Term as KMP
Full year
Current Non-Executive Directors
Lee Ausburn
Chair, People and Remuneration Committee
Full year
Member, Risk and Reputation Committee
Member, Nomination Committee
Jacqueline Chow
Chair, Risk and Reputation Committee
Full year
Member, People and Remuneration Committee
Member, Audit Committee
Member, Nomination Committee
David Gordon
Member People and Remuneration Committee
Full year
Member Audit Committee
Member Nomination Committee
Anne Loveridge
Chair, Audit Committee
Full year
Chair Board Audit, Risk and Compliance Committee New Zealand
Director, New Zealand subsidiaries
Member, Risk and Reputation Committee
Member, Investment Committee
Member, Nomination Committee
Donal O’Dwyer
Chair, Investment Committee
Full year
Member, People and Remuneration Committee
Member, Risk and Reputation Committee
Member, Nomination Committee
Former Non-Executive Director
Christine McLoughlin
Member Audit Committee
Until 30 September 2020
Managing Director and CEO
Member Nomination Committee
Mark Fitzgibbon
Current Executives
Martin Adlington
James Barr
Edward Close
Nick Freeman
Anna Gladman
Rob Hennin
Brendan Mills
Matt Paterson
Roslyn Toms
Former Executive
Mellissa Naidoo
Managing Director/Chief Executive Officer (MD/CEO)
Full year
Group Chief People Officer (CPO)
Chief Executive, International Visitors (CE IV)
From 1 October 2020
From 1 October 2020
Chief Executive, Australian Residents Health Insurance (CE ARHI) Full year
Group Chief Financial Officer (CFO)
Full year
Chief Executive, nib Travel (CE TRAVEL)
From 1 October 2020
Chief Executive Officer, nib New Zealand (CEO NZ)
Group Chief Information Officer (CIO)
Group Chief Operations Officer (COO)
Group Executive, Legal and Chief Risk Officer (GELCRO)
Full year
Full year
Full year
Full year
Group Executive Health and Chief Medical Officer (GEHCMO)
From 1 October 2020 until
30 April 2021
nib holdings limited | Annual Report 2021 25
Our remuneration governance
board
Responsible for the Governance of the company, including ensuring nib’s remuneration framework and executive reward outcomes are
transparent and suitably robust, and aligned with the interests of our members, travellers, employees, shareholders, and the community’s
expectations.
Considers recommendations from PARCO regarding changes to nib Group’s Executive reward and recognition framework including
long‑term and short term incentive arrangements. The Board is responsible for assessing the performance of the MD/CEO.
parco
The role of PARCO is to ensure nib’s remuneration framework supports nib’s business strategy
assisting and advising the Board on:
• remuneration strategy, policies and practices
• setting measurable diversity and inclusion
targets and reviewing the nib Diversity and
Inclusion Policy
• reviewing the People and Culture strategy,
succession planning processes and annual
engagement survey
• reviewing the company values and the
inculcation of those values throughout
the organisation; and
• monitoring employee engagement and
culture.
risk gateway
assessment
PARCO conducts a formal
assessment of each
Executive with input from
nib's Risk and Reputation
Committee as well as
nib's Chief Risk Officer
to confirm performance
warrants award.
shareholders and
other stakeholders
nib Board and PARCO representatives
seek feedback from industry
stakeholders, including major
shareholders and shareholder interest
groups, to assist in remuneration
decisions.
external remuneration
advisers
PARCO regularly engages external
remuneration advisors to assist
in Executive salary benchmarking
against a comparator group
of companies.
management
The MD/CEO is responsible for
assessing the performance of other
Executives which is subject to
Board approval.
The role of our People and Remuneration Committee (Committee) is to ensure alignment of nib’s remuneration framework and
executive reward strategy against the short and long-term performance of the nib Group, assessed through a combination of financial
and non-financial measures. The Committee also has an ongoing role to assess remuneration and performance to ensure it is
consistent with shareholder and community expectations.
As part of this process the Committee seeks advice and feedback from a range of external stakeholders from time-to-time, including
remuneration consultants, specialists, major shareholders and shareholder advisory groups.
When assessing our remuneration framework strategy, the Committee ensures there is a clear link to nib’s culture and values as well
as risk management and business strategy. Guiding this process is an intent to create a workplace and environment that attracts,
retains, develops and appropriately rewards our people. External factors such as the operating environment, governance and
regulatory expectations also feed into this process.
The Committee includes the following independent Non-Executive Directors:
Lee Ausburn (Chair)
Jacqueline Chow
Donal O’Dwyer
David Gordon (until July 2021)
Peter Harmer (from August 2021)
Shareholders can view the Committee Charter on the nib website (nib.com.au/shareholders).
26 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 Executive remuneration structure
Executive remuneration is based on nib’s performance assessed using a combination of metrics and time frames, ensuring reward is
linked to decision-making and performance, aligned to our values and culture, is sustainable, consistent with our long-term business
strategy and shareholder value creation.
The structure of our executive remuneration arrangements are set against a comparator group of listed organisations or peers, which
nib determines in consultation with external remuneration advisors. The aim is to position the fixed remuneration of our Executive
Management team between the 50th and 75th percentile of benchmarked companies. The Committee also considers shareholder
views when setting the remuneration of our MD/CEO and Executive Management team, with feedback shared by the Committee.
nib’s remuneration framework and executive reward strategy provides a mix of fixed and variable remuneration assessed against short
and long-term performance. There are three components to total remuneration:
• fixed remuneration, comprising a base remuneration package, superannuation and insurance cover;
• short-term incentives based on pre-determined Key Performance Indicator (KPI) financial and non-financial targets established by
the Board as well as individual and leadership assessment; and
•
longer-term incentives based on pre-determined Total Shareholder Return (TSR) and Statutory Earnings Per Share (EPS)
performance hurdles, established by the Board.
A significant portion of remuneration for our Executives is performance-based or ‘at risk’ through Short-Term Incentives (STI) and
Long-Term Incentives (LTI). All Executives’ performance-based incentives (STI and LTI) include claw-back arrangements and a malus
condition.
If the Board becomes aware of a material misstatement of our financial accounts or statements, and nib has awarded an Executive an
incentive payment or award, short or long-term, having regard to misstatement, the Board may (at its absolute discretion), require the
Executive to:
•
•
repay the Company any short or long-term incentive received; or
forfeit or cancel any short or long-term award (vested or unvested).
When granting a variable remuneration component for each Executive relating to the performance period, such as STI and LTI
Awards, the Board also ensures any governance, adverse risk taking, or audit issues are factored into the quantum of payments to
each Executive. To support this, a risk gate assessment is applied for our STI Plan where our People and Remuneration Committee
and Chief Risk Officer evaluate the risk culture and risk management, with input from nib’s Risk and Reputation Committee, to confirm
Executive performance warrants award.
nib holdings limited | Annual Report 2021 27
Executive remuneration mix
The remuneration structure for each executive is made up of the following components:
Total fixed remuneration
(cash salary, superannuation,
plus insurance cover)
+
Short-term incentive (STI)
being cash and
deferral into shares
+
Long-term incentive (LTI)
being
performance rights
=
Total potential reward
Fixed
Variable
The graph below illustrates the FY21 remuneration mix for our Executives based on maximum total remuneration opportunity.
Any variations in remuneration mix between executive roles reflect position responsibilities. As can be seen from the graph a large
portion of Executive remuneration is ‘at risk’ and subject to meeting performance hurdles as set out through the STI and LTI for
each Executive.
36%
24%
24%
19%
19%
19%
19%
38%
38%
y
t
i
n
u
t
r
o
p
p
o
n
o
i
t
a
r
e
n
u
m
e
r
x
a
m
%
18%
18%
28%
13%
13%
13%
13%
13%
13%
63%
63%
24%
22%
19%
19%
38%
17%
17%
44%
13%
13%
13%
63%
22%
22%
17%
17%
17%
17%
44%
44%
13%
13%
13%
63%
MD/CEO
CE ARHI
CEO NZ
CE IV
CE TRAVEL
CFO
CIO
CPO
GE BS
GELCRO
GEHCMO
Fixed remuneration (base salary, superannuation + benefits)
Maximum short-term incentive opportunity – cash
Maximum short-term incentive opportunity – deferred into shares
Long-term incentive grant
The following diagram provides an illustrative indication of how 2021 financial year remuneration will be delivered to Executives:
Fixed remuneration
STI cash 50%
STI deferred shares
25% for 1 year
STI deferred shares
25% for 2 years
LTI performance rights (FY21-25 grant)
50% unrestricted
50% subject to 2 year restriction
FY21
FY22
FY23
FY24
FY25
FY26
Date granted
Date paid
Date eligible for vesting
28 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021
Executive remuneration mix – fixed remuneration
Fixed remuneration for Executives reflects their core responsibilities and duties, which is determined with reference to a benchmarking
process, external market factors, competition to attract and retain talent, as well as consideration of the expertise of the individual in
the role. Fixed Executive remuneration is set between the 50th and 75th percentile of benchmarked companies, with consideration to
adjust based on the size and specialty of the role, as well as the skills and experience of the Executive.
Fixed remuneration includes cash salary, superannuation and insurance cover. The fixed remuneration may be salary packaged at no
additional cost to the Group. Adjustments to an Executive’s remuneration are generally only made where their remuneration is below
benchmarked companies or there is a material change in the Executive’s responsibilities.
In May 2021, we engaged EY to provide remuneration benchmarking data which the Committee considered along with a range of
other factors in determining the FY22 remuneration review. While the Committee typically seeks guidance from external remuneration
advisors every two years, due to the Board’s decision not to increase executive remuneration in FY21, this was the first time in three
years that our executive management team’s salaries had been externally benchmarked.
The information provided by EY did not constitute a remuneration recommendation in relation to KMP as defined by Division 1 of
part 1.2 of Chapter 1 of the Corporations Act 2001.
The companies that make up our peer group for assessing benchmark remuneration data include the following sectors and industries:
• Australian market capitalisation comparator group (all roles except the CEO NZ): this includes ASX200 companies within 50-200%
of nib’s market capitalisation.
• Australian industry-based comparator group (all roles except the CEO NZ): This includes selected ASX200 financial services and
healthcare companies within 33-300% of nib’s market capitalisation: and
• New Zealand industry-based comparator group (nib New Zealand Chief Executive Officer only): both listed and unlisted financial
services companies in New Zealand.
In setting executive reward for FY22, the Board considered the remuneration data along with a range of other factors, including the
performance of the company, the external competitive market and shareholders’ views. Based on this review, the Board approved
fixed remuneration increases ranging between 2.5% and 8.6% to ensure remuneration levels remain competitive and aligned to
market rates.
Details of FY21 and FY22 fixed remuneration levels for all Executives are provided below:
Executives
Mark Fitzgibbon
Martin Adlington
James Barr
Edward Close
Nick Freeman
Anna Gladman
Rob Hennin2
Brendan Mills
Matt Paterson
Roslyn Toms
1. Includes base salary and superannuation.
2. Includes base salary and employer contributions to KiwiSaver, reflected in New Zealand dollars.
Total fixed remuneration1 $
FY22
FY21
1,172,000
1,143,300
390,500
390,500
517,500
687,000
390,500
371,694
371,694
479,000
670,000
371,694
NZD 572,500 NZD 530,000
461,500
461,500
461,500
450,000
450,000
425,000
nib holdings limited | Annual Report 2021 29
Executive remuneration mix – variable remuneration
Short‑term incentives (STI)
nib’s short-term incentive (STI) plan for each Executive is structured as follows.
Cash (50%)
Deferred into shares (50%)
1 year deferral (50%)
2 year deferral (50%)
=
Total potential STI
Variable (Determined by a mixture of financial, non-financial and individual performance outcomes)
The Board is responsible for assessing the performance of the MD/CEO and the MD/CEO is responsible for assessing the
performance of other Executives (with approval of the resulting STI awards subject to a Committee risk gate assessment prior to
Board approval).
Due to the importance of risk management, compliance and behaviour, our People and Remuneration Committee conduct a formal
assessment of each Executive prior to the award of the STI with input from nib’s Risk and Reputation Committee and nib’s Chief
Risk Officer.
The MD/CEO potential STI is 125% of TFR with other Executives in a range of 30%-100% of TFR. Actual outcomes are determined
on performance criteria based on two components:
1.
Individual and leadership assessment, which makes up 15% of the total STI. The individual and leadership component ensures
we continue to recognise the contribution our Executives make in developing a high-performance organisational culture and seek
a balance between the financial and non-financial performance of our business.
The leadership component for the MD/CEO is assessed as part of an annual performance review by the Board, factors which are
considered include:
• Leadership
• Strategic planning
• Board/Joint Ventures
• Financial management
• Shareholder communication and return
• Public image and professional development
• Operations and Culture
The Board also takes into account the MD/CEO’s progress in achieving the various goals set out in nib’s strategic plan.
In determining the leadership component for other members of the Executive team, the MD/CEO provides a detailed assessment
of each Executive’s progress and achievements in relation to their individual performance plans for the year. The individual’s
performance plans are based on nib’s strategic plan and reflect the Executive’s primary accountability. The Board considers and
determines the leadership component for each Executive based upon the MD/CEO’s recommendations.
nib does not disclose individual performance hurdles and metrics of the STI for the MD/CEO if they are commercially or
strategically sensitive.
2. Company performance assessment that makes up 85% of the total STI. The performance component is assessed against
predetermined financial and non-financial performance milestones for each Executive and is weighted accordingly (for FY21 this
is set out on page 33). In some instances, an Executive’s STI assessment may also include strategic milestones, which can be
assessed over multi-year periods.
The table on page 33 details the remuneration outcomes for the MD/CEO against performance criteria for the FY21 STI award.
The table on page 33 shows the STI award for each Executive for FY21 and previous year relating to their performance against both
components of the STI.
A condition of acceptance for each Executive in the STI Plan is the requirement that 50% of the STI be deferred into shares, with 50%
having a one year deferral and the remaining 50% deferred for two years. These shares are subject to a risk of forfeiture during the
deferral period under bad leaver and clawback conditions.
30 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 Long‑term incentives (LTI)
nib’s long-term incentive (LTI) plan for each executive is structured as follows.
LTI issue of Rights
4 year performance period
Tranche 1 (50%): TSR
Tranche 2 (50%): EPS
=
LTI awarded
With 50% of total award
having 2 years escrow period
The purpose of the LTI is to balance short-term performance objectives with the creation of long-term shareholder value by focusing
overall Group performance over a multi-year period.
The nib LTI is an incentive provided to eligible Executives if specific measures are met over a four-year period. LTI targets are set in
the interests of creating long-term shareholder value and to assist nib to attract, reward, motivate and retain executives.
LTI participants are granted performance rights that enable the Executive to acquire shares in nib for nil consideration if performance
conditions are met and the Executive is still employed by nib at the end of the vesting period. No dividends are received on
unvested rights.
The vesting date may be accelerated at the Board’s discretion:
•
in the event of death of a participant;
• on cessation of employment for other reasons (including total and permanent disablement, redundancy and retirement); or
• on winding up, delisting, change of control and reconstruction or amalgamation.
Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any
guaranteed benefits.
The performance hurdles for the nib LTI are Total Shareholder Return (TSR) relative to the S&P/ASX200 over four years and Statutory
EPS growth over the performance period. The LTI is allocated in two equal tranches; 50% for TSR and 50% for Statutory EPS.
The Board’s view is that our current LTI performance hurdles being EPS and TSR relative to S&P/ASX200 group of companies remain
appropriate and aligned to our remuneration philosophy. We will continue to assess the appropriateness of these performance
hurdles each year and consult with shareholders, proxy advisors and other shareholder representative groups regarding any future
amendments to ensure they are aligned to shareholders’ interests and regulatory requirements.
A condition of acceptance for each Executive in the LTI Plan is the requirement for 50% of the LTI to have a two-year escrow period.
This escrow period extends beyond employment at nib ceasing, including termination.
If vesting conditions are met, the performance rights will vest following the end of the performance period. On the vesting date,
Executives who hold vested performance rights will be either issued or transferred shares in nib for each vested performance right.
There is no re-testing of performance.
nib holdings limited | Annual Report 2021 31
Executive remuneration for the financial year ended 30 June 2021
Actual remuneration for each Executive in FY21 included a fixed component, as well as a variable or at risk component, made up of
an STI payment and LTI award.
The table below details remuneration received by Executives during the financial year, including:
• fixed pay and other benefits paid during the financial year
•
•
the value of STI awards (cash and shares held in escrow) received during the financial year; and
the value of prior years’ deferred LTI awards that vested during the financial year.
Statutory remuneration disclosures prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards
differ to the numbers presented below, as they include expensing for equity grants that are yet to realise or may never be realised.
Statutory remuneration table is presented on page 38.
Actual Remuneration Received (non-statutory)
Mark Fitzgibbon
Martin Adlington
James Barr
Edward Close
Nick Freeman
Anna Gladman
Rob Hennin
Brendan Mills
Mellissa Naidoo (until 30/4/21)
Matt Paterson
Roslyn Toms
Total fixed
remuneration1
$
1,143,300
359,195
359,194
479,000
669,999
388,743
513,349
450,000
350,943
450,000
418,525
Total
termination
payments
$
–
–
–
–
–
–
–
–
235,676
–
–
STI applicable to the FY20 year
paid in Sept 2020 (FY21)2
Cash
$
Shares held
in escrow
$
LTI vested
in FY213
$
Total reward
(received or
available)
$
275,536
275,536
298,461
1,992,833
51,249
53,759
63,076
2,159
54,214
142,589
81,450
30,103
38,105
78,423
–
–
46,924
2,159
–
139,844
81,450
–
38,105
78,423
–
–
–
–
–
74,787
52,645
–
–
8,624
410,444
412,953
589,000
674,317
442,957
870,569
665,545
616,722
526,210
583,995
5,582,248
235,676
870,663
662,441
434,517
7,785,545
1. Total fixed remuneration comprises cash salaries and fees, superannuation and leave entitlements paid on termination.
2. FY20 STI paid in the FY21 year.
3. Value of shares issued during the year on exercise of performance rights.
Short‑term incentives for the financial year ended 30 June 2021
For the FY21 STI, the Board considered a number of financial and non-financial performance measures to be appropriate metrics
and hurdles. The performance outcomes against these measures are reflected in the MD/CEO’s FY21 remuneration outcomes.
nib Executives were subject to similar performance assessments, reflecting their area of responsibility and function within the
nib Group.
Short-term performance targets are set for achieving specific financial and non-financial business and individual performance
outcomes, with awards made relative to true outperformance. Due to the commercial and strategic nature of some STI targets for
Executives, nib does not disclose some specific KPIs for key management personnel.
32 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 The table below summarises performance versus target against each FY21 STI component for the MD/CEO for both financial and
non-financial measures based on 30 June 2021 actuals.
Category and Measure
Financial Measures (50% weighting)
Scorecard result
Weighting
Threshold
(25%)
Target
(75%)
Maximum
(100%)
STI Award Comment
Growth
arhi underlying operating revenue1
10.0%
Group underlying operating revenue1
Profitability
Group underlying operating profit2
Group statutory earnings per share3
Cost control
Group operating expenses
10.0%
10.0%
10.0%
10.0%
Performance Assessment – Financial Measures
50.0%
Non-Financial Measures (50% weighting)
Member satisfaction Net promoter score4
Member complaints
People and safety
Employee engagement score
18.0%
2.0%
5.0%
Group lost time injury frequency rate
10.0%
Leadership
Leadership assessment
15.0%
Performance Assessment – Non-Financial Measures
50.0%
Total Assessment/Outcome
100.0%
10.0% Strong financial performance
resulted in 48.6% out of 50%
STI awarded.
8.6%
Group UOP above target, but fell
slightly below the ‘maximum’ award
due to the impacts of COVID-19 on
the travel and international visitors
businesses.
NPS target achieved in 1 of 5
segments, STI outcome was
impacted by higher weighting to
arhi member satisfaction which
did not achieve target. Employee
engagement score was favourable at
69%, however the stretch target set
for STI purposes was not achieved.
Strong results across all other
non- financial measures.
10.0%
10.0%
10.0%
48.6%
1.7%
2.0%
1.3%
9.4%
13.5%
27.9%
76.5%
1 Premium revenue, other underwriting revenue and other income from non-underwriting businesses, excluding one-off transactions.
2
Underwriting result, other income and expenses including non-underwriting businesses. It excludes amortisation of acquired intangibles, one-off transactions (integration of acquired business,
establishment of business costs as well as extraordinary legal fees), merger and acquisition costs, finance costs, net investment income and income tax.
3 Adjusted for M&A costs and change in accounting policy for capitalisation of Software-as-a-Service (SaaS) costs.
4 arhi, iihi, nz, nib travel.
Actual FY21 STIs awarded and forfeited (as a percentage of total STI) for each Executive are set out below:
Mark Fitzgibbon
Martin Adlington
James Barr
Edward Close
Nick Freeman
Anna Gladman
Rob Hennin
Brendan Mills
Matt Paterson
Roslyn Toms
Group average
FY21 STI Bonus
FY20 STI Bonus
Total Awarded
Forfeited
Total Awarded
Forfeited
%
76.5%
73.6%
69.0%
77.7%
75.0%
68.5%
74.5%
73.6%
68.5%
72.6%
72.9%
%
23.5%
26.4%
31.0%
22.3%
25.0%
31.5%
25.5%
26.4%
31.5%
27.4%
27.1%
%
38.6%
39.4%
39.4%
39.4%
26.2%
26.2%
57.8%
45.3%
52.0%
49.1%
36.9%
%
61.4%
60.6%
60.6%
60.6%
73.8%
73.8%
42.2%
54.7%
48.0%
50.9%
63.1%
nib holdings limited | Annual Report 2021 33
Executive remuneration for the financial year ended 30 June 2021 continued
Long‑term incentives for the financial year ended 30 June 2021
nib LTI performance rights vest in accordance with the achievement of the following vesting conditions:
Vesting Condition 1
Vesting Condition 2
50% of the performance rights (Tranche 1)
50% of the performance rights (Tranche 2)
Total shareholder return targets (TSR Hurdle) for the relevant performance
period are met
Earnings per share growth targets (EPS Hurdle) for the relevant
performance period are met
TSR Hurdle (Tranche 1)
For the four year performance period ended 30 June 2021, nib’s TSR was ranked at the 58th percentile to our peer group (S&P/ASX 200).
As per the TSR vesting conditions for the FY18-FY21 LTI (as set out below) this translates to a 58% vesting of the performance rights for
tranche 1.
nib’s TSR performance compared to the relevant peer group
Performance of Tranche 1 performance rights vesting
>= 75th percentile
100%
>= 50th percentile to 74th percentile
Pro-rata straight line vesting between 50% and 74%
< 50th percentile
0%
%
)
R
S
T
(
n
r
u
t
e
r
r
e
d
l
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r
a
h
s
l
a
t
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700
600
500
400
300
200
100
0
-100
-200
Four Year Relative TSR
Comparator Companies
nib holdings limited (NHF)
nib 34.30%
58th percentile
1 4 7
0
1
3
1
6
1
9
1
2
2
5
2
8
2
1
3
4
3
7
3
0
4
3
4
6
4
9
4
2
5
5
5
8
5
1
6
4
6
7
6
0
7
3
7
6
7
9
7
2
8
5
8
8
8
1
9
4
9
7
9
0
0
1
3
0
1
6
0
1
9
0
1
2
1
1
5
1
1
8
1
1
1
2
1
4
2
1
7
2
1
0
3
1
3
3
1
6
3
1
9
3
1
2
4
1
5
4
1
8
4
1
1
5
1
4
5
1
7
5
1
0
6
1
3
6
1
6
6
1
9
6
1
2
7
1
5
7
1
8
7
1
Company number
Source: Orient Capital (as at 30 June 2021).
Statutory EPS Hurdle (Tranche 2)
For the 12 months to 30 June 2021 nib’s statutory EPS was 35.2 cps. As per the Statutory EPS vesting conditions for the FY18-FY21
LTI (as set out below) this translates to Statutory EPS CAGR of 6.67% from the base Statutory EPS of 27.2 cps and 70.54% vesting of
the performance rights for tranche 2.
Percentage of performance rights vesting
100%
75%
50%
25%
0%
FY18-FY21 LTIP
38.4 cps
35.7 cps
33.1 cps
30.6 cps
nil
For the purpose of the calculation, 25% to 50% will be discrete thresholds, with performance above the 50% entitlement calculated on a pro rata basis to a maximum entitlement of 100%.
34 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021
Linking remuneration with performance
The components of remuneration that are linked to performance are the STI and LTI plans. Set performance indicators determine
85% of the STI award, while 15% is assessed on the leadership of each Executive. Refer table on page 33 for summary of
performance versus target against each FY21 STI component for the MD/CEO. The Five Year Summary on page 12 details the
Group’s financial performance and KPI results for the last five years.
Commercial and strategic milestone targets were set for some of our Executives, including the MD/CEO, which are dependent and
assessed on their segment and area of responsibility. These metrics are not disclosed due to their commercially sensitive nature.
Executive employment conditions
Executive contracts summarise employment terms and conditions, including remuneration arrangements and compensation.
A significant portion of remuneration for our Executives is performance based through STI and LTI arrangements. Executives have
claw-back arrangements and a malus condition in place for performance-based remuneration such as STI and LTI received.
The table below provides a summary of the agreements.
Service agreement effective
Mark Fitzgibbon (MD/CEO)
Martin Adlington (CPO)
James Barr (CE IV)
Edward Close (CE ARHI)
Nick Freeman (CFO)
Anna Gladman (CE TRAVEL)
Rob Hennin (CEO NZ)
Brendan Mills (CIO)
Matt Paterson (COO)
Roslyn Toms (GE LCRO)
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
Permanent
1 Reduces to 6 months after completion of two years’ service.
Termination payments
Notice by nib
12 months
3 months
3 months
6 months
9 months1
3 months
9 months
12 months
6 months
6 months
Termination provisions
Notice by employee
3 months
3 months
3 months
6 months
6 months
3 months
3 months
3 months
6 months
3 months
Where notice is given by nib, the Group may make a payment in lieu of all or part of the notice period.
The Executive may also receive the following benefits upon termination:
• a pro-rata STI payment based on the period of the financial year during which the Executive was employed and the Board’s
assessment of the Executive’s performance against the key performance indicators as at the date of termination; and/or
•
the Board has discretion to determine that all or a portion of unvested performance rights of a participant of the LTIP are to be
vested upon termination.
At the 2011 Annual General Meeting nib received shareholder approval for the payment of termination benefits that may exceed the
12 month salary limit on termination benefits under the Corporations Act 2001. In response to shareholder feedback, the Board has
since determined that this approval will only be undertaken for Executives who held this position at the date of shareholder approval.
The only current Executive this approval would be applicable to is Mark Fitzgibbon (MD/CEO).
Minimum shareholding requirements
While nib does not set minimum shareholding requirements on our Executives, the Board’s view is that the deferral arrangements
under the STI and LTI means all Executives have an appropriate minimum equity holding.
nib holdings limited | Annual Report 2021 35
Non-Executive Director remuneration
Fees and payments to Non-Executive Directors reflect the Board role, market fee levels, and the objective of the Group to attract
highly skilled and experienced non-executive directors.
Non‑Executive Director fees
Our Non-Executive Directors are paid a base fee and an additional fee for being members of other nib Board Committees.
Non-Executive Director fees are reviewed annually by the Committee and approved by the Board.
In May 2021, nib engaged the services of EY to conduct a benchmarking and market remuneration analysis, which the Committee
used together with a range of other factors and supplementary data to inform our FY22 analysis. While the Committee typically seeks
guidance from external remuneration advisors every two years, due to the Board’s decision not to increase NED fees in FY21, this
was the first time in three years that our NED fees were externally benchmarked. For FY22 the Board approved a 2.5% increase for all
Directors except for the NZ Chair where a 7% increase was approved to reflect movement in the NZ market.
Non-Executive Director fees are determined within the $1.9 million aggregate nib Directors’ fee pool limit. This includes Non-Executive
Directors on the nib holdings limited Board, our nib New Zealand subsidiary, as well as our nib Travel business. Directors’ fees and
superannuation are paid out of this pool. Travel allowances, non-monetary benefits and retirement benefits are not included in this
pool. The current aggregate fee pool was set at the AGM in November 2017.
The following table shows the fees (inclusive of superannuation) for nib’s Australian Boards and committees:
2021
$
2020
$
318,800
132,200
318,800
132,200
32,800
13,800
18,500
10,800
32,800
13,800
32,800
13,800
–
–
32,800
13,800
18,500
10,800
32,800
13,800
32,800
13,800
–
–
Base fees
Chairman
Other Non-Executive Directors
Additional fees*
Audit committee
Chairman
Member
Investment committee
Chairman
Member
Risk and Reputation committee
Chairman
Member
People and Remuneration committee
Chairman
Member
Nomination committee
Chairman
Member
* The Chairman of the Board does not receive additional fees for involvement in committees.
36 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 The following fees (inclusive of superannuation) for the New Zealand boards and committees have applied:
NZ Base fees1
Chairman2
Member (AU domiciled)3
Member (NZ domiciled)
NZ Board, Audit, Risk and Compliance committee1
Chairman (AU domiciled)3
Member
2021
$
78,290
42,000
41,519
2020
$
79,777
42,000
42,308
10,300
10,300
–
–
1 All amounts are converted to AUD.
2 The Chairman and NZ domiciled Directors of the NZ Board are not members of the nib holdings limited Board.
3 The AU domiciled Director, Anne Loveridge, is also member of the nib holdings limited board.
Principle 2 of nib’s Corporate Governance Statement (which is available at ww.nib.com.au/shareholders/company-profile/corporate-
governance) includes the committee membership of each of nib’s NEDs (Non-Executive Directors).
Minimum shareholding requirements (MSR)
The Board reviewed the minimum shareholding requirements for Non-Executive Directors during FY21 which resulted in an increase
to the minimum shareholding requirement. All Non-Executive Directors (nib holdings limited only) are now required to hold a minimum
of 100% of their first year’s total annual base director’s fee in shares, which is to be accumulated within four years of appointment
(based on the share price at the date of joining the Board). All current Non-Executive Directors (nib holdings limited) comply with this
requirement as at 30 June 2021, or are within the four year requirement to achieve MSR.
nib holdings limited | Annual Report 2021 37
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nib holdings limited | Annual Report 2021 39
Detailed disclosure of non-executive remuneration
Details of the remuneration of the Directors of the nib holdings group are set out in the following tables.
Non-Executive Directors
2021
Steve Crane
Lee Ausburn
Jacqueline Chow
David Gordon
Anne Loveridge
Christine McLoughlin (until 30/9/2020)
Donal O’Dywer
2020
Steve Crane
Lee Ausburn
Jacqueline Chow
David Gordon (from 29/5/2020)
Anne Loveridge
Christine McLoughlin
Donal O’Dywer
* Non-monetary benefits for Christine McLoughlin include a retirement gift and associated fringe benefits tax.
Short-term employee benefits
Post-employment benefits
Cash salary
and fees
$
Non-monetary
benefits
$
Superannuation
$
297,106
163,288
201,729
156,334
236,653
31,818
162,831
1,249,759
297,797
163,288
169,115
12,740
231,407
146,442
162,831
1,183,620
–
–
–
–
–
4,830
–
4,830
–
–
–
–
–
–
–
–
21,694
15,512
–
4,676
5,247
3,023
15,469
65,621
21,003
15,512
16,066
1,210
10,493
6,977
15,469
86,730
Total
$
318,800
178,800
201,729
161,010
241,900
39,671
178,300
1,320,210
318,800
178,800
185,181
13,950
241,900
153,419
178,300
1,270,350
40 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 Equity instruments held by Key Management Personnel
Reconciliation of performance rights held by KMP
The numbers of performance rights over ordinary shares in the Company held during the financial year by each Executive of nib holdings
limited are set out below.
Balance at the
start of the year
Unvested
Granted as
compensation
Vested and exercised
Lapsed
Balance at the
end of the year
Number
%
Number
%
Other
Changes
Vested and
exercisable
Unvested
–
–
–
–
314,792
12,247
12,247
–
63,305
88,548
Name and Grant dates
Mark Fitzgibbon
5 Dec 2016 (FY17 – FY20 LTIP)
15 Dec 2017 (FY18 – FY21 LTIP)
23 Nov 2018 (FY19 – FY22 LTIP)
11 Dec 2019 (FY20 – FY23 LTIP)
27 Nov 2020 (FY21 – FY24 LTIP)
Martin Adlington
27 Nov 2020 (FY21 – FY24 LTIP)
James Barr
27 Nov 2020 (FY21 – FY24 LTIP)
Edward Close
225,978
222,298
215,962
200,632
–
–
–
28 Feb 2020 (FY20 – FY23 LTIP)
20,063
27 Nov 2020 (FY21 – FY24 LTIP)
Nick Freeman
27 Nov 2020 (FY21 – FY24 LTIP)
Anna Gladman
–
–
11 Dec 2019 (FY20 – FY23 LTIP)
10,416
–
27 Nov 2020 (FY21 – FY24 LTIP)
–
16,374
Rob Hennin
5 Dec 2016 (FY17 – FY20 LTIP)
15 Dec 2017 (FY18 – FY21 LTIP)
23 Nov 2018 (FY19 – FY22 LTIP)
11 Dec 2019 (FY20 – FY23 LTIP)
56,623
42,252
40,324
38,648
–
–
–
–
27 Nov 2020 (FY21 – FY24 LTIP)
–
64,197
Brendan Mills
5 Dec 2016 (FY17 – FY20 LTIP)
15 Dec 2017 (FY18 – FY21 LTIP)
23 Nov 2018 (FY19 – FY22 LTIP)
11 Dec 2019 (FY20 – FY23 LTIP)
27 Nov 2020 (FY21 – FY24 LTIP)
Mellissa Naidoo
8 Apr 2021 (FY21 – FY24 LTIP)
Matt Paterson
39,858
31,365
30,747
28,562
–
–
–
–
–
–
49,560
12,861
28 Feb 2020 (FY20 – FY23 LTIP)
12,773
–
27 Nov 2020 (FY21 – FY24 LTIP)
–
49,560
64,404
28.5% 161,574
71.5%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16,138
28.5%
40,485
71.5%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,360
28.5%
28,498
71.5%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,861
–
–
–
–
–
–
–
–
–
Roslyn Toms
27 Oct 2017 (FY17 – FY20 LTIP)
15 Dec 2017 (FY18 – FY21 LTIP)
23 Nov 2018 (FY19 – FY22 LTIP)
11 Dec 2019 (FY20 – FY23 LTIP)
27 Nov 2020 (FY21 – FY24 LTIP)
8 Apr 2021 (FY21 – FY24 LTIP)
6,530
30,751
29,508
28,014
–
–
–
–
–
–
43,954
2,134
1,861
28.5%
4,669
71.5%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
222,298
215,962
200,632
314,792
12,247
12,247
20,063
63,305
88,548
10,416
16,374
–
42,252
40,324
38,648
64,197
–
31,365
30,747
28,562
49,560
–
12,773
49,560
–
30,751
29,508
28,014
43,954
2,134
nib holdings limited | Annual Report 2021 41
Equity instruments held by Key Management Personnel continued
Reconciliation of performance rights held by KMP continued
To date nib’s practice has been to source equity for remuneration awards from shares purchased on market. Accordingly, there was
no dilution from Executive new issue equity awards in 2021.
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are:
LTIP
Grant date
Date vested and
exercisable
Expiry date
Exercise price
FY17-FY20
5 December 2016
1 September 2020
1 September 2020
FY17-FY20
27 October 2017
1 September 2020
1 September 2020
FY18-FY21
15 December 2017
1 September 2021
1 September 2021
FY19-FY22
23 November 2018
1 September 2022
1 September 2022
FY20-FY23
11 December 2019
1 September 2023
1 September 2023
FY20-FY23
28 February 2020
1 September 2023
1 September 2023
FY21-FY24
27 November 2020
1 September 2024
1 September 2024
FY21-FY24
8 April 2021
1 September 2024
1 September 2024
nil
nil
nil
nil
nil
nil
nil
nil
Value per
performance
right at grant
date
Performance
achieved
$4.0096
28.5%
$4.0096
28.5%
$6.0813
to be determined
$4.4229
to be determined
$6.0675
to be determined
$4.0758
to be determined
$4.4760
to be determined
$4.4760
to be determined
% Vested
28.5%
28.5%
n/a
n/a
n/a
n/a
n/a
n/a
Share holdings
The number of shares in the Company held during the financial year by each Director of nib holdings limited and other Key
Management Personnel of the Group, including their personally related parties, are set out below.
Balance at the
start of the year
Granted during
the year as
compensation
Shares
purchased
Shares sold
Other changes
during the year
Balance at the
end of the year
2021
Ordinary shares
Directors of nib group
Steve Crane
Lee Ausburn
Jacqueline Chow
David Gordon
Anne Loveridge
Christine McLoughlin
Donal O’Dwyer
Other key management personnel of the Group
Mark Fitzgibbon
Martin Adlington
James Barr
Edward Close
Nick Freeman
Anna Gladman
Rob Hennin
Brendan Mills
Mellissa Naidoo
Matt Paterson
Roslyn Toms
250,000
50,885
50,000
–
23,885
110,885
41,485
–
–
–
–
–
–
–
2,602,968
123,861
–
–
–
–
702
10,125
–
–
228,149
178,162
–
–
36,263
466
–
46,315
28,936
–
1,278
8,223
18,784
–
–
–
–
–
30,000
–
–
–
–
657
657
–
–
–
59
–
(150,000)
–
–
–
–
–
–
(160,000)
–
–
–
–
–
–
(97,029)
–
–
(10,000)
–
–
–
–
–
(110,885)
–
–
18,494
23,241
–
–
–
–
–
(1,278)
–
–
100,000
50,885
50,000
30,000
23,885
–
41,485
2,564,329
19,151
23,898
10,827
466
–
274,523
110,069
–
8,223
45,047
Other transactions with key management personnel
There were no transactions with other related parties during the year.
42 nib holdings limited | Annual Report 2021
remunerationreportfor the year ended 30 June 2021 Corporate Governance Statement
The nib Board and management are committed to achieving and demonstrating the highest standards of corporate governance and
ensuring compliance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th edition).
The Board is dedicated to, and responsible for, actively promoting ethical and responsible decision making and practices at nib to
ensure that practices are in place to maintain confidence in nib’s integrity.
The 2021 Corporate Governance Statement is dated as at 30 June 2021 and reflects the corporate governance practices in place
throughout the 2021 financial year. The Corporate Governance Statement was approved by the Board on 29 July 2021. A description
of the Group’s current corporate governance practices is set out in the Group’s Corporate Governance Statement which can be
viewed at www.nib.com.au/shareholders/company-profile/corporate-governance.
nib holdings limited | Annual Report 2021 43
corporate governance statementfor the year ended 30 June 2021 Financial Report
financial
report
for the year ended 30 June 2021
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1. Summary of significant accounting policies
2. Critical accounting judgements and estimates
3. Risk management
4. Fair value measurement
5. Segment reporting
6. Revenue and other income
7. Expenses
8. Taxation
9. Cash and cash equivalents
10. Receivables
11. Financial assets
12. Deferred acquisition costs
13. Property, plant and equipment
14. Intangible assets
15. Lease assets and liabilities
16. Payables
17. Borrowings
18. Claims liabilities
19. Unearned premium liability and unexpired risk liability
20. Premium payback liability
21. Provision for employee entitlements
22. Contributed equity
23. Retained profits
24. Reserves
25. Dividends
26. Earnings per share
27. Capital management
28. Commitments for expenditure
29. Contingent liabilities
30. Events occurring after the balance sheet date
31. Change in accounting policy
32. Remuneration of auditors
33. Interest in other entities
34. Related party transactions
35. Share-based payments
36. Parent entity financial information
45
46
47
48
49
50
52
53
59
61
64
65
66
69
71
73
75
76
77
82
84
85
86
90
91
93
94
95
95
96
97
98
100
100
100
101
102
103
106
107
110
44 nib holdings limited | Annual Report 2021
Consolidated Income Statement
consolidated
income statement
for the year ended 30 June 2021
Premium revenue
Outwards reinsurance premium expense
Net premium revenue
Claims expense
Reinsurance and other recoveries revenue
RESA levy
State levies
(Increase)/decrease in premium payback liability
Claims handling expenses
Net claims incurred
Other underwriting revenue
Acquisition costs
Other underwriting expenses
Underwriting expenses
Underwriting result
Other income
Other expenses
Share of net profit/(loss) of associates and joint ventures accounted for using the equity method
Operating profit
Finance income
Finance costs
Investment income
Investment expenses
Profit before income tax
Income tax expense
Profit for the year
Profit/(loss) for the year is attributable to:
Owners of nib holdings limited
Charitable foundation
Earnings per share for profit from continuing operations attributable to the ordinary equity
holders of the company
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
1 Comparative information has been restated. For further details, refer to Note 31.
Notes
2021
$m
20201
$m
6
6
7
6
7
7
6
7
33
6
7
6
7
8
33
26
26
26
26
2,580.8
2,473.1
(32.0)
(33.5)
2,548.8
2,439.6
(1,753.9)
(1,666.3)
15.9
(213.8)
(36.0)
2.3
(19.4)
16.4
(247.3)
(35.0)
(1.2)
(21.9)
(2,004.9)
(1,955.3)
3.8
(160.4)
(163.7)
(324.1)
223.6
33.8
(66.6)
(4.8)
186.0
0.2
(7.0)
54.1
(2.3)
231.0
(70.5)
160.5
161.1
(0.6)
160.5
3.5
(168.5)
(148.5)
(317.0)
170.8
60.4
(112.3)
(4.0)
114.9
–
(9.7)
18.6
(2.0)
121.8
(34.8)
87.0
87.9
(0.9)
87.0
Cents
Cents
35.2
35.2
35.2
35.2
19.3
19.3
19.3
19.3
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
nib holdings limited | Annual Report 2021 45
Consolidated Statement of Comprehensive Income
consolidated statement
of comprehensive income
for the year ended 30 June 2021
Profit for the year
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Income tax related to these items
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income/(loss) for the year is attributable to:
Owners of nib holdings limited
Charitable foundation
1 Comparative information has been restated. For further details, refer to Note 31
Notes
2021
$m
20201
$m
160.5
87.0
24
8
33
(0.2)
–
(0.2)
(2.1)
0.4
(1.7)
160.3
85.3
160.9
(0.6)
160.3
86.2
(0.9)
85.3
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
46 nib holdings limited | Annual Report 2021
Consolidated Balance Sheet
consolidated
balance sheet
as at 30 June 2021
ASSETS
Current assets
Cash and cash equivalents
Receivables
Financial assets at amortised cost
Financial assets at fair value through profit or loss
Deferred acquisition costs
Current tax assets
Finance lease receivable
Total current assets
Non-current assets
Financial assets at fair value through profit or loss
Investments accounted for using the equity method
Deferred acquisition costs
Deferred tax assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Finance lease receivable
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Borrowings
Claims liabilities
Unearned premium liability
Premium payback liability
Lease liabilities
Provision for employee entitlements
Current tax liabilities
Total current liabilities
Non-current liabilities
Payables
Borrowings
Unearned premium liability
Premium payback liability
Lease liabilities
Provision for employee entitlements
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Retained profits
Reserves
Capital and reserves attributable to owners of nib holdings limited
Charitable foundation
Total equity
1 Comparative information has been restated. For further details, refer to Note 31.
Notes
2021
$m
20201
$m
9
10
11
11
12
15
11
33
12
8
13
14
15
15
16
17
18
19
20
15
21
16
17
19
20
15
21
8
22
23
24
33
213.9
93.9
7.7
870.1
55.0
1.4
1.7
1,243.7
–
17.8
71.3
–
7.9
325.0
26.5
10.6
459.1
198.0
86.4
8.8
828.6
50.7
–
–
1,172.5
0.4
17.6
66.7
12.4
11.4
334.7
62.1
–
505.3
1,702.8
1,677.8
184.3
1.6
217.1
218.1
8.2
6.9
7.6
2.6
646.4
4.3
230.7
31.3
9.5
50.7
3.2
20.5
350.2
191.4
2.0
245.9
223.3
3.5
6.3
6.8
22.5
701.7
6.5
230.9
34.8
16.6
76.3
3.2
4.7
373.0
996.6
1,074.7
706.2
603.1
127.2
567.7
(4.8)
690.1
16.1
706.2
121.4
470.5
(5.5)
586.4
16.7
603.1
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
nib holdings limited | Annual Report 2021 47
Consolidated Statement of Changes in Equity
consolidated statement
of changes in equity
as at 30 June 2021
Attributable to owners of nib holdings limited
Contributed
equity
$m
Retained
profits
$m
Notes
Reserves
$m
Total
$m
Charitable
foundation
$m
Total
equity
$m
Balance at 30 June 2019 as originally presented
115.2
488.4
Impact of change in accounting policy
31
Balance at 1 July 2019
Profit/(loss) for the year
Movement in foreign currency translation, net of tax
24
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners:
Ordinary shares issued
Shares acquired by the nib Holdings Ltd Share
Ownership Plan Trust
Issue of shares held by nib Holdings Ltd Share
Ownership Plan Trust to employees
Employee performance rights – value of employee
services
Dividends paid
22
22
22
25
–
115.2
–
–
–
7.1
(6.3)
5.4
–
–
6.2
(1.1)
487.3
87.9
–
87.9
–
–
–
–
(104.7)
(104.7)
0.5
–
0.5
–
(1.7)
(1.7)
–
–
(3.9)
(0.4)
–
(4.3)
604.1
17.6
621.7
(1.1)
603.0
87.9
(1.7)
86.2
7.1
(6.3)
1.5
(0.4)
(104.7)
(102.8)
–
17.6
(0.9)
–
(0.9)
–
–
–
–
–
–
(1.1)
620.6
87.0
(1.7)
85.3
7.1
(6.3)
1.5
(0.4)
(104.7)
(102.8)
Balance at 30 June 2020
121.4
470.5
(5.5)
586.4
16.7
603.1
Balance at 1 July 2020
Profit/(loss) for the year
Movement in foreign currency translation, net of tax
24
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners:
Ordinary shares issued
Shares acquired by the nib Holdings Ltd Share
Ownership Plan Trust
Issue of shares held by nib Holdings Ltd Share
Ownership Plan Trust to employees
Employee performance rights – value of employee
services
Dividends paid
22
22
22
25
121.4
470.5
(5.5)
586.4
16.7
603.1
–
–
–
4.7
(1.1)
2.2
–
–
5.8
161.1
–
161.1
–
–
–
–
(63.9)
(63.9)
–
(0.2)
(0.2)
–
–
(1.0)
1.9
–
0.9
161.1
(0.2)
160.9
4.7
(1.1)
1.2
1.9
(63.9)
(57.2)
(0.6)
–
(0.6)
–
–
–
–
–
–
160.5
(0.2)
160.3
4.7
(1.1)
1.2
1.9
(63.9)
(57.2)
Balance at 30 June 2021
127.2
567.7
(4.8)
690.1
16.1
706.2
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
48 nib holdings limited | Annual Report 2021
Consolidated Statement of Cash Flows
consolidated statement
of cash flows
for the year ended 30 June 2021
Cash flows from operating activities
Receipts from policyholders and customers (inclusive of goods and services tax)
Payments to policyholders and customers
Receipts from outwards reinsurance contracts
Payments for outwards reinsurance contracts
Payments to suppliers and employees (inclusive of goods and services tax)
Dividends received
Interest received
Distributions received
Interest paid
Income taxes paid
Net cash inflow/(outflow) from operating activities
9
Cash flows from investing activities
Proceeds from disposal of financial assets at fair value through profit or loss
Payments for financial assets at fair value through profit or loss
Proceeds from sale of available-for-sale financial assets
Proceeds from sale of property, plant and equipment and intangibles
Payments for property, plant and equipment and intangibles
Payments for investments in associates and joint ventures
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Principal elements of lease payments
Shares acquired by the nib Holdings Ltd Share Ownership Plan Trust
Dividends paid to the company’s shareholders
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
Reconciliation to Consolidated Balance Sheet
Cash and cash equivalents
Borrowings – overdraft
1 Comparative information has been restated. For further details, refer to Note 31.
13,14
33
9
17
Notes
2021
$m
20201
$m
2,654.6
2,597.3
(2,062.2)
(1,875.2)
18.8
(39.8)
(414.7)
156.7
0.2
2.8
15.8
(3.2)
(63.6)
108.7
365.8
(373.0)
12.9
0.1
(23.6)
(5.7)
(23.5)
4.7
–
–
(9.0)
(1.1)
(63.9)
(69.3)
15.9
196.0
0.4
212.3
213.9
(1.6)
212.3
15.8
(32.3)
(452.5)
253.1
0.3
6.2
15.5
(5.6)
(61.9)
207.6
1,155.2
(1,181.7)
–
0.1
(23.0)
(10.0)
(59.4)
7.1
67.2
(67.2)
(10.6)
(6.3)
(104.7)
(114.5)
33.7
163.3
(1.0)
196.0
198.0
(2.0)
196.0
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
nib holdings limited | Annual Report 2021 49
Notes to the Consolidated Financial Statements
notes to the consolidated
financial statements
for the year ended 30 June 2021
1. Summary of significant accounting policies
The financial statements are for the consolidated entity consisting
of nib holdings limited and its subsidiaries. nib holdings limited
is a company limited by shares, incorporated and domiciled
in Australia.
The Financial Report was authorised for issue by the Directors
on 20 August 2021. The company has the power to amend and
reissue the Financial Report.
The principal accounting policies adopted in the preparation
of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years
presented, unless otherwise stated.
Significant and other accounting policies that summarise the
measurement basis used and are relevant to the understanding
of financial statements are provided throughout the notes to the
financial statements.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries are changed where necessary
to ensure consistency with the policies adopted by the Group.
ii) Associates
Associates are all entities over which the group has significant
influence but not control or joint control. This is generally the
case where the group holds between 20% and 50% of the voting
rights. Investments in associates are accounted for using the
equity method of accounting (see (iii) below), after initially being
recognised at cost.
a) Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting Standards
(and interpretations issued by the Australian Accounting
Standards Board) and the Corporations Act 2001. nib holdings
limited is a for-profit entity for the purpose of preparing the
financial statements.
i) Compliance with IFRS
The consolidated financial statements of nib holdings limited
Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
ii) Historical cost convention
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation of
claims liabilities and financial assets and liabilities at fair value
through profit or loss.
iii) Comparatives
Where necessary, comparative information has been reclassified
to achieve consistency in disclosure with the current year.
The comparatives in the Consolidated Income Statement have
been amended between Claims Expense and RESA Levy for
$12.3 million between these two line items.
b) Principles of consolidation
i) Subsidiaries
The consolidated financial statements incorporate the assets and
liabilities of all subsidiaries of nib holdings limited (‘parent entity’)
as at 30 June 2021 and the results of all subsidiaries for the year
then ended. nib holdings limited and its subsidiaries together are
referred to in this financial report as the Group.
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the
date that control ceases.
50 nib holdings limited | Annual Report 2021
iii) Equity method
Under the equity method of accounting, the investments are
initially recognised at cost and adjusted thereafter to recognise
the Group’s share of the post-acquisition profits or losses of the
investee in profit or loss, and the Group’s share of movements
in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from
associates and joint ventures are recognised as a reduction in the
carrying amount of the investment.
When the Group’s share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the group does not
recognise further losses, unless it has incurred obligations or
made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its
associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are
also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of equity
accounted investees have been changed where necessary to
ensure consistency with the policies adopted by the Group.
iv) Changes in ownership interests
The Group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the Group. A change in ownership interest results in
an adjustment between the carrying amounts of the controlling
and non-controlling interests to reflect their relative interests
in the subsidiary. Any difference between the amount of the
adjustment to non-controlling interests and any consideration
paid or received is recognised in a separate reserve within equity
attributable to owners of nib holdings limited.
When the Group ceases to have control, joint control or
significant influence, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount
recognised in profit or loss. This fair value becomes the initial
carrying amount for the purposes of subsequently accounting for
the retained interest as an associate, jointly controlled entity or
financial asset.
c) Foreign currency translation
d) Assets backing private health insurance liabilities
As part of the investment strategy, the Group actively manages
its investment portfolio to ensure that a portion of its investments
mature in accordance with the expected pattern of future cash
flows arising from private health insurance liabilities.
The Group has determined that all financial assets of nib health
funds limited and nib nz limited are held to back private health
insurance liabilities. Financial assets that are not held to back
private health insurance liabilities are designated as Financial
assets at amortised cost.
e) Rounding of amounts
The company is of a kind referred to in Instrument 2016/191,
issued by the Australian Securities and Investments Commission,
relating to the ‘rounding off’ of amounts in the Financial
Report. Amounts in the Financial Report have been rounded
off in accordance with that Instrument to the nearest hundred
thousand dollars, or in certain cases, the nearest dollar.
f) New and amended standards and interpretations
adopted by the Group
The Group has applied the following standard and amendment
for the current reporting period commencing 1 January 2020. Any
new or amended accounting standards or interpretations that are
not yet mandatory have not been early adopted.
• Conceptual Framework for Financial Reporting and
AASB 2019-1 Amendments to Australian Accounting
Standards – References to the Conceptual Framework
The amendment above did not have any impact on the amounts
recognised in prior periods and is not expected to significantly
affect the current or future periods.
Following the IFRS Interpretations Committee agenda decision
on Configuration or Customisation Costs in a Cloud Computing
Arrangement in March 2021, the Group has reconsidered its
accounting treatment and adopted the treatment set out in the
IFRS IC agenda decision, which is to recognise those costs as
intangible assets only if the implementation activities create
an intangible asset that the entity controls and the intangible
asset meets the recognition criteria. Refer to Note 31 Change in
Accounting Policy for the impact of this change.
i) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (the ‘functional
currency’). The consolidated financial statements are presented
in Australian dollars, which is nib holdings limited’s functional and
presentation currency.
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
period end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss,
except when they are deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges or are attributable
to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings
are presented in the income statement, within finance costs. All
other foreign exchange gains and losses are presented in the
income statement on a net basis within other income or other
expenses. Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange rates at the
date when the fair value was determined. Translation differences
on assets and liabilities carried at fair value are reported as
part of the fair value gain or loss. For example, translation
differences on non-monetary assets and liabilities such as
equities held at fair value through profit or loss are recognised in
profit or loss as part of the fair value gain or loss and translation
differences on non-monetary assets such as equities classified
as available-for-sale financial assets are recognised in other
comprehensive income.
iii) Group companies
The results and financial position of foreign operations (none of
which has the currency of a hyperinflationary economy) that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet;
•
income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses
are translated at the dates of the transactions); and
• all resulting exchange differences are recognised in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
nib holdings limited | Annual Report 2021 51
1. Summary of significant accounting policies continued
g) New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2021 reporting
periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
Mandatory application date
Mandatory for financial
years commencing on
or after 1 January 2023.
At this stage, the Group
does not intend to adopt
the standard before its
effective date.
Title of standard
Nature of change and impact
AASB 17
Insurance
Contracts
On 19 July 2017, Australian Accounting Standard Board issued AASB 17 Insurance
Contracts, incorporating the recently issued IFRS 17 Insurance Contracts. This will
replace AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts
and AASB 1038 Life Insurance Contracts. IFRS 17 will change the accounting for
insurance contracts by nib.
The standard introduces three new measurement approaches for accounting for
insurance contracts. These include the Building Block Approach for long term
contracts, the Premium Allocation Approach for short term contracts and a Variable
Fee Approach for direct participating products.
The Group, being the Ultimate Parent nib holdings limited and its subsidiaries, has
formed a project team to assess the impact of this change on the operations and
financial statements of the business.
The Group is also a member of the PHI industry and AASB 17 Insurance Contracts
Transition Resource Group (TRG).
Initial investigation into the application for the standard indicates it is likely that the
Premium Allocation Approach will apply to the Group’s insurance contracts. This
will simplify the implementation of the standard as no significant modifications to
IT systems will be required.
Under the Premium Allocation Approach the Group will have the option to
expense acquisition costs each year, which would result in the write-off of any
Deferred Acquisition Costs and associated tax liabilities to retained profits on
implementation.
2. Critical accounting judgements and estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying the Group’s accounting policies.
The Group makes estimates and assumptions in respect of certain key assets and liabilities. Estimates and judgments are continually
evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
The COVID-19 pandemic has impacted the Group’s assessment of these assumptions and forward looking estimates, and
management have accordingly adjusted them to reflect the change in risk. Specifics of the impact on estimates are detailed in
each note.
The key areas in which critical estimates are applied are:
Note 12
Note 14
Note 18
Note 19
Note 20
Deferred acquisition costs
Goodwill and indefinite life intangibles impairment and useful life of brand names and trademarks
Claims liabilities – Outstanding claims liability and Provision for deferred and suspended claims
Liability adequacy test
Premium payback liabilities
52 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 3. Risk management
The Board of nib is ultimately responsible for the Group’s risk management framework and oversees the Group’s operations by
ensuring that management operates within the approved risk appetite statement. The Board approved the Group’s overall risk
management strategy, risk appetite and policies and practices to ensure that risks are identified and managed within the context of
this appetite.
The Board’s sub committees, including the Audit Committee, Investment Committee and the Risk and Reputation Committee assist
the Board in the execution of its responsibilities. The responsibilities of these Committees are detailed in their respective Charters.
The Group’s risk management framework is based on a three lines of defence model and provides defined risk ownership
responsibilities with functionally independent oversight and assurance. The Group manages risks through:
•
•
the governance structure established by the Board,
implementation of the risk management framework by management,
• oversight of the risk management framework by the Risk function,
•
•
the Group’s internal policies and procedures designed to identify and mitigate risks,
internal audit which provides independent assurance to the Board regarding the appropriateness, effectiveness and adequacy of
controls over activities where risks are perceived to be high,
•
regular risk and compliance reporting to the Board and relevant Board Committees,
• application of solvency and capital adequacy standards for nib health funds limited (regulated by APRA) and nib New Zealand
(regulated by RBNZ).
The Group’s objective is to manage the Group’s risks in line with the Board approved risk appetite statement. Various procedures are
in place to identify, mitigate and monitor the risks faced by the Group. Management are responsible for understanding and managing
risks, including financial and non-financial risks. The Group’s exposure to all high and critical risks, and other key enterprise risks, is
reported quarterly to the Board via the Risk and Reputation Committee.
During the year we continued to invest in and strengthen our risk management systems and practices to reflect our strong
commitment to risk and compliance in alignment with APRA Prudential Standard CPS 220 – Risk Management.
The financial condition and operations of the Group are affected by a number of Principal Risks and Uncertainties. High level
descriptions of these risks are included in the Operating and Financial Review (see pages 4 to 12), including Insurance Risks,
Financial Risks, Strategic Risks and Operational Risks as categorised in nib’s Risk Management Strategy. Realisation of these risks
can have both financial and/or non-financial impacts.
Similarly to last year, the impact of the COVID-19 pandemic on the global economy has continued to result in increased insurance
and financial risk to the Group. This heightened level of uncertainty and risk is managed as part of the Group’s Risk Management
Framework.
Further material is contained in the notes below on the exposures and mitigation of specific risks with discrete financial impacts.
Category
Insurance risks
Risks
Pricing
Claims inflation
Risk equalisation (Australia only)
Financial risks
Fair value interest rate risk
Foreign exchange risk
Price risk
Credit risk
Liquidity risk
Capital management (see Note 27)
nib holdings limited | Annual Report 2021 53
3. Risk management continued
a) Insurance risk
Insurance risk is the risk that inadequate or inappropriate underwriting, claims management, product design and pricing will expose
the Group to financial loss from claims expenditure exceeding the amount implicit in premium income.
Insurance risk is seen as a key risk to our PHI focused businesses. There are a number of sources of risk that require nib to closely
review and monitor our control strategies. These risks have Board oversight. These sources include:
Description
Pricing risk
Claims inflation
Exposure
Mitigation
Forecasting and pricing is a core capability within the
Group. Without effective controls there is potential for poor
quality forecasting. This could result in a range of negative
outcomes, including: pricing decisions that do not align
with nib strategic goals, material impact to nib financial
performance; and failure to comply with ASX Listing Rule
Continuous Disclosure obligations. Control failures could
also impact annual pricing approval decisions by the
Minister for Health. Amendments or rejections of price
applications could have a negative impact on nib’s operating
and financial performance.
This risk is managed by establishing
product premiums through the use of
actuarial models based on historical claims
costs and forecast claims inflation.
Pricing recommendations are externally
reviewed by the Appointed Actuary.
The Group works collaboratively with
Government, regulators and other
stakeholders to improve health insurance
premium affordability through industry
reforms and health policy setting.
The Group is subject to significant claims inflation which
may not be adequately covered by premium price increases
and/or product design changes.
In Australia the principle of community rating prevents
private health insurers from improperly discriminating
between people who are or wish to be insured, on the basis
of their health status, age, race, gender, religious beliefs,
sexuality, frequency of need of health care, lifestyle or
claims history.
Claims patterns are monitored and
premiums calculated accordingly.
Governance, contractual and control
procedures are in place for key benefits
and provider relationships.
Maintenance of reserves in excess
of minimum solvency and capital
requirements allows the Group to
withstand increased levels of claims
inflation.
Risk equalisation
special account
arrangements
Risk equalisation arrangements apply to the registered
health insurance industry in Australia. Under these
arrangements all registered health insurers effectively
provide reinsurance support so that the industry as a whole
shares the hospital cost of high risk groups irrespective of
the policyholder or private health fund related to the claim.
Risk equalisation provides some protection
to high cost claims however exposes the
Group to claims from other health insurers.
Actuarial models are used to monitor
past experience and predict future costs,
premiums are calculated accordingly.
54 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 b) Fair value interest rate risk
Description
Exposure
Mitigation
Risk of fluctuations
in interest rates
impacting the
Group’s financial
performance or
the fair value of its
financial instruments.
The Group has interest rate risk arises from long-term
borrowings. Borrowings issued at variable rates expose the
Group to cash flow interest rate risk. Borrowings issued
at fixed rates expose the Group to fair value interest rate
risk if the borrowings are carried at fair value. The Group’s
borrowings at variable rate were denominated in Australian
and New Zealand Dollars.
The Group’s other interest rate risks arise from:
•
receivables;
• financial assets at amortised cost;
• financial assets at fair value through profit or loss; and
• cash and cash equivalents.
All other receivables are non-interest bearing. There is an
interest-bearing component of financial assets at fair value
through profit or loss.
The Group mitigates interest rate risk on
long term borrowings by maintaining an
appropriate gearing ratio and monitoring
and forecasting key indicators such as
interest expense coverage.
nib has a defined investment strategy and
risk/return objectives, that is aligned to the
strategic plan and capital management
plans, overseen by the Investment
Committee and assisted by asset
management consultants.
As at the end of the reporting period, the Group had the following variable rate borrowings outstanding:
Bank loans
Net exposure to cash flow interest rate risk
2021
2020
Weighted
average interest
rate
%
1.5%
Weighted
average interest
rate
%
2.3%
Balance
$m
230.7
230.7
Balance
$m
230.9
230.9
The bank overdraft comprised of the closing positive balance of the bank account, adjusted for unpresented cheques and outstanding
deposits is not included in bank loans.
The Group’s sensitivity to interest rate risk has increased with the COVID-19 associated economic impact. The Group has shown the
impact of a change in 100 bps to reflect this increased risk. An analysis by maturities is provided at 3(f). The table below summarises
the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk.
Interest rate risk
-100bps
+100bps
-100bps
+100bps
2021
2020
Financial assets
Cash and cash equivalents
Other receivables
Financial assets at amortised cost
Financial assets at fair value through profit or loss
Financial liabilities
Bank loans
Premium payback liability
Carrying
amount
$m
Profit
after tax
$m
Profit
after tax
$m
Carrying
amount
$m
Profit
after tax
$m
Profit
after tax
$m
213.9
27.4
7.7
870.1
(230.7)
(17.7)
(1.5)
(0.2)
0.1
8.1
1.7
(0.5)
1.5
0.2
(0.1)
(8.1)
(1.7)
0.6
198.0
22.6
8.8
829.0
(230.9)
(20.1)
(1.4)
(0.2)
0.1
13.4
1.7
(0.7)
1.4
0.2
(0.1)
(13.6)
(1.7)
0.7
nib holdings limited | Annual Report 2021 55
3. Risk management continued
c) Foreign exchange risk
Description
Exposure
Mitigation
Risk of fluctuations
in foreign exchange
rates impacting the
Group’s financial
performance.
The Group operates internationally and is exposed to foreign
exchange risk arising from foreign currency translation risk
through its subsidiaries located in overseas jurisdictions.
In accordance with the policy set out in Note 1(c), foreign
exchange gains or losses arising on translation of the
Group’s foreign operations to the Group’s Australian dollar
presentation currency are recognised in equity through other
comprehensive income. Foreign exchange gains or losses
arising on assets and liabilities denominated in foreign
currencies are recognised directly in profit and loss.
The Group does not hedge this risk.
The table below summarises the sensitivity of the Group’s equity to a 10% strengthening and weakening of the Australian dollar
against the foreign currency, with all other variables held constant.
Foreign exchange risk
-10%
+10%
-10%
+10%
2021
2020
Exposure
$m
75.4
12.3
4.1
Profit
after tax
$m
–
(0.9)
(0.8)
Equity
$m
(7.5)
–
0.8
Profit
after tax
$m
–
0.9
0.8
Equity
$m
Exposure
$m
7.5
–
(0.8)
65.6
8.6
6.9
Profit
after tax
$m
–
(0.6)
(0.6)
Equity
$m
(6.5)
–
0.2
Profit
after tax
$m
–
0.6
0.6
Equity
$m
6.5
–
(0.2)
New Zealand dollar
Chinese Yuan
Other
d) Price risk
Description
Exposure
Mitigation
Risk of fluctuations
in price of equity
securities impacting
the Group’s fair
value of its financial
instruments.
The Group is exposed to equity securities price risk.
This arises from investments held by the Group and
classified on the balance sheet as at fair value through profit
or loss. The Group is not exposed to commodity price risk.
To manage its price risk the Group has
adopted an investment strategy which
delivers a diversified portfolio with a
heavier weighting to defensive assets
versus growth assets.
nib has a defined investment strategy and
risk/return objectives, that is aligned to the
strategic plan and capital management
plans, overseen by the Investment
Committee and assisted by asset
management consultants.
The Group’s increased risk relating to price of equity securities as a result of COVID-19 is mitigated by the heavier weighting of the
Group’s investments to defensive assets versus growth assets.
Profit after tax for the year would increase/decrease as a result of gains/losses on equity securities classified as at fair value through
profit or loss. The table below summarises the sensitivity of the Group’s financial assets to price risk.
Other price risk
-10% unit price +10% unit price
-10% unit price +10% unit price
2021
2020
Carrying
amount
$m
Profit
after tax
$m
Profit
after tax
$m
Carrying
amount
$m
Profit
after tax
$m
Profit
after tax
$m
Financial assets
Financial assets at fair value through profit or loss
870.1
(15.8)
15.8
829.0
(11.7)
11.7
56 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 Methods and assumptions used in preparing sensitivity analysis
The after tax effect on profit and equity of movements in foreign exchange, interest rate and price have been calculated using
‘reasonably possible’ changes in the risk variables, based on recent interest rate and market movements.
An interest rate change of 100 basis points will directly affect interest received on cash and cash equivalents and other receivables.
An interest rate change of 100 basis points will inversely affect the unit price of fixed interest investments. This change has been
calculated by multiplying the average duration of underlying investments in each portfolio by the interest rate change. All other
investments are not directly affected by interest rate changes but would be revalued through profit or loss as their unit price changes.
e) Credit risk
Description
Exposure
Mitigation
Risk that a
counterparty
will default on
its contractual
obligations, or from
the decline in the
credit quality of a
financial instrument,
resulting in financial
loss to the Group.
Credit risk arises from:
• cash and cash equivalents;
• financial assets and deposits with banks and financial
institutions; and
• credit exposures to policyholders and the Department
of Human Services (Private Health Insurance Premiums
Reduction Scheme).
The maximum exposure to credit risk, excluding the value
of any collateral or other security, at balance date is the
carrying amount, net of any provisions for impairment loss,
as disclosed in the balance sheet and notes to the financial
statements. Apart from the Department of Human Services
the Group does not have any material credit risk to any other
single debtor or group of debtors under financial instruments
entered into.
Directly managed term deposits are held
with institutions that have at least an
A-2 credit rating.
Term deposits held within portfolios
managed by investment asset consultants
are in accordance with the relevant
investment policy statement.
nib has a defined investment strategy and
risk/return objectives, that is aligned to the
strategic plan and capital management
plans, overseen by the Investment
Committee and assisted by asset
management consultants.
Credit risk for premium receivables
are minimal due to the diversification
of policyholders. The Private Health
Insurance Premiums Reduction Scheme
receivable is due from a government
organisation under legislation.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings
(if available) or to historical information about counterparty default rates.
The Group’s credit risk assessments and loss allowances have been updated for the increased risk of default as a result of the
COVID-19 pandemic.
Other receivables
Counterparties with external credit rating
Group 1 – new debtors (relationship less than 6 months)
Group 2 – existing debtors with no defaults in the past
Group 3 – existing debtors with some defaults in the past. All defaults were fully recovered.
Cash at bank and short-term bank deposits
A-1+
A-1
A-2
B*
* Transactional bank account.
2021
$m
5.0
0.2
21.8
0.4
27.4
2021
$m
197.8
13.5
1.0
1.6
2020
$m
4.7
0.5
17.2
0.2
22.6
2020
$m
183.4
13.7
0.9
–
213.9
198.0
nib holdings limited | Annual Report 2021 57
3. Risk management continued
Financial assets at amortised cost
Short-term deposits
A-1+
Financial assets at fair value through profit or loss
Interest-bearing securities1
AAA
AA
A
BBB
2021
$m
7.7
7.7
2021
$m
215.5
364.3
52.7
13.2
645.7
2020
$m
8.8
8.8
2020
$m
158.9
378.6
103.6
19.1
660.2
1. The financial assets at fair value through profit or loss with credit risk are held in unit trusts. The above table summarises the underlying investments of the unit trusts.
f) Liquidity risk
Description
Exposure
Mitigation
Risk that the Group
will not be able to
meet its financial
obligations as they
fall due, because of
lack of liquid assets
or access to funding
on acceptable terms.
Liquidity risk arises from:
•
trade creditors;
• other payables;
•
lease liabilities; and
• borrowings.
The Group manages liquidity risk by
continuously monitoring forecast and actual
cash flows and holding a high percentage
of highly liquid investments.
The bank overdraft within borrowings
comprises the closing positive balances of
the bank account, adjusted for unpresented
cheques and outstanding deposits.
There are no overdraft facilities.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
≤ 1 month
$m
1-3 months
$m
3-12 months
$m
1-5 years
$m
> 5 years
$m
15.0
83.9
0.8
0.1
99.8
5.2
12.9
1.6
0.7
20.4
0.6
6.9
7.2
2.5
17.2
–
5.1
36.5
234.5
276.1
–
–
23.3
–
23.3
≤ 1 month
$m
1-3 months
$m
3-12 months
$m
1-5 years
$m
> 5 years
$m
12.9
80.9
0.9
0.2
94.9
0.6
17.7
2.6
0.9
21.8
0.3
10.9
6.7
3.0
20.9
–
6.8
41.0
234.9
282.7
–
1.0
56.8
–
57.8
Total
contractual
cash flows
$m
20.8
108.8
69.4
237.8
436.8
Total
contractual
cash flows
$m
13.8
117.3
108.0
239.0
478.1
Carrying
amount
$m
20.8
108.8
57.6
232.3
419.5
Carrying
amount
$m
13.7
117.3
82.6
232.9
446.5
Group at 30 June 2021
Financial Liabilities
Trade creditors
Other payables
Lease liabilities
Borrowings
Group at 30 June 2020
Financial Liabilities
Trade creditors
Other payables
Lease liabilities
Borrowings
58 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021
4. Fair value measurement
a) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in
determining fair value, the Group classifies its financial instruments into the three levels prescribed under the accounting standards.
An explanation of each level follows below the table.
The following tables present the Group’s assets and liabilities measured and recognised at fair value at 30 June 2021 and
30 June 2020:
Group at 30 June 2021
Assets
Receivables
Financial assets at fair value through profit or loss
Equity securities
Interest-bearing securities
Property trusts
Finance lease receivable
Total assets
Group at 30 June 2020
Assets
Receivables
Financial assets at fair value through profit or loss
Equity securities
Interest-bearing securities
Mortgage trusts
Property trusts
Total assets
Level 1
$m
Level 2
$m
Level 3
$m
–
1.0
–
–
1.3
11.2
–
12.5
–
39.2
–
12.3
52.5
Level 2
$m
Level 3
$m
213.2
605.2
–
–
818.4
Level 1
$m
–
1.9
156.1
633.8
–
1.8
791.7
–
26.4
0.4
–
28.7
–
–
–
–
10.5
10.5
Total
$m
1.0
213.2
645.7
11.2
12.3
883.4
Total
$m
1.9
156.1
660.2
0.4
12.3
830.9
There were no transfers between level 1, 2 and 3 during the year.
The Group’s policy is to recognise transfers into and transfers out of the fair value hierarchy levels as at the end of the reporting
period.
Level 1
Level 2
Level 3
The fair value of financial instruments traded in active markets (such as financial assets at fair value through
profit or loss) is based on quoted market prices at the reporting date. The quoted market price used for
financial assets held by the Group is the current bid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in active markets (for example interest bearing
securities) is determined using valuation techniques. The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance date. These instruments are
included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in
level 3.
nib holdings limited | Annual Report 2021 59
4. Fair value measurement continued
b) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
• The use of quoted market prices or dealer quotes for similar instruments.
• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
All of the resulting fair value estimates for financial instruments are included in level 2.
In the circumstances where a valuation technique for financial instruments is based on significant unobservable inputs, those
instruments are included in level 3. For the Group this includes the valuation of certain property trusts and interest bearing securities.
c) Fair value measurements using significant unobservable inputs (level 3)
The Group’s level 3 investments comprise units in property trusts which hold illiquid investments in unlisted property and interest
bearing securities which are infrequently traded. The following table presents the changes in level 3 instruments for the year ended
30 June 2021 and 30 June 2020:
Fair value measurement as at 1 July
Purchased
Sales
Change in fair value
Exchange differences
Fair value measurement at end of period
i) Transfers between levels 2 and 3
2021
$m
10.5
1.8
(0.6)
0.7
0.1
12.5
2020
$m
12.9
0.7
(2.2)
(0.9)
–
10.5
There were no transfers between the levels of the fair value hierarchy during the year.
There were also no changes during the year to any of the valuation techniques applied
as of 30 June 2020.
ii) Valuation process
The valuation of unlisted property and interest bearing securities is based on unit prices
provided by investment managers.
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements:
Description
At 30 June 2021
Interest-bearing securities and Unlisted
property trusts
At 30 June 2020
Fair value
$m Unobservable inputs
Relationship of unobservable inputs to fair value
12.5 Redemption price
Higher/(lower) redemption price (+/- 10%) would
increase/(decrease) fair value by $1.3m
Unlisted property trusts
10.5 Redemption price
Higher/(lower) redemption price (+/- 10%) would
increase/(decrease) fair value by $1.1m
60 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021
d) Fair values of other financial instruments
The Group also had another financial instrument which was not measured at fair value in the balance sheet. This had the following fair
value as at 30 June 2021 and 30 June 2020:
Non-current borrowings
Bank loans
2021
2020
Carrying
amount
$m
230.7
Fair value
$m
230.7
Carrying
amount
$m
230.9
Fair value
$m
230.9
The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values due to
their short-term nature.
5. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to Executive management. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the Managing Director/Chief Executive Officer (MD/CEO).
The MD/CEO assesses the performance of the operating segments based on underlying operating profit. This measurement basis
excludes from the operating segments the effects of income and expenditure such as integration costs, merger and acquisition costs,
new business implementation costs, amortisation of acquired intangibles and impairment of intangibles.
No information regarding assets, liabilities and income tax is provided for individual Australian Residents Health Insurance and
International (Inbound) Health Insurance segments to the MD/CEO. Furthermore, investment income and expenditure for Australia is
not allocated to individual Australian segments as this type of activity is driven by the central treasury function, which manages the
cash position of the Australian companies.
Management has determined the operating segments based on the reports reviewed by the MD/CEO that are used to make strategic
decisions.
The MD/CEO considers the business from both a geographic and product perspective and has identified four reportable
segments:
Australian
Residents Health
Insurance
New Zealand
Residents Health
Insurance
International
(Inbound) Health
Insurance
nib’s core product offering within the Australian private health insurance industry
nib’s core product offering within the New Zealand private health insurance industry
nib’s offering of health insurance products for international students and workers
nib Travel
nib’s distribution of travel insurance products
‘Unallocated to segments’ includes commission of other insurance products, corporate expenses, share of profit/(loss) of
Honeysuckle Health and China joint ventures and charitable foundation as they do meet the quantitative requirements for reportable
segments.
nib holdings limited | Annual Report 2021 61
5. Segment reporting continued
Premium revenue
Outwards reinsurance premium expense
Net premium revenue
Claims expense
Reinsurance and other recoveries revenue
RESA
State levies
(Increase)/decrease in premium payback liability
Claims handling expenses
Net claims incurred
Other underwriting revenue
Acquisition costs
Other underwriting expenses
Underlying underwriting expenses
Underlying underwriting result
Other income
Other expenses
Share of net profit/(loss) of associates and joint
ventures
For the year ended 30 June 2021
Australian
Residents
Health Insurance
$m
International
(Inbound)
Health Insurance
$m
New Zealand
Health Insurance
$m
nib Travel
$m
Unallocated
to segments
$m
2,185.0
(10.9)
2,174.1
(1,496.1)
4.9
(213.8)
(36.0)
–
(12.6)
(1,753.6)
1.8
(106.0)
(104.5)
(210.5)
211.8
–
–
–
135.6
(20.1)
115.5
(96.2)
10.4
–
–
–
(4.1)
(89.9)
2.0
(12.3)
(21.2)
(33.5)
(5.9)
–
–
–
258.9
(0.3)
258.6
(161.0)
–
–
–
2.3
(2.5)
(161.2)
–
(41.6)
(31.7)
(73.3)
24.1
–
–
–
1.3
(0.7)
0.6
(0.6)
0.6
–
–
–
(0.2)
(0.2)
–
(0.5)
(0.2)
(0.7)
(0.3)
14.0
(27.3)
–
Underlying operating profit/(loss)
211.8
(5.9)
24.1
(13.6)
Items not included in underlying operating profit
Amortisation of acquired intangibles
(1.9)
(0.8)
(3.4)
Impairment of intangibles
One-off transactions, merger, acquisition and new
business implementation costs
Gain on sale of investment in joint venture
–
–
–
–
–
–
Finance income
Finance costs
Investment income
Investment expenses
Profit before income tax from
continuing operations
Inter-segment other income1
Depreciation and amortisation
Total assets
Total liabilities
Insurance liabilities
Claims liabilities
Unearned premium liability
Premium payback liability
Total insurance liabilities
0.1
2.5
–
1.7
1,196.3
628.9
201.6
227.7
–
429.3
0.1
3.4
223.3
76.4
15.4
21.4
17.7
54.5
1. Inter-segment other income is eliminated on consolidation and not included in operating profit.
62 nib holdings limited | Annual Report 2021
(1.9)
(8.8)
–
–
1.9
146.1
32.9
0.1
0.3
–
0.4
Total
$m
2,580.8
(32.0)
2,548.8
(1,753.9)
15.9
(213.8)
(36.0)
2.3
(19.4)
(2,004.9)
3.8
(160.4)
(157.6)
(318.0)
229.7
24.1
(44.1)
(4.8)
204.9
(8.0)
(8.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10.1
(16.8)
(4.8)
(11.5)
–
–
(11.8)
(11.8)
9.7
0.2
(7.0)
54.1
(2.3)
–
17.2
137.1
258.4
–
–
–
–
9.7
0.2
(7.0)
54.1
(2.3)
231.0
0.2
26.7
1,702.8
996.6
217.1
249.4
17.7
484.2
notes to the consolidated financial statementsfor the year ended 30 June 2021 For the year ended 30 June 2020
International
(Inbound)
Health
Insurance
$m
New Zealand
Health
Insurance
$m
nib Travel
$m
Unallocated
to segments
$m
Australian
Residents
Health
Insurance
$m
2,085.0
(12.7)
2,072.3
(1,448.1)
4.9
(247.3)
(35.0)
–
(15.5)
(1,741.0)
2.4
(110.0)
(92.3)
(202.3)
131.4
–
–
(1.0)
130.4
Premium revenue
Outwards reinsurance premium expense
Net premium revenue
Claims expense
Reinsurance and other recoveries revenue
RESA
State levies
(Increase)/decrease in premium payback liability
Claims handling expenses
Net claims incurred
Other underwriting revenue
Acquisition costs
Other underwriting expenses
Underlying underwriting expenses
Underlying underwriting result
Other income
Other expenses
Share of net profit/(loss) of associates and joint
ventures
Underlying operating profit/(loss)
Items not included in underlying operating profit
139.7
(16.6)
123.1
(71.2)
9.4
–
–
–
(3.4)
(65.2)
1.2
(16.0)
(20.9)
(36.9)
22.2
–
–
–
240.5
(0.4)
240.1
(144.9)
–
–
–
(1.2)
(2.5)
(148.6)
(0.1)
(39.6)
(28.4)
(68.0)
23.4
–
–
–
7.9
(3.8)
4.1
(2.1)
2.1
–
–
–
(0.5)
(0.5)
–
(2.9)
(0.2)
(3.1)
0.5
54.1
(74.3)
–
22.2
23.4
(19.7)
Amortisation of acquired intangibles
(1.9)
(1.5)
(3.4)
Impairment of intangibles
One-off transactions, merger, acquisition and new
business implementation costs
–
–
–
–
–
–
Finance costs
Investment income
Investment expenses
Profit before income tax from
continuing operations
Inter-segment other income2
Depreciation and amortisation
Total assets
Total liabilities
Insurance liabilities
Claims liabilities
Unearned premium liability
Premium payback liability
Total insurance liabilities
3.4
2.7
0.2
1.8
1,177.0
676.2
220.4
236.6
–
457.0
0.1
3.5
228.0
87.5
25.1
21.2
20.1
66.4
(3.6)
(8.0)
–
–
3.6
157.6
47.4
0.4
0.3
–
0.7
Total1
$m
2,473.1
(33.5)
2,439.6
(1,666.3)
16.4
(247.3)
(35.0)
(1.2)
(21.9)
(1,955.3)
3.5
(168.5)
(141.8)
(310.3)
177.5
60.1
(86.7)
(4.0)
146.9
(10.4)
(8.0)
(13.6)
(9.7)
18.6
(2.0)
121.8
3.7
27.7
1,677.8
1,074.7
245.9
258.1
20.1
524.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.0
(12.4)
(3.0)
(9.4)
–
–
(13.6)
(9.7)
18.6
(2.0)
–
16.1
115.2
263.6
–
–
–
–
1. Comparative information has been restated. For further details, refer to Note 31.
2. Inter-segment other income is eliminated on consolidation and not included in operating profit.
nib holdings limited | Annual Report 2021 63
6. Revenue and other income
Premium revenue
Outwards reinsurance premiums
Net premium revenue
Agency fee
Sundry income
Other underwriting revenue
Other income
Travel insurance commission
Commission on other insurance products
Gain on sale of investment in joint venture
Wages subsidies
Insurance recoveries
Sundry income
Finance income
Investment income
Interest
Net realised gain (loss) on financial assets at fair value through profit or loss
Net unrealised gain (loss) on financial assets at fair value through profit or loss
Dividends
a) Accounting policy
2021
$m
2020
$m
2,580.8
2,473.1
(32.0)
(33.5)
2,548.8
2,439.6
0.3
3.5
3.8
12.5
2.8
9.7
4.2
0.1
4.5
0.3
3.2
3.5
54.1
3.1
–
2.0
0.3
0.9
33.8
60.4
0.2
–
2.8
20.3
30.8
0.2
54.1
5.6
34.2
(21.5)
0.3
18.6
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of amounts
collected on behalf of third parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases
its estimates on historical results, taking into account the type of customer, the type of transaction and the specifics of each
arrangement.
Revenue is recognised for the major business activities as follows:
i) Premium
revenue
Premium revenue comprises premiums from private health insurance contracts held by policyholders.
Premium revenue is recognised when it has been earned. Premium revenue is recognised from the attachment
date over the period of the contract. The attachment date is from when the insurer accepts the risk from the
insured under the insurance contract. Revenue is recognised in accordance with the pattern of the incidence
of risk expected over the term of the contract.
The proportion of the premium received or receivable not earned in the income statement at the reporting date
is recognised in the balance sheet as an unearned premium liability. Any non-current portion is discounted
based on expected settlement dates.
Premiums on unclosed business are brought to account using estimates based on payment cycles nominated
by the policyholder.
ii) Investment
income
Net fair value gains or losses on financial assets classified as at fair value through profit or loss are recognised
in the period.
Interest income is recognised using the effective interest method. Refer to Note 10(a)(iii) for impairment of
financial assets.
64 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 iii) Outwards
reinsurance
Premiums ceded to reinsurers under insurance contracts held by the Group are recognised as an outwards
reinsurance expense and are recognised in the income statement from the attachment date over the period of
indemnity of the reinsurance contract in accordance with the expected pattern of the incidence of risk ceded.
iv) Income from
travel insurance
commission
Income in the form of commissions is recognised when the sale of an insurance policy to a customer occurs.
Income is also generated on travel services activities and recognised as the service is performed.
v) Finance income Finance income on sublease is allocated to accounting periods so as to reflect a constant period rate of
return on the Group’s finance lease. Refer to Note 15 for finance lease receivables.
7. Expenses
Expenses by function
Claims handling expenses
Acquisition costs
Other underwriting expenses
Other expenses
Finance costs
Investment expenses
Notes
2021
$m
19.4
160.4
163.7
66.6
7.0
2.3
20201
$m
21.9
168.5
148.5
112.3
9.7
2.0
Total expenses (excluding direct claims expenses)
419.4
462.9
Expenses by nature
Amortisation of acquired intangibles
Bank charges
Communications, postage and telephone expenses
Depreciation and amortisation
Depreciation of right-of-use assets
Impairment of right-of-use assets
Employee costs
Finance costs
Finance costs – interest on lease liabilities
Impairment of intangibles
Information technology expenses
Investment expenses
Marketing expenses – excluding commissions
Marketing expenses – commissions
Merger, acquisition and new business implementation costs
Professional fees
Other expenses
15
15
15
8.0
3.0
4.8
18.7
5.3
1.1
10.4
5.1
5.6
16.5
7.5
–
150.9
164.7
3.4
3.6
8.8
27.7
2.3
35.7
104.4
0.3
27.4
14.0
5.5
4.2
8.0
25.8
2.0
45.3
115.7
9.7
18.3
18.6
Total expenses (excluding direct claims expenses)
419.4
462.9
1. Comparative information has been restated. For further details, refer to Note 31.
nib holdings limited | Annual Report 2021 65
Notes
2021
$m
20201
$m
42.8
28.2
(0.5)
70.5
70.5
70.5
29.2
(1.0)
28.2
76.2
(40.0)
(1.4)
34.8
34.8
34.8
(33.4)
(6.6)
(40.0)
231.0
121.8
69.3
36.5
2.3
(0.4)
0.2
(0.7)
(0.5)
–
0.3
70.5
–
–
–
–
–
0.5
0.2
(0.7)
(1.4)
0.1
(0.4)
34.8
(0.4)
(0.4)
0.3
0.1
8. Taxation
a) Income tax
i) Income tax expense
Recognised in the income statement
Current tax expense
Deferred tax expense
Under (over) provided in prior years
Income tax expense is attributable to:
Profit from continuing operations
Aggregate income tax expense
Deferred income tax expense included in income tax expense comprises:
(Increase)/decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
8(b)
8(c)
ii) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2020: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Goodwill impairment
Sundry items
Net assessable trust distributions
Imputation credits and foreign tax credits
Adjustment for current tax of prior periods
Unrecognised tax losses and deferred tax assets
Differences in foreign tax rates
Income tax expense
iii) Tax expense relating to items of other comprehensive income
Foreign currency translations
iv) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 30%
1. Comparative information has been restated. For further details, refer to Note 31.
66 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 b) Deferred tax assets
The balance comprises temporary differences attributable to:
Notes
Claims liabilities
Employee benefits
Lease liabilities
Premium payback liabilities
Provisions
Unrealised losses on investments
Other
Depreciation and amortisation
Loss allowance
Income receivables
Investment in associates and joint ventures
Share issue costs
Tax losses
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
8(c)
Net deferred tax assets
Recovery of total deferred tax assets:
Deferred tax assets to be recovered within 12 months
Deferred tax assets to be recovered after more than 12 months
2021
$m
11.7
6.0
17.2
4.5
5.9
–
45.3
0.1
0.6
0.4
2.6
0.1
0.6
4.4
49.7
(49.7)
–
23.4
26.3
49.7
Movements
At 1 July 2019
(Charged)/credited to the income statement
(Charged)/credited directly to other
comprehensive income
At 30 June 2020
At 1 July 2020
(Charged)/credited to the income statement
(Charged)/credited directly to other
comprehensive income
At 30 June 2021
Claims
liabilities
$m
Employee
benefits
$m
Lease
liabilities
$m
Premium
payback
liabilities
$m
Unrealised
losses on
investments
$m
Provisions
$m
0.3
30.4
–
30.7
30.7
(19.0)
–
11.7
5.7
0.4
–
6.1
6.1
(0.1)
–
6.0
25.2
(1.5)
0.1
23.8
23.8
(6.6)
–
17.2
5.1
0.4
(0.3)
5.2
5.2
(0.7)
–
4.5
6.1
(0.4)
–
5.7
5.7
0.2
–
5.9
–
4.0
–
4.0
4.0
(4.0)
–
–
Other
$m
3.2
0.1
0.1
3.4
3.4
1.0
–
4.4
2020
$m
30.7
6.1
23.8
5.2
5.7
4.0
75.5
0.6
0.6
0.4
1.4
0.2
0.2
3.4
78.9
(66.5)
12.4
41.0
37.9
78.9
Total
$m
45.6
33.4
(0.1)
78.9
78.9
(29.2)
–
49.7
nib holdings limited | Annual Report 2021 67
8. Taxation continued
c) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Brands and trademarks and customer contracts and relationships
Notes
Deferred acquisition costs
Right-of-use assets
Unrealised foreign exchange gains
Unrealised gains on investments
Other
Unearned premium liability
Total deferred tax liabilities
Set-off of deferred tax liabilities pursuant to set-off provisions
8(b)
Net deferred tax liabilities
Recovery of total deferred tax liabilities:
Deferred tax liabilities to be settled within 12 months
Deferred tax liabilities to be settled after more than 12 months
2021
$m
15.2
37.2
11.5
0.6
5.6
70.1
0.1
0.1
70.2
(49.7)
20.5
14.7
55.5
70.2
Brands and
trademarks
and customer
contracts and
relationships
$m
Deferred
acquisition
costs
$m
Right-of-
use assets
$m
Unrealised
foreign
exchange
losses
$m
Unrealised
gains on
investments
$m
22.8
(5.0)
(0.1)
17.7
17.7
(2.5)
–
15.2
32.4
2.4
(0.1)
34.7
34.7
2.5
–
37.2
19.4
(1.4)
(0.1)
17.9
17.9
(6.4)
–
11.5
1.1
–
(0.3)
0.8
0.8
(0.2)
–
0.6
2.5
(2.5)
–
–
–
5.6
–
5.6
Other
$m
0.2
(0.1)
–
0.1
0.1
–
–
0.1
Movements
At 1 July 2019
(Charged)/credited to the income statement
(Charged)/credited directly to other comprehensive income
At 30 June 2020
At 1 July 2020
(Charged)/credited to the income statement
(Charged)/credited directly to other comprehensive income
At 30 June 2021
d) Accounting policy
2020
$m
17.7
34.7
17.9
0.8
–
71.1
0.1
0.1
71.2
(66.5)
4.7
15.4
55.8
71.2
Total
$m
78.4
(6.6)
(0.6)
71.2
71.2
(1.0)
–
70.2
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amount in the consolidated financial statements. However, the deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it
is probable that the differences will not reverse in the foreseeable future.
68 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the
liability simultaneously.
nib holdings limited and its wholly-owned Australian controlled entities are a tax consolidated group. As a consequence, the entities
within each group are taxed as a single entity and the deferred tax assets and liabilities of these entities are set-off in the consolidated
financial statements. Details of tax consolidated group are detailed in Note 36 a) ii).
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
9. Cash and cash equivalents
Cash at bank and cash on hand
Short-term deposits and deposits at call
a) Accounting policy
2021
$m
148.3
65.6
213.9
2020
$m
141.6
56.4
198.0
Cash and cash equivalents, and bank overdrafts, are carried at face value of the amounts deposited or drawn. For the purpose of
the presentation in the Consolidated Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
b) Risk exposure
The Group’s exposure to interest rate risk is discussed in Note 3(b). The maximum exposure to credit risk at the reporting date is the
carrying amount of each class of cash and cash equivalents mentioned above.
c) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Net (gain)/loss on disposal of property, plant and equipment
Profit on sale of joint venture investment
Fair value (gain)/loss on other financial assets through profit or loss
Share of net (profit)/loss of associates and joint ventures
Non-cash employee (benefits)/expense – share-based payments
Depreciation and amortisation
Depreciation of right-of-use assets and interest on leases
Impairment of right-of-use assets
Impairment of intangibles
Net exchange differences
Change in operating assets and liabilities, net of effect from purchase of controlled entity
Decrease (increase) in receivables
Decrease (increase) in deferred acquisition costs
Decrease (increase) in deferred tax assets
Increase (decrease) in trade payables
Increase (decrease) in unearned premium liability
Increase (decrease) in premium payback liability
Increase (decrease) in current tax liabilities
Increase (decrease) in deferred tax liabilities
Increase (decrease) in provisions
Net cash flow from operating activities
1. Comparative information has been restated. For further details, refer to Note 31.
2021
$m
160.5
0.9
(9.7)
(33.3)
4.8
1.7
26.7
8.9
1.1
8.8
0.1
(11.3)
(8.9)
–
(9.0)
(8.8)
(2.3)
(21.2)
28.1
(28.4)
108.7
20201
$m
87.0
0.1
–
4.6
4.0
(0.4)
26.9
11.7
–
8.0
0.9
(3.3)
(2.2)
(8.6)
(8.3)
0.7
0.8
12.7
(31.4)
104.4
207.6
nib holdings limited | Annual Report 2021 69
9. Cash and cash equivalents continued
d) Net debt
This section sets out an analysis and movements in net debt:
Cash and cash equivalents
Liquid investments
Borrowings – repayable within one year
Borrowings – repayable after one year
Lease liabilities
Net debt
Cash and liquid investments
Gross debt – variable interest rates
Lease liabilities
Net debt
As at 1 July 2019
Cash flows
Acquisition – leases
Foreign exchange adjustments
Other non-cash movements
As at 30 June 2020
Cash flows
Acquisition – leases
Foreign exchange adjustments
Other non-cash movements
As at 30 June 2021
2021
$m
213.9
858.9
(1.6)
(230.7)
(57.6)
782.9
2020
$m
198.0
818.1
(2.0)
(230.9)
(82.6)
700.6
1,072.8
1,016.1
(232.3)
(57.6)
782.9
(232.9)
(82.6)
700.6
Cash and cash
equivalents
$m
Assets
Liquid
investments
$m
Liabilities from financing activities
Sub-total
$m
Borrowings
$m
Lease liabilities
$m
164.7
34.2
–
(0.9)
–
198.0
15.4
–
0.5
–
731.4
66.2
–
(2.1)
22.6
818.1
(13.4)
–
(0.4)
54.6
896.1
100.4
–
(3.0)
22.6
(233.9)
(0.5)
–
1.5
–
1,016.1
(232.9)
2.0
–
0.1
54.6
0.4
–
0.2
–
213.9
858.9
1,072.8
(232.3)
(87.6)
10.6
(1.8)
0.1
(3.9)
(82.6)
10.4
(1.0)
0.2
15.4
(57.6)
Net Debt
Total
$m
574.6
110.5
(1.8)
(1.4)
18.7
700.6
12.8
(1.0)
0.5
70.0
782.9
Liquid investments comprise current investments that are traded in an active market, being the Group’s financial assets at amortised
cost and financial assets at fair value through profit or loss.
e) Off‑balance sheet arrangements
nib Travel Pty Limited (nib Travel), a wholly-owned subsidiary of nib holdings limited, operates bank accounts held in its name on
behalf of its underwriters in accordance with contractual terms governing the arrangements. These accounts are not considered
part of the cash and cash equivalents of nib Travel as they do not have the control over the cash. At 30 June 2021 this amounted to
$30,360,856 (2020: $23,510,009).
70 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 10. Receivables
Current
Premium receivable
Private Health Insurance Premiums Reduction Scheme receivable
Other receivables
Provision for loss allowance
Prepayments
Expected future reinsurance recoveries undiscounted
on claims paid
on outstanding claims
2021
$m
14.3
41.7
27.4
(2.5)
9.7
1.1
2.2
93.9
As at 30 June 2021, current receivables of the Group with a nominal value of $2.532 million (2020: $1.928 million) were impaired.
The loss allowance as at 30 June 2021 and 2020 was determined as follows for both premium receivables and other receivables:
Group at 30 June 2021
Expected loss rate
Gross carrying amount – premium receivables
Gross carrying amount – other receivables
Loss allowance
Group at 30 June 2020
Expected loss rate
Gross carrying amount – premium receivables
Gross carrying amount – other receivables
Loss allowance
%
$m
$m
$m
%
$m
$m
$m
More than
30 days past
due
More than
60 days past
due
More than
120 days past
due
17%
0.4
0.2
0.1
8%
0.2
1.1
0.1
9%
–
9.5
0.9
More than
30 days past
due
More than
60 days past
due
More than
120 days past
due
5%
0.7
1.4
0.1
5%
0.4
1.5
0.1
15%
0.3
3.6
0.6
Current
5%
13.7
16.6
1.4
Current
4%
10.5
16.1
1.1
2020
$m
11.9
38.2
22.6
(1.9)
9.4
3.8
2.4
86.4
Total
14.3
27.4
2.5
Total
11.9
22.6
1.9
The closing loss allowances for premium receivables and other receivables as at 30 June 2021 and 2020 reconcile to the opening loss
allowances as follows:
1 July 2019
Increase/(decrease) in loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectible
At 30 June 2020
Increase/(decrease) in loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectible
At 30 June 2021
As of 30 June 2021 and 30 June 2020 no receivables were past due but not impaired.
Premium
receivables
$m
Other
receivables
$m
1.6
(0.1)
–
1.5
(0.2)
–
1.3
0.2
0.3
(0.1)
0.4
0.9
(0.1)
1.2
Total
$m
1.8
0.2
(0.1)
1.9
0.7
(0.1)
2.5
nib holdings limited | Annual Report 2021 71
10. Receivables continued
a) Accounting policy
i) Premium receivables
Amounts due from policyholders are initially recognised at fair value, being the amounts due. They are
subsequently measured at amortised cost less allowance for expected credit losses.
The Group has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, premium receivables have
been grouped based on shared risk characteristics.
The amount of expected credit losses is recognised in Premium revenue on the Consolidated Income
Statement.
ii) Other receivables
Other receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses. Other receivables
are generally due for settlement within 30 days.
iii) Impairment of
financial assets
The Group has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, other receivables have been
grouped based on shared risk characteristics.
The amount of expected credit losses is recognised in the Consolidated Income Statement.
When a receivable becomes uncollectible it is written off against the expected credit loss account.
Subsequent recoveries of amounts previously written off are credited against other expenses in the
Consolidated Income Statement.
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of
the loss allowance depends upon the Group’s assessment at the end of each reporting period as to
whether the financial instrument’s credit risk has increased significantly since initial recognition, based
on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses.
The amount of expected credit loss recognised is measured on the basis of the probability weighted
present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in
profit or loss.
iv) Interest rate risk
Information about the Group’s exposure to interest rate risk in relation to other receivables is provided
in Note 3.
v) Fair value and
credit risk
Due to the short-term nature of current receivables, their carrying amount is assumed to approximate
their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above.
vi) Risk exposure
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivable mentioned above. Refer to Note 3 for more information on the risk management policy of
the Group and the credit quality of the Group’s receivables.
vii) Reinsurance and
other recoveries
receivable
Reinsurance and other recoveries receivable on paid claims, reported claims not yet paid, incurred but
not reported (IBNR), and unexpired risk liabilities are recognised as revenue. Recoveries receivable are
assessed in a manner similar to the assessment of outstanding claims.
Recoveries are measured as the present value of the expected future receipts, calculated on the same
basis as the liability for outstanding claims (see Note 18).
72 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 11. Financial assets
a) Financial assets at amortised cost
Short-term deposits
2021
$m
7.7
7.7
2020
$m
8.8
8.8
Interest income on financial assets at amortised cost are recorded in investment income in profit or loss in Note 6.
b) Financial assets at fair value through profit or loss
Current
Equity securities
Interest-bearing securities
Property trusts
Non-current
Mortgage trusts
2021
$m
2020
$m
213.2
645.7
11.2
870.1
–
–
156.1
660.2
12.3
828.6
0.4
0.4
Changes in fair values of financial assets at fair value through profit or loss are recorded in investment income in profit or loss in
Note 6.
The redemption terms for investments in certain managed trusts can be varied by their responsible entities in response to market
conditions. For those investments which cannot be redeemed entirely within one year from reporting date, the amounts have been
allocated between current and non-current in accordance with the maximum percentage redeemable within one year as per the most
recent advice from the manager at the end of the reporting period.
c) Accounting policy
i) Classification
The Group classifies its financial assets into the following measurement categories:
•
those to be measured at fair value (either through other comprehensive income, or through profit or
loss), and
•
those to be measured at amortised cost.
The classification depends on the Group’s business model for managing the financial assets and the
contractual terms of the relevant cash flows.
The Group has determined that financial assets held by entities in the Group that are health insurers
are classified as fair value through profit or loss as they are held to back insurance liabilities. These
assets are managed in accordance with agreed investment mandate agreements on a fair value basis
and are reported to the Board on this basis.
A financial asset is measured at amortised cost only if both of the following conditions are met:
•
•
it is held within a business model which objective is to hold assets in order to collect contractual
cash flows, and
the contractual terms of the financial asset represent contractual cash flows that are solely
payments of principal and interest.
ii) Recognition and
derecognition
Purchases and sales of financial assets are recognised on trade date, being the date on which the
Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
nib holdings limited | Annual Report 2021 73
11. Financial assets continued
iii) Measurement
Financial assets at fair value through profit or loss are recognised initially at fair value. All other financial
assets are recognised initially at fair value plus directly attributable transaction costs.
Subsequent to the initial recognition, for financial assets measured at fair value, gains and losses will
either be recorded in profit or loss or other comprehensive income. For investments in debt instruments,
this will depend on the business model in which the investment is held as described below.
Reclassification of debt investments is done when and only when its business model for managing
those assets changes. For investments in equity instruments, the fair value will be recorded in profit or
loss, unless the Group has made an irrevocable election at the time of initial recognition to account for
the equity investment at fair value through other comprehensive income (FVOCI).
Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
iv) Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing
the asset and the cash flow characteristics of the asset. There are three measurement categories into
which the company classifies its debt instruments:
Amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment
that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised
in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets
is included in profit or loss using the effective interest rate method.
Fair value through other comprehensive income (FVOCI)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where
the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the recognition of impairment
losses or reversal of impairment losses, interest income and foreign exchange gains and losses which
are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to profit or loss. Interest income from these
financial assets is included in profit or loss using the effective interest rate method.
Fair value through profit or loss (FVPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through
profit or loss. A gain or loss on a debt investment that is subsequently measured at FVPL and is not
part of a hedging relationship is recognised in profit or loss and presented net within investment gains/
(losses) in the period in which it arises. Interest income from these financial assets is included in the
profit or loss using the effective interest rate method.
The Group subsequently measures all investments in equity instruments at fair value. Where the
Group’s management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit
or loss.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in
investment gains/(losses) in the statement of profit or loss. Impairment losses (and reversal of
impairment losses) on equity investments measured at FVOCI are not reported separately from other
changes in fair value.
The Group assesses on a forward looking basis the expected credit losses (ECL) associated with its
financial assets carried at amortised cost. The recognition of impairment depends on whether there
has been a significant increase in credit risk.
Debt investments at amortised cost are considered to be low credit risk, and thus the impairment
provision is determined as 12 months ECL.
v) Equity instruments
vi) Impairment
vii) Risk exposure
Information about the Group’s exposure to price risk and interest rate risk is provided in Note 3.
74 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 12. Deferred acquisition costs
Current
Non-current
Movements in the deferred acquisition costs are as follows:
Balance at beginning of year
Acquisition costs deferred during the period
Amortisation expense
Exchange differences
Deferred acquisition costs by segment are as follows:
Australian Residents Health Insurance
New Zealand Residents Health Insurance
International (Inbound) Health Insurance
a) Accounting policy
2021
$m
55.0
2020
$m
50.7
71.3
66.7
2021
$m
117.4
67.9
(58.9)
(0.1)
126.3
2021
$m
89.0
33.5
3.8
2020
$m
115.2
60.9
(58.2)
(0.5)
117.4
2020
$m
86.0
27.0
4.4
126.3
117.4
Direct acquisition costs incurred in obtaining health insurance contracts, including broker commissions, are deferred and recognised
as assets where they can be reliably measured and where it is probable that they will give rise to premium revenue that will be
recognised in the consolidated income statement in subsequent reporting periods. This pattern of amortisation reflects the earning
pattern of the corresponding premium revenue.
b) Critical accounting judgements and estimates
i) Australian Residents Health Insurance
Deferred acquisition costs are amortised on a straight line basis over a period of 5 years (2020: 5 years), in accordance with
the expected pattern of the incidence of risk under the open ended insurance contracts to which they relate, which includes
expectations of customers remaining insured.
The Group pays an upfront commission to retail brokers on signing up new members to the business. These upfront commissions
will give rise to future premium revenue beyond the current period and are able to be measured and directly associated with a
particular insurance contract. The Group does not capitalise the indirect administration costs associated with acquiring new
members due to the difficulty in measurement. The Group considers the duration of a health insurance contract to be an open
ended agreement as the Group stands ready to continue to insure its customers under continuing policies. The Group uses
average retention rates to determine the appropriate customer contract life and related amortisation period for customers who
purchase insurance through these broker channels. The analysis included extrapolating historical lapse rates for broker acquired
customers but truncating the data at 10 years in order to allow for the inherent distortion created by extrapolating historical data.
This analysis and management’s expectations of future lapse supports the amortisation period of 5 years. The Group re-performs
this analysis at least every six months for reassessment. A decrease in the expected contract periods of one year would increase
amortisation expense by $14.3 million for 30 June 2021. An increase in the expected contract periods of one year would decrease
amortisation expense by $11.3 million for 30 June 2021.
The recoverability of the related deferred acquisition costs is also considered as part of the liability adequacy test performed.
As described in Note 19, the Group has no deficiency in the unearned premium liability at 30 June 2021.
nib holdings limited | Annual Report 2021 75
12. Deferred acquisition costs continued
b) Critical accounting judgements and estimates (continued)
Alternative view
General insurers amortise deferred acquisition costs usually over one year, as their policies generally have a defined term of one
year. With health insurance, if the contract term is considered to be only the term to which the customer has agreed to, or paid to,
the deferred acquisition cost would be amortised over a period of between one and two months, which is the period paid in advance
by the customer. However, the Group believes that does not reflect the open ended nature of a health insurance contract, the
contract periods to which future premium revenue will arise, nor the expected pattern of the incidence of risk under the insurance
contracts to which the costs relate. For these reasons the Group believes the current adopted treatment is more appropriate.
ii) nib New Zealand
The Group incurs upfront commission costs that will give rise to future premium revenue and are able to be directly associated
with a particular insurance contract. These costs are deferred and amortised over the life of the insurance contract. The Group
does not capitalise the indirect administration costs associated with acquiring new members due to the difficulty in identifying
and associating those indirect costs with acquiring particular insurance contracts.
There are two key assumptions required to recognise the acquisition costs over the life of the insurance contract:
•
•
the period of the insurance contract is assumed to be the average length of insurance for nib nz limited policyholders who are
the subject of an upfront commission; and
the average length of insurance for nib nz limited policyholders who are the subject of an upfront commission is calculated by
extrapolating historical lapse rates for that group of policyholders.
The recoverability of the related deferred acquisition costs is also considered through an assessment of the net present value of
the future estimated cash flows for policies that are subject to commission, and as part of the liability adequacy test performed.
As described in Note 19, the Group has no deficiency in the unearned premium liability at 30 June 2021.
13. Property, plant and equipment
At 1 July 2019
Cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2020
Opening net book amount
Additions
Depreciation charge for the year
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation and impairment
Net book amount
Year ended 30 June 2021
Opening net book amount
Additions
Disposals
Depreciation charge for the year
Closing net book amount
At 30 June 2021
Cost
Accumulated amortisation and impairment
Net book amount
76 nib holdings limited | Annual Report 2021
Plant and
Equipment
$m
Leasehold
Improvements
$m
20.3
(15.5)
4.8
4.8
2.1
(2.3)
4.6
22.2
(17.6)
4.6
4.6
0.6
(0.2)
(2.2)
2.8
19.9
(17.1)
2.8
17.3
(8.9)
8.4
8.4
0.2
(1.8)
6.8
17.5
(10.7)
6.8
6.8
0.5
(0.7)
(1.5)
5.1
13.2
(8.1)
5.1
Total
$m
37.6
(24.4)
13.2
13.2
2.3
(4.1)
11.4
39.7
(28.3)
11.4
11.4
1.1
(0.9)
(3.7)
7.9
33.1
(25.2)
7.9
notes to the consolidated financial statementsfor the year ended 30 June 2021 a) Accounting policy
All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of a replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over
their estimated useful lives, as follows:
• Plant and equipment
• Leasehold improvements
3 to 10 years
3 to 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate at each reporting date. An asset’s carrying
amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable
amount (see Note 14(a)(v)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to
retained earnings.
14. Intangible assets
At 1 July 2019
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2020
Opening net book amount
Additions
Disposals
Amortisation charge for the year
Impairment charge
Exchange differences
Closing net book amount
At 30 June 2020
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 30 June 2021
Opening net book amount
Additions
Disposals
Amortisation charge for the year
Impairment charge
Exchange differences
Closing net book amount
At 30 June 2021
Cost
Accumulated amortisation and impairment
Net book amount
1 Comparative information has been restated. For further details, refer to Note 31.
Goodwill
$m
Software
$m
Brands and
Trademarks
$m
Customer
Contracts and
relationships
$m
227.4
–
227.4
227.4
–
–
–
–
(0.9)
226.5
226.5
–
226.5
226.5
–
–
–
(7.6)
(0.2)
218.7
218.7
–
218.7
110.4
(68.8)
41.6
41.6
20.7
(0.1)
(14.2)
–
(0.3)
47.7
129.3
(81.6)
47.7
47.7
22.5
(0.1)
(15.3)
–
–
54.8
153.2
(98.4)
54.8
Total1
$m
452.1
(105.5)
346.6
32.6
(7.2)
25.4
81.7
(29.5)
52.2
25.4
52.2
346.6
–
–
(1.2)
(5.8)
–
18.4
32.6
(14.2)
18.4
–
–
(7.4)
(2.2)
(0.5)
42.1
80.7
(38.6)
42.1
20.7
(0.1)
(22.8)
(8.0)
(1.7)
334.7
469.1
(134.4)
334.7
18.4
42.1
334.7
–
–
(1.0)
(1.2)
–
16.2
32.6
(16.4)
16.2
–
–
(6.7)
–
(0.1)
35.3
80.6
(45.3)
35.3
22.5
(0.1)
(23.0)
(8.8)
(0.3)
325.0
485.1
(160.1)
325.0
nib holdings limited | Annual Report 2021 77
14. Intangible assets continued
a) Accounting policy
i) Goodwill
ii) Software
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries
is included in intangible assets. Goodwill is not amortised. Instead, goodwill is tested for impairment annually,
and is carried at cost less accumulated impairment losses.
Costs incurred in developing products or systems and costs incurred in acquiring software that will contribute
to future period financial benefits through revenue generation and/or cost reduction are capitalised to software.
Costs capitalised include external direct costs of materials and service and direct payroll and payroll related
costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over periods
generally ranging from two and a half years to five years.
Change of accounting policy
The Group previously capitalised costs incurred in configuring or customising Software-as-a-Service (SaaS)
arrangements as intangible assets, as the Group considered that it would benefit from those costs to
implement the SaaS arrangements over the expected renewable term of the arrangements. Following the IFRS
Interpretations Committee agenda decision on Configuration or Customisation Costs in a Cloud Computing
Arrangement in March 2021, the Group has reconsidered its accounting treatment and adopted the treatment
set out in the IFRS IC agenda decision, which is to recognise those costs as intangible assets only if the
implementation activities create an intangible asset that the entity controls and the intangible asset meets the
recognition criteria. Costs that do not result in intangible assets are expensed as incurred, unless they are paid
to the suppliers of the SaaS arrangement to significantly customise the cloud-based software for the Group, in
which case the costs are recorded as a prepayment for services and amortised over the expected renewable
term of the arrangement.
Refer to Note 31 Change in accounting policy for the impact of this change on the financial statements.
iii) Brands and
trademarks
Brands and trademarks acquired as part of a business combination are carried at fair value at the date of
acquisition less accumulated amortisation. Amortisation is calculated on the asset’s estimated useful life which
is five years for IMAN Australian Health Plans Pty Ltd and 10 years for Grand United Corporate Health Limited.
Brands and trademarks acquired with World Nomads Group in July 2015 have an indefinite useful life and are
carried at fair value at the date of acquisition, less impairment losses.
iv) Customer
Contracts and
relationships
Customer contracts and relationships acquired as part of a business combination are recognised separately
from goodwill. The customer contracts are carried at their fair value at the date of acquisition less accumulated
amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash flows of
the contracts over their estimated useful lives, which is
v) Impairment
• 10 years for both nib nz limited and Grand United Corporate Health Limited;
• approximately 2.5 years for World Nomads Group;
• 5 to 10 years for QBE Travel.
Goodwill and intangible assets that have an indefinite useful life and are not subject to amortisation are tested
annually for impairment or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each reporting date.
78 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 b) Allocation of goodwill and intangible assets to CGUs
Australian
Residents Health
Insurance
Australia
$m
International
Workers Health
Insurance
Australia
$m
New Zealand
Residents Health
Insurance
New Zealand
$m
nib travel Group
Australia
$m
Unallocted to
CGUs
$m
Goodwill
At 30 June` 2021
At 30 June 2020
Brands and Trademarks
At 30 June 2021
At 30 June 2020
Customer Contracts and relationships
At 30 June 2021
At 30 June 2020
Software1
At 30 June 2021
At 30 June 2020
Total
At 30 June 2021
At 30 June 2020
80.2
80.2
$m
3.0
3.5
$m
14.2
16.5
$m
–
–
$m
21.1
21.1
40.9
41.1
$m
–
–
$m
–
–
$m
–
–
$m
$m
–
–
$m
14.4
17.8
$m
–
–
$m
76.5
84.1
$m
13.2
14.9
$m
6.7
7.8
$m
–
–
$m
Total
$m
218.7
226.5
$m
16.2
18.4
$m
35.3
42.1
$m
54.8
47.7
–
–
$m
–
–
$m
–
–
$m
54.8
47.7
97.4
100.2
21.1
21.1
55.3
58.9
96.4
106.8
54.8
47.7
325.0
334.7
$m
$m
1. Software is shown as unallocated as it is predominately a shared services function.
c) Allocation of definite life and indefinite life assets to CGUs
Definite life
At 30 June 2021
At 30 June 2020
Indefinite life
At 30 June 2021
At 30 June 2020
Total
At 30 June 2021
At 30 June 2020
Australian
Residents
Health
Insurance
Australia
$m
International
Workers Health
Insurance
Australia
$m
New Zealand
Residents
Health
Insurance
New Zealand
$m
nib travel Group
Australia
$m
Unallocted to
CGUs
$m
17.2
20.0
$m
80.2
80.2
$m
97.4
100.2
–
–
$m
21.1
21.1
$m
21.1
21.1
14.4
17.8
$m
40.9
41.1
$m
55.3
58.9
6.7
7.8
$m
89.7
99.0
$m
54.8
47.7
$m
–
–
$m
96.4
106.8
54.8
47.7
Total
$m
93.1
93.3
$m
231.9
241.4
$m
325.0
334.7
nib holdings limited | Annual Report 2021 79
14. Intangible assets continued
The definite and indefinite life brand names allocated to nib Travel Group CGU (included in Brands and Trademarks table on previous
page) are as follows:
Brands and Trademarks
At 30 June 2021
At 30 June 2020
WorldNomads.
com
$m
Travel
Insurance
Direct
$m
12.7
12.7
0.5
2.2
Total
$m
13.2
14.9
d) Impairment tests for goodwill and intangibles
Goodwill and intangibles are allocated to a cash–generating unit (CGU).
An asset is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined
as the higher of its fair value less cost of disposal and its value in use.
The recoverable amount of a CGU is determined based on a value-in-use calculation. The value-in-use calculation uses cash flow
projections based on financial budgets and forecast forward projections approved by management covering a four-year period.
During the year, the nib Travel Group CGU goodwill was impaired by $7.6 million and the Travel Insurance Direct brand name was
partially impaired by $1.2 million, due to the ongoing impact of COVID-19 and an increase in the discount rate applied to the CGU.
The impairment has been included in Other expenses on the Consolidated Income Statement.
The estimates used in calculating value-in-use are highly sensitive, and depend on assumptions specific to the nature of the Group’s
activities. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived from
discounting techniques.
e) Key assumptions used for value‑in‑use calculations
The assumptions used for the cash flow projections for the first four years are in line with the current forecast forward projections.
Key assumptions include policyholder growth, claims ratio and the discount factor.
Policyholder growth is calculated by forecasting the number of sales each month based on budgeted advertising and promotions
spend, less the number of expected lapses each month. Claims ratios are targeted that generate price increases that maintain
price competitiveness, cover expected increases in claims costs, do not adversely affect the funds capital adequacy position and
enable funding of future business growth.
Cash flows beyond the four-year period are extrapolated into perpetuity assuming a growth factor of 2.5% with the exception of
Travel Insurance Direct Brand at (7.0)%. The Group has applied a post-tax discount rate to discount the forecast future attributable
post tax cash flows.
These assumptions have been used for analysis of each CGU. Management determined policyholder growth and claims ratios
based on past performance and its expectations for the future.
i) nib Travel Group
The assumptions for nib Travel Group have been updated for the ongoing impact of COVID-19 on the travel industry, to which nib
is exposed via the nib Travel Group CGU.
FY22 to FY25 cash-flows are based on nib internal budget assumptions, and scenarios on the reopening of borders and the
timing of return to inflation-adjusted pre-COVID-19 revenue levels (from 1H20 revenues). These have been set with reference to
external industry forecasts, as well as Federal Budget expectations. Resumption of international tourism is assumed to increase
internationally in late 2021, and from Australia in mid-2022 (calendar periods). A gradual recovery is assumed, with reduced
volumes initially and full return to pre-COVID levels in FY24 (2020: FY24).
Terminal growth rates of 2.5% compound annual growth rate has been applied for growth beyond FY25.
nib travel is in the process of securing new underwriting arrangements with a range of outcomes possible. As such the goodwill
impairment assessment has also been based on the probability weighted range of outcomes that could reasonably be expected
to occur with the arrangements on top of the other assumptions outlined in this Note.
80 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 f) Significant estimate: Impact of possible changes in key assumptions
During the year the nib Travel Group CGU goodwill was impaired by $7.6 million and the Travel Insurance Direct brand name was
partially impaired by $1.2 million, based on the assumptions in section e). A further deterioration in assumptions would result in a
future impairment of goodwill and the Travel Insurance Direct brand name.
Should the travel industry return back to pre-COVID-19 levels of activity be delayed by one year (i.e. from FY24 to FY25) a further
impairment of approximately $16.0 million would be present. Given the high level of uncertainty around whether the travel industry
will return to pre-COVID-19 levels, the nib Travel Group Australia CGU will continually be assessed as more information evolves.
The range of reasonable possible outcomes from the process of securing new underwriting arrangements for nib Travel was no
impairment through to an additional impairment of the nib Travel CGU by $1.1 million.
Sensitivity to changes in other key assumptions has been outlined in the table below.
Other than as noted in the sensitivity table in Note 14(f) below, there are no reasonably possible changes in key assumptions that
would impair the reported CGUs.
The following table sets out the key assumptions for those CGUs that have significant goodwill allocated to them.
Goodwill
Australian Residents Health Insurance
International Workers Health Insurance
New Zealand Residents Health Insurance
Policyholder growth
2021
%
2.7
2.8
8.9
2020
%
1.7
2.1
6.3
Claims ratio
2021
%
2020
%
Long-term growth rate
2020
%
2021
%
Pre-tax discount rate
2020
%
2021
%
83.2
43.7
63.8
83.6
43.7
62.6
2.5
2.5
2.5
2.5
2.5
2.5
12.2
12.2
11.2
10.4
10.4
9.9
nib travel
Revenue growth rate
(forecast years)
2021
%
3.7
2020
%
2.5
Long-term growth rate
2020
%
2021
%
Pre-tax discount rate
2020
%
2021
%
2.5
2.5
14.8
11.0
1H20 revenues have been assumed to represent pre-COVID levels of activity which have then been run rated. Expected FY25 revenue represents a 3.7% pa compound annual growth rate (CAGR) from 1H20.
The following table outlines the sensitivity to reasonably possible changes in assumptions that would lead to an impairment.
Sensitivity to changes in assumptions
nib Travel Group CGU
Change in recoverable value
Change in revenue across FY22 – FY25
Change in pre-tax discount rate
Change in long-term growth rate
Carrying value
$m
Recoverable
value
$m
Difference
$m
106.4
106.4
–
Movement in
variable
+10.0%
-10.0%
+1.0%
-1.0%
+1.0%
-1.0%
Change in
recoverable
value
$m
Excess/(deficit)
in carrying
value
$m
11.1
(11.1)
(9.7)
11.4
13.3
(10.6)
11.1
(11.1)
(9.7)
11.4
13.3
(10.6)
nib holdings limited | Annual Report 2021 81
14. Intangible assets continued
The following table sets out the key assumptions for the indefinite life for the brand names and trademarks for the nib Travel Group
CGUs.
Revenue growth rate
(forecast years)
2021
%
3.7
2020
%
2.5
Royalty rate
2021
%
2.5
2020
%
2.5
Long-term growth rate
2020
%
2021
%
Pre-tax discount rate
2020
%
2021
%
2.5
2.5
14.8
11.0
Brandnames and trademarks
WorldNomads.com
15. Lease assets and liabilities
a) Right‑of‑use assets
Right-of-use assets – properties
2021
$m
26.5
26.5
2021
$m
1.7
10.6
2021
$m
1.9
2.0
2.1
2.2
2.3
2.6
13.1
2021
$m
6.9
50.7
2020
$m
62.1
62.1
2020
$m
–
–
2020
$m
–
–
–
–
–
–
–
2020
$m
6.3
76.3
Additions to the right-of-use assets during the 2021 financial year was $1.0 million (2020: $1.8 million).
b) Finance lease receivables
Current
Non-current
Minimum undiscounted lease payments receivable on the sublease are as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
c) Lease liabilities
Current
Non-current
82 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 d) Amounts recognised in the consolidated income statement
The consolidated income statement shows the following amounts related to leases.
Finance income
Gain on recognition of finance sublease (included in other income)
Depreciation charge of right-of-use assets – properties
Impairment of right-of-use assets – properties
Finance costs – interest on lease liabilities
Expenses relating to short-term leases (included in other expenses)
The total cash outflow for leases in 2021 was $9.03 million (2020: $10.6 million).
e) Accounting policy
Notes
6
6
7
7
7
7
2021
$m
0.2
2.5
5.3
1.1
3.6
0.1
2020
$m
–
–
7.5
–
4.2
0.2
As a lessee
The Group leases various offices and retail stores. Rental contracts are typically made for fixed periods of 3 to 15 years but may have
extension options as described in (i) below. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value
of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate
• amounts expected to be payable by the lessee under residual value guarantees
•
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset
of similar value in a similar economic environment with similar terms and conditions.
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes
in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does
not have recent third party financing, and
• makes adjustments specific to the lease, e.g. term, country, currency and security
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in
the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is
reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the following:
•
the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
•
restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or less.
As a lessor
The Group is a sub-lessor (intermediate lessor) of the right-of-use assets. The Group classifies the sublease as a finance lease or
an operating lease by assessing if the lease transfers substantially all the risks and rewards with reference to the right-of-use asset
arising from the head lease, rather than by reference to the underlying asset.
nib holdings limited | Annual Report 2021 83
15. Lease assets and liabilities continued
e) Accounting policy continued
For subleases classified as finance lease, the sub-lessor derecognises the right-of-use asset relating to the head lease that it transfers
to the sublease and recognises the net investment in the sublease; any difference between the right-of-use assets and the net
investment in the finance sublease is recognised in profit or loss. At the commencement date, net investment in the finance lease
is measured at an amount equal to the present value of the lease payments for the underlying right-of-use assets during the lease
term. The Group recognises finance income over the lease term, based on a pattern reflecting a constant period rate of return on the
lessor’s net investment in the lease.
i) Extension and termination options
Extension and termination options are included in a number of leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts.
The minimum non-discounted cash flows associated with the extensions that have not been recognised is $21.6 million.
16. Payables
Current
Outwards reinsurance expense liability – premiums payable to reinsurers
Trade creditors
Claims payable
Other payables
RESA payable1
Annual leave payable
Non-current
Other payables
2021
$m
0.3
20.8
55.4
49.1
48.2
10.5
2020
$m
8.1
13.7
57.3
53.5
48.4
10.4
184.3
191.4
4.3
4.3
6.5
6.5
1. Risk Equalisation Special Account (RESA) levy, represents expenses incurred under Risk Equalisation Trust Fund arrangements which are provided for within the legislation to support the principle of
community rating.
Annual leave payable is accrued annual leave. The entire amount is presented as current, since the Group does not have an
unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full
amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not to be expected
to be taken within the next 12 months.
Annual leave obligation expected to be settled after 12 months
a) Accounting policy
2021
$m
1.5
2020
$m
1.1
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. These amounts are unsecured and are usually paid within 30 days of recognition.
i) Risk Equalisation
Special Account levy
The Risk Equalisation Special Account Levy is accrued based on an industry survey of eligible paid
claims to be submitted to APRA. If a private health insurer notifies APRA of a material variation in paid
claims which can be quantified, the Group adjusts the risk equalisation expense.
84 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 17. Borrowings
Current
Bank overdraft
Non-current
Bank loans
2021
$m
1.6
1.6
2020
$m
2.0
2.0
230.7
230.7
230.9
230.9
The bank overdraft comprises the closing positive balance of the bank account, adjusted for unpresented cheques and outstanding
deposits.
The Group has a line-of-credit facility for corporate credit cards issued to nib employees for a total of $2.3 million. Outstanding
amounts as at 30 June 2021 are included in Current Liabilities – Payables under Trade Creditors.
Movements in the bank loans (secured) are as follows:
Balance at beginning of period
Proceeds from borrowings
Repayment of borrowings
Exchange differences
Balance at end of period
a) Accounting policy
2021
$m
230.9
–
–
(0.2)
230.7
2020
$m
232.5
67.2
(67.2)
(1.6)
230.9
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over
the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is
deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or
finance costs.
Borrowings are classified as non-current liabilities if the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
b) Bank loans
During the year the Group refinanced its AUD $85.0 million variable rate loan with NAB to extend its maturity date to 16 December
2023. It also has a AUD $80.5 million variable rate loan with NAB with a maturity date of 9 December 2022. Both loans are carried at
amortised cost.
nib nz holdings limited, a wholly-owned subsidiary of nib holdings limited, has a NZD $70.0 million variable rate loan with NAB with a
maturity date of 9 December 2022.
The above loans have the following covenants that must be met by the Group:
Financial Covenant
Ratio as at 30 June 2021
Group Gearing Ratio1 will not be more than 45%
Group Interest Cover Ratio1 will not be less than 3:1.
25.2%
70:1
1. Excludes lease liabilities and associated interest.
nib holdings limited | Annual Report 2021 85
17. Borrowings continued
nib holdings limited has provided a guarantee and indemnity to NAB on behalf of nib nz holdings limited in respect of the NZD
$70.0 million term loan facility.
c) Risk exposure
Information on the sensitivity of the Group’s profit and equity to interest rate risk on borrowings is provided in Note 3.
18. Claims liabilities
Outstanding Claims Liability
Outstanding claims – central estimate of the expected future payment for claims incurred1
Risk margin
Claims handling costs
Gross outstanding claims liability
Outstanding claims – expected payment to the RESA2 in relation to the central estimate
Risk margin
Net outstanding claims liability
Provision for deferred and suspended claims
Provision for deferred and suspended claims
Total claims liabilities
2021
$m
140.8
14.8
2.1
157.7
24.1
1.3
183.1
2020
$m
112.6
9.8
2.0
124.4
21.3
1.4
147.1
34.0
34.0
98.8
98.8
217.1
245.9
1. Includes $0.1 million of outstanding claims for nib Travel’s underwriting company Nomadic Insurance Benefits Limited which is 100% reinsured.
2. Risk Equalisation Special Account (RESA) Levy represents expenses incurred under Risk Equalisation Trust Fund arrangements which are provided for within the legislation to support the principle of
community rating.
a) Outstanding claims liability
Movements in the gross outstanding claims are as follows:
Gross outstanding claims at beginning of period
Risk margin
Administration component
Central estimate at beginning of period
Change in claims incurred for the prior year
Claims paid in respect of the prior year
Claims incurred during the period (expected)
Claims paid during the period
Effect of changes in foreign exchange rates
Central estimate at end of period
Risk margin
Administration component
Gross outstanding claims at end of period
86 nib holdings limited | Annual Report 2021
2021
$m
2020
$m
124.4
122.4
(9.8)
(2.0)
112.6
(2.5)
(107.8)
(8.4)
(1.8)
112.2
2.3
(112.1)
1,804.7
1,576.9
(1,666.0)
(1,466.4)
(0.2)
140.8
14.8
2.1
157.7
(0.3)
112.6
9.8
2.0
124.4
notes to the consolidated financial statementsfor the year ended 30 June 2021
i) Actuarial methods and critical accounting judgements and estimates
Provision is made at the period end for the liability for outstanding claims which is measured as the central estimate of the
expected payments against claims incurred but not settled at the reporting date under private health insurance contracts issued
by the Group. The expected future payments include those in relation to claims reported but not yet paid and claims incurred but
not yet reported. To account for inherent uncertainty in the central estimate a risk margin is added. However, given the uncertainty
in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.
The estimated cost of claims includes allowances for Risk Equalisation Special Account (RESA) consequences and claims handling
expense. The central estimates are calculated gross of any recoveries. A separate estimate and risk margin is made of the amounts
that will be recoverable based upon the gross provision. The Group takes all reasonable steps to ensure that it has appropriate
information regarding its claims exposures.
In calculating the estimated cost of unpaid claims, the Group uses estimation techniques based upon statistical analysis of
historical experience. Allowance is made, however, for changes or uncertainties which may create distortions in the underlying
statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously
settled claims, including changes in the Group’s processes which might accelerate or slow down the development and/or recording
of paid or incurred claims, compared with the statistics from previous periods.
The outstanding claims estimate for Australian segments is derived based on three valuation classes, namely hospital and
prostheses services combined, medical services, and general treatment. For the New Zealand segment the outstanding claims
estimate is derived based on two valuation classes, surgical and medical. This analysis is supplemented by more granular analysis
within classes as appropriate.
As most claims for health funds are generally settled within one year, no discounting of claims is applied as the difference between
the undiscounted value of claims payments and the present value of claims payments is not likely to be material. Accordingly,
reasonable changes in assumptions would not have a material impact on the outstanding claims balance.
nib notified the regulatory authorities in December 2020 that it had become aware of issues in its risk equalisation reporting,
involving the inclusion of certain claims that may be ineligible. At balance date the Group recorded an increase in its risk
equalisation estimate of $3.4 million including risk margin in relation to the matter. The risk margin of the underlying liability has
been estimated to equate to a probability of adequacy of 95% (June 2020: 95%) for the Group.
ii) Actuarial assumptions
The following assumptions have been made in determining the outstanding claims liability for claims incurred 12 months to the
following financial years:
Hospital
%
2021
Medical
%
General
%
Hospital
%
2020
Medical
%
General
%
90.8%
91.8%
98.5%
92.1%
91.6%
98.6%
Australian Residents Health Insurance
Assumed proportion paid to date
Expense rate
Discount rate
Risk margin
0.8%
0.0%
6.5%
0.8%
0.0%
6.5%
Risk equalisation rate
20.8%
20.8%
Allowance for risk equalisation claims eligibility
(incl. risk margin)
Risk margin for risk equalisation
International Students Health Insurance
Assumed proportion paid to date
Expense rate
Discount rate
Risk margin
International Workers Health Insurance
Assumed proportion paid to date
Expense rate
Discount rate
Risk margin
3.4%
6.5%
69.9%
4.0%
0.0%
29.3%
78.2%
3.5%
0.0%
29.3%
3.4%
6.5%
90.5%
4.0%
0.0%
29.3%
88.3%
3.5%
0.0%
29.3%
0.8%
0.0%
6.5%
0.0%
0.0%
0.0%
98.1%
4.0%
0.0%
29.3%
93.2%
3.5%
0.0%
29.3%
1.1%
0.0%
5.5%
1.1%
0.0%
5.5%
27.6%
27.6%
0.0%
6.5%
72.7%
4.0%
0.0%
29.4%
72.1%
4.5%
0.0%
29.4%
0.0%
6.5%
91.5%
4.0%
0.0%
29.4%
86.2%
4.5%
0.0%
29.4%
1.1%
0.0%
5.5%
0.0%
0.0%
0.0%
99.3%
4.0%
0.0%
29.4%
93.4%
4.5%
0.0%
29.4%
nib holdings limited | Annual Report 2021 87
18. Claims liabilities continued
a) Outstanding claims liability continued
NZ Health Insurance
Assumed proportion paid to date
Expense rate
Discount rate
Risk margin
Surgical
%
91.8%
3.2%
0.0%
5.1%
2021
Medical
%
92.0%
3.2%
0.0%
5.1%
Surgical
%
89.0%
3.0%
0.0%
7.0%
2020
Medical
%
88.7%
3.0%
0.0%
7.0%
The risk margin of the underlying liability has been estimated to equate to a probability of adequacy of 95% (June 2020: 95%) for
the Group.
The risk margin within each territory is set at the probability of adequacy adopted for the local accounts and is 95% in Australia
(June 2020: 95%) and 75% in New Zealand (June 2020: 95%) with the benefit of diversification across the Group now negligible
after adjustment to achieve an overall Group probability of adequacy of 95%.
The assumptions show the allowance for ineligible risk equalisation claims at the 95th percentile of sufficiency, expressed as
an additional margin to the estimated outstanding claims expense. The risk margin for risk equalisation is applied to estimated
outstanding risk equalisation liabilities excluding the allowance for ineligible claims.
iii) Impact of changes in key variables relating to insurance liability
The Group conducts sensitivity analysis to quantify the exposure to risk of changes in the key underlying variables. The valuations
included in the reported results are calculated using certain assumptions about these variables as disclosed above. The movement in
any key variable will impact the performance and equity of the Group. The table below describes how a change in each assumption
will affect the insurance liabilities.
Key variable
Description
Impact of movement in variable
Chain ladder
development
factors
Chain ladder development factors were selected based on
observations of historical claim payment experience. Particular
attention was given to the development of the most recent
12 months.
Expense rate Claims handling expenses were calculated by reference to
both historical and forecast total claims handling costs as a
percentage of historical and forecast claims payments.
An increase or decrease in the chain ladder
factors would lead to a higher or lower
projection of the ultimate liability and a
corresponding increase or decrease in
claims expense respectively.
An estimate for the internal costs of handling
claims is included in the outstanding claims
liability. An increase or decrease in the
expense rate assumption would have a
corresponding impact on claims expense.
Discount rate
As most claims for health funds are generally settled within
one year, no discounting of claims is applied as the difference
between the undiscounted value of claims payments and the
present value of claims payments is not likely to be material.
N/A
Risk
equalisation
allowance
Risk margin
In simplified terms, each organisation is required to contribute to
the risk equalisation pool or is paid from the pool to equalise their
hospital claims exposure to policyholders aged over 55 years
of age and in respect of high cost claims. This is the allowance
made in respect of the claims incurred but not yet paid.
An estimate for the risk equalisation cost
is included in the outstanding claims
liability. An increase or decrease in the
risk equalisation allowance would have a
corresponding impact on RESA Levy.
The process of estimating insurance liabilities is uncertain by
nature due to the difficulty of estimating outcomes of events that
will occur in the future. A risk margin is estimated to increase
reserves to a level that is expected to provide a 95% probability of
sufficiency for the outstanding claims liability, based on an analysis
of past group payment experience volatility (June 2020: 95%).
An estimate of the amount of uncertainty in
the determination of the central estimate.
An increase or decrease in the risk margin
would have a corresponding impact on
claims expense.
88 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021
The table below describes how a change in each assumption will affect the profit after tax.
Variable
Chain ladder development factors
Expense rate
Risk equalisation allowance
Risk margin
Movement in
variable
2021
Profit after tax
$m
2020
Profit after tax
$m
+0.5%
-0.5%
+1.0%
-1.0%
+2.5%
-2.5%
+1.0%
-1.0%
(13.0)
13.0
(1.1)
1.1
(1.9)
1.9
(1.2)
1.2
(12.0)
12.0
(0.9)
0.9
(1.4)
1.4
(1.0)
1.0
b) Provision for deferred and suspended claims
i) Critical accounting judgements and estimates
On 12 March 2020, the World Health Organisation declared the outbreak of coronavirus (COVID-19) a global pandemic. Due to the
temporary closure of elective surgery and reduced access to ancillary benefits, Private Health Insurers (PHIs) in both Australia and
New Zealand experienced unusually low claims volumes in March, April and May 2020 with unusually low claim volumes again
experienced during the various State lockdowns in FY21.
Given the lower claims activity, the Group believes it has an obligation to recognise a provision for deferred claims based on a
present constructive obligation resulting from a past event under relevant accounting standards. In nib’s case, the event (impacts
of COVID-19 on the availability of and access to procedures since March 2020) has triggered the deferral of claims activity and
benefits that would have otherwise been provided to members. If cover remains in place, a responsibility exists to provide for these
claims that would have ordinarily been incurred under normal circumstances. nib members with continuing cover would have had
an expectation to use and therefore claim on hospital, surgical and ancillary services had the pandemic not arisen, notwithstanding
the backlog of activity. The provision is therefore management’s estimate of the cost of claims which might have occurred up until
30 June but did not as a result of COVID-19 impacts and are therefore deferred at that date.
In estimating the provision, four key steps were undertaken:
1.
2.
3.
Estimating the gross reduction in claims due to temporary closure of elective surgery and reduced access to ancillary
benefits. Incurred claims estimates produced across the period from March 2020 to 30 June 2021 as part of the outstanding
claims provisioning process were compared to the forecast produced leading up to March 2020 when COVID-19 impacted
claims activity. The difference between forecast and actual incurred was calculated by modality (claim type) to estimate the
financial impact of COVID-19 across the March 2020 to June 2021 period.
Estimating risk equalisation levy impact (Australian claims only). The risk equalisation impact of COVID-19 was estimated
by applying consistent ratios used for the risk equalisation amounts in outstanding claims.
Applying a deferral rate (percentage of the gross reduction in claims to date due to COVID-19 that is expected to be
caught up in later periods). Certain factors need to be considered when assessing that not all estimated savings translate to
a claims payment backlog at balance date. For example:
a.
b.
c.
there has continued to be lapses of memberships in the normal course of business;
some types of private health benefits, particularly in the ancillary category, are less likely to have been deferred;
catch up of benefits between ancillary and hospital categories differs due to capacity in facilities, lead time to arrange
procedures etc.
nib’s deferral rates have been estimated as follows:
– 34% (June 2020: 80%) of gross Australian claims reduction in 2021; and
– 90% (June 2020: 90%) of New Zealand,
to be deferred on the basis that this represents the 2021 and 2022 financial year claims which are expected to be inflated
above normal trends due to COVID-19.
4.
Deducting the catch up of claims to date. Incurred claims estimates for this year ended 30 June 2021 were compared to
February 2020 forecast incurred claims (pre COVID-19 impacted claims activity). The difference between actual incurred and
prior period incurred was calculated by modality (claim type) and used to estimate the catch up of claims to date.
At 30 June 2021 the liability remaining is only for Australian hospital claims and associated risk equalisation levy. No liability
remains for Australian ancillary claims and New Zealand claims.
Risks and uncertainties have been taken into account in the measurement of the liability and are reflected in the key inputs and
judgements. The key risks associated in estimating the components of the provision is the under/over estimation of the claims
deferral rate and to a lesser extent, the under/over estimation of the claims savings (net of risk equalisation impact).
nib holdings limited | Annual Report 2021 89
18. Claims liabilities continued
Movements in the deferred and suspense claims are as follows:
Net Deferred and Suspended Claims at beginning of period
Claims handling costs
Gross Deferred and Suspended Claims at beginning of period
Change in deferred and suspended claims estimate for prior period
Deferred and suspended claims provision made during the period
Deferred and suspended claims paid during the period
Gross Deferred and Suspended Claims at end of period
Claims handling costs
Net Deferred and Suspended Claims at end of period
2021
$m
98.8
(0.8)
98.0
(46.1)
24.6
(42.7)
33.8
0.2
34.0
2020
$m
–
–
–
–
98.0
–
98.0
0.8
98.8
The table below describes how a change in the estimate relating to deferred and suspended claims provision disclosed above will
affect the profit after tax.
Variable
Reduction in claims activity
Claims deferral rate
Catch up of claims to date
19. Unearned premium liability and unexpired risk liability
a) Unearned premium liability
Current
Non-current
The unearned premium liability reflects premiums paid in advance by customers.
Movements in the unearned premium liability are as follows:
Unearned premium liability as at 1 July
Deferral of premiums on contracts written in the period
Earning of premiums written in previous periods
Unearned premium liability as at 30 June
b) Unexpired risk liability
Movement in
variable
2021
Profit after tax
$m
2020
Profit after tax
$m
+2.0%
-2.0%
+10.0%
-10.0%
+20.0%
-20.0%
(0.5)
0.5
(7.0)
7.0
4.8
(4.8)
(1.3)
1.3
(7.8)
7.8
–
–
2021
$m
2020
$m
218.1
223.3
31.3
34.8
2021
$m
258.1
214.6
(223.3)
249.4
2020
$m
257.4
220.0
(219.3)
258.1
No deficiency was identified as at 30 June 2021 and 2020 that resulted in an unexpired risk liability needing to be recognised.
90 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021
c) Critical accounting judgements and estimates
A liability adequacy test is required to be performed for the period over which the insurer is ‘on risk’ in respect of premiums paid in
advance. At each reporting date, the adequacy of the unearned premium liability is assessed by considering current estimates of all
expected future cash flows relating to future claims arising from the rights and obligations created. If the sum of the present value
of the expected future cash flows relating to future claims plus the additional risk margin to reflect the inherent uncertainty in the
central estimate exceeds the unearned premium liability, less related intangible assets and related deferred acquisition costs, then
the unearned premium is deemed to be deficient, with the deficiency being recorded in the income statement and an unexpired
risk liability created. The Group applies a risk margin to achieve a 75% (June 2020: 75%) probability of adequacy for future claims
which is lower than the 95% achieved in the estimate of the outstanding claims liability, refer to Note 18(a)(ii) as the former is
in effect an impairment test used to test the sufficiency of the unearned premium liability whereas the latter is a measurement
accounting policy used in determining the carrying value of the outstanding claims liability. No deficiency was identified as at
30 June 2021 and 2020 that resulted in an unexpired risk liability needing to be recognised.
This test is also extended beyond recognised unearned premium liability to include premiums renewable until the next repricing
review, usually 1 April each year.
20. Premium payback liability
Current
Non-current
Movements in the premium payback liability are as follows:
Gross premium payback liability at beginning of period
Value of payments currently being processed
Risk margin
Central estimate at beginning of period
Funding/new accrued
Unwind discount rate
Interest rate movement impact
Premium payback payments
Others
Effect of changes in foreign exchange rates
Central estimate at end of the period
Value of payments currently being processed
Risk margin
Total premium payback liability as at end of period
Risk exposure
2021
$m
8.2
9.5
2021
$m
20.1
(1.1)
(0.6)
18.4
2.7
0.2
(0.5)
(4.4)
(0.3)
(0.1)
16.0
1.2
0.5
17.7
2020
$m
3.5
16.6
2020
$m
19.3
(0.7)
(0.5)
18.1
2.3
0.3
0.8
(2.2)
(0.5)
(0.4)
18.4
1.1
0.6
20.1
Information about the Group’s exposure to interest rate risk in relation to premium payback liability is provided in Note 3(b).
a) Actuarial methods and critical accounting judgements and estimates
The premium payback liability represents the accrued amount of premium expected to be repaid to certain New Zealand health
insurance policyholders. A number of nib nz limited’s health insurance policies have a benefit whereby policyholders receive a
proportion of premiums paid less claims received over the life of their policy, ‘premium payback’, if certain conditions are met.
This liability represents a long term health insurance contract liability. The liability was determined based on the discounted value of
accumulated excess of premiums over claims at an individual policy level, adjusted for GST recoveries and expected future lapses.
A risk margin at 95% probability of sufficiency was estimated by assuming there are no future lapses. Most of the premium
payback reserve is held in respect of a group of customers where the historical lapse rate is already very low.
nib holdings limited | Annual Report 2021 91
20. Premium payback liability continued
The following assumptions have been made in determining the premium payback liability:
Lapse rate until 3 years from premium payback date
Lapse rate within 3 years of premium payback date
Expense rate
Discount rate for succeeding and following year
Risk margin
2021
2020
2.0% - 10.0% 2.0% - 10.0%
0.0% - 1.0%
0.0% - 1.0%
0.0%
0.0%
0.57% - 1.00%
0.3% - 0.4%
2.7%
3.1%
The risk margin has been estimated to equate to a 95% probability of adequacy (2020: 95%).
b) Sensitivity analysis
The Group conducts sensitivity analysis to quantify the exposure to risk of changes in the key underlying actuarial assumptions.
The movement in any key variable will impact the performance and equity of the Group. The table below provides a description of the
processes used to determine these assumptions, as well as how a change in each assumption will affect the insurance liabilities.
Key variable
Description
Impact of movement in variable
Lapse rate
Discount rate
Rate used in calculating the discounted provision
to allow for expected lapses, based on historical
experience.
An increase or decrease in the lapse assumption would
have an inverse impact on the premium payback liability
and risk margin.
Rate used in calculating the discounted provision
to allow for expected investment income, based
on current yields on New Zealand government
debt (risk free rates).
An increase or decrease in the discount rate assumption
would have an inverse impact on the premium payback
liability.
Risk margin
An estimate of the amount of uncertainty in the
determination of the central estimate.
An increase or decrease in the risk margin would have a
corresponding impact on the premium payback liability.
The table below describes how a change in each assumption will affect the profit after tax.
Variable
Lapse rate
Discount rate
Risk margin
2021
Profit
after tax
$m
2020
Profit
after tax
$m
0.3
(0.3)
0.6
(0.5)
(0.1)
0.1
0.4
(0.4)
0.7
(0.7)
(0.1)
0.1
Movement in
variable
+1.0%
-1.0%
+1.0%
-1.0%
+1.0%
-1.0%
c) Unexpired risk liability
A liability adequacy test was performed allowing for the expected cash flows of each policy over the entire product life.
The future cash flows include:
• Expected future payments for claims including risk margin;
• Expected future payments for policy paybacks and management expenses; and
• Expected future revenue from premiums and investment income.
No deficiency was identified at 30 June 2021 (2020: nil) that resulted in an unexpired risk liability needing to be recognised.
92 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 21. Provision for employee entitlements
Current
Long service leave
Termination benefits
Non-current
Long service leave
2021
$m
2020
$m
4.8
2.8
7.6
3.2
3.2
4.8
2.0
6.8
3.2
3.2
Amounts not expected to be settled within the next 12 months
The current provision for long service leave includes all unconditional entitlements where employees have completed the required
period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount is
presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past experience,
the Group does not expect all employees to take the full amount of the provision or require payment within the next 12 months. The
following amounts reflect leave that is not to be expected to be taken or paid within the next 12 months.
Long service leave obligation expected to be settled after 12 months
2021
$m
4.4
4.4
2020
$m
4.2
4.2
a) Accounting policy
i) Short-term
obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave are recognised in
payables in respect of employees’ services up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled. The portion not expected to be settled within
12 months is discounted based on expected settlement dates. Liabilities for non-accumulating sick leave
are recognised when the leave is taken and measured at the rate paid or payable.
ii) Other long-term
employee benefit
obligations
The liability for long service leave is the amount of the future benefit that employees have earned in
return for their service in the current and prior periods. The liability is calculated using expected future
increases in wage and salary rates and expected settlement dates, and is discounted using G100 treasury
discount rates at the balance sheet date which have the maturity dates approximating to the terms of
nib’s obligations.
iii) Bonus plans
A liability for employee benefits in the form of bonus plans is recognised in other creditors when at least
one of the following conditions is met:
•
•
there are formal terms in the plan for determining the amount of the benefit, or
the amounts to be paid are determined before the time of completion of the financial report, or
• past practice gives clear evidence of the amount of the obligation.
Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts
expected to be paid when they are settled.
Liabilities for termination benefits, not in connection with the acquisition of an entity or operation, are
recognised when a detailed plan for the terminations has been developed and a valid expectation has
been raised with those employees effected that the terminations will be carried out without possibility of
withdrawal. The liabilities for termination benefits are recognised as current provisions, as liabilities for
termination benefits are expected to be settled within 12 months of reporting date.
iv) Termination
benefits
nib holdings limited | Annual Report 2021 93
22. Contributed equity
a) Share capital
Ordinary shares
Fully paid
Other equity securities
Treasury shares
Total contributed equity
b) Movements in share capital
Date
Details
1 Jul 2019
Opening balance
30 Sep 2019
Shares issued – Dividend reinvestment plan
7 Apr 2020
Shares issued – Dividend reinvestment plan
30 Jun 2020
Balance
1 Jul 2020
Opening balance
6 Oct 2020
Shares issued – Dividend reinvestment plan
6 Apr 2021
Shares issued – Dividend reinvestment plan
30 June 2021
Balance
c) Treasury shares
2021
$m
2020
$m
132.1
127.4
(4.9)
(6.0)
127.2
121.4
No. of shares
Price $
455,551,378
533,454
734,694
456,819,526
456,819,526
346,540
576,137
457,742,203
7.32
4.30
4.22
5.52
$m
120.3
3.9
3.2
127.4
127.4
1.5
3.2
132.1
Treasury shares are shares in nib holdings limited that are held by the nib Holdings Ltd Share Ownership Plan Trust (trust) for the
purpose of issuing shares under the Group’s Executive management Short-Term Incentive and Long-Term Incentive share plans.
See Note 35 for more information.
Date
Details
30 Jun 2019
Balance
Acquisition of shares by the Trust
Employee share issue – LTIP
Employee share issue – STI
30 Jun 2020
Balance
Acquisition of shares by the Trust
Employee share forfeiture
Employee share issue – LTIP
Employee share issue – STI
30 June 2021
Balance
d) Accounting policy
i) Ordinary shares
No. of shares
920,760
1,062,658
(628,895)
(283,080)
1,071,443
223,679
52,071
(141,334)
(192,022)
1,013,837
$m
5.1
6.3
(3.9)
(1.5)
6.0
1.1
–
(1.0)
(1.2)
4.9
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
are shown in equity as a deduction, net of tax, from the proceeds. If the entity reacquires its own equity
instruments, for example as the result of a share buy-back, those instruments are deducted from equity and
the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration
paid including any directly attributable incremental cost (net of income taxes) is recognised directly in equity.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
company in proportion to the number of and amounts paid on the shares held. On a show of hands every
holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote.
ii) Employee share trust The Group has formed a trust to administer the Group’s executive management Short-Term Incentive and
Long-Term Incentive share plans. This trust is consolidated, as the substance of the relationship is that the
trust is controlled by the Group.
Shares held by the nib Holdings Ltd Share Ownership Plan Trust are disclosed as treasury shares and
deducted from contributed equity.
94 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 23. Retained profits
Balance at the beginning of the year
Net profit attributable to owners of nib holdings limited
Adjustment on adoption of AASB 16
Dividends
Balance at the end of the year
1 Comparative information has been restated. For further details, refer to Note 31.
24. Reserves
Share-based payments
Share-based payments exercised
Foreign currency translation
Movements in reserves
Share-based payments
Balance at the beginning of the year
Performance rights expense
Transfer to share-based payments exercised reserve on exercise of performance rights
Balance at the end of the financial year
Share-based payments exercised
Balance at the beginning of the year
Transfer from share-based payments reserve on exercise of performance rights
Issue of shares held by nib Holdings Ltd Share Ownership Plan Trust to employees
Balance at the end of the financial year
Foreign currency translation
Balance at the beginning of the year
Currency translation differences arising during the year – gross
Deferred tax
Balance at the end of the financial year
Nature and purpose of reserves
2021
$m
470.5
161.1
–
(63.9)
567.7
2021
$m
2.6
(10.4)
3.0
(4.8)
2021
$m
1.5
1.9
(0.8)
2.6
(10.2)
0.8
(1.0)
(10.4)
3.2
(0.2)
–
3.0
20201
$m
497.8
87.9
(10.5)
(104.7)
470.5
2020
$m
1.5
(10.2)
3.2
(5.5)
2020
$m
3.3
(0.4)
(1.4)
1.5
(7.7)
1.4
(3.9)
(10.2)
4.9
(2.1)
0.4
3.2
Notes
8(a)(iii)
i)
Share-based
payments
The share-based payments reserve is used to recognise the fair value of performance rights and bonus
share rights issued to employees but not exercised.
ii) Share-based
payments exercised
The share-based payments exercised reserve is used to recognise the difference between fair value of
performance rights and bonus share rights accumulated in the share based payments reserve and cost
of exercising the rights.
iii) Foreign currency
translation
Exchange rate differences arising on translation of foreign controlled entities are recognised in other
comprehensive income as described in Note 1(c) and accumulated in a separate reserve within equity.
The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
nib holdings limited | Annual Report 2021 95
25. Dividends
a) Ordinary shares
Final dividend for the year ended 30 June 2020 of 4.0 cents (2019 – 13.0 cents) per fully paid share paid
on 6 October 2020
Fully franked based on tax paid at 30%
18.3
59.2
Interim dividend for the year ended 30 June 2021 of 10.0 cents (2020 – 10.0 cents) per fully paid share paid
on 6 April 2021
2021
$m
2020
$m
Fully franked based on tax paid at 30%
Total dividends provided for or paid
b) Dividends not recognised at year end
In addition to the above dividends, since the end of the year the Directors have recommended the payment of a
final dividend of 14.0 cents (2020 – 4.0 cents) per fully paid ordinary share, fully franked based on tax paid at 30%.
The aggregate amount of the proposed dividend expected to be paid on 5 October 2021 out of retained profits at
30 June 2021, but not recognised as a liability at the end of the year, is:
45.6
63.9
2021
$m
45.5
104.7
2020
$m
64.1
18.3
c) Franked dividends
The franked portion of the final dividends recommended after 30 June 2021 will be franked out of existing franking credits or out of
franking credits arising from the payment of income tax in the year ending 30 June 2021.
Franking credits available for subsequent financial years to equity holders of parent entity based on a tax rate of 30%
2021
$m
2020
$m
121.4
105.4
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
• Franking credits that will arise from the payment of the amount of the provision for income tax;
• Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
• Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
d) Accounting policy
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity,
on or before the end of the financial year but not distributed at balance date.
96 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 26. Earnings per share
Profit from continuing operations attributable to the ordinary equity holders of the company
used in calculating basic/diluted EPS
Weighted average number of ordinary shares
Basic/Diluted EPS
1 Comparative information has been restated. For further details, refer to Note 31.
a) Accounting policy
2021
20201
$m
#m
cents
161.1
457.2
35.2
87.9
456.1
19.3
i) Basic earnings
Basic earnings per share is calculated by dividing:
per share
•
the profit attributable to equity holders of the company, excluding any costs of servicing equity
other than ordinary shares
• by the weighted average number of ordinary shares outstanding during the financial year.
ii) Diluted earnings
per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account:
•
•
the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
b) Information concerning the classification of shares
i) Performance rights
Performance rights granted to employees under the nib holdings Long-Term Incentive Plan are
considered to be potential ordinary shares and are only included in the determination of diluted
earnings per share to the extent to which they are dilutive. The performance rights have not been
included in the determination of basic earnings per share. Details relating to the performance rights are
set out in the Remuneration Report on page 34.
The total 2,011,152 performance rights granted (2020 – 1,790,138) are not included in the calculation
of diluted earnings per share because they are contingently issuable ordinary shares and conditions
were not satisfied at 30 June 2021. These performance rights could potentially dilute basic earnings
per share in the future.
nib holdings limited | Annual Report 2021 97
27. Capital management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group has a number of levers, including adjusting the amount of dividends paid
to shareholders, returning capital to shareholders, issuing new shares, selling assets, raising or reducing debt or buying back shares.
nib holdings limited
At 30 June 2021 the Group had available capital of $65.7 million above our internal benchmark (after allowing for the payment of a
fully franked final ordinary dividend of 14.0 cents per share, totalling $64.1 million, in October 2021).
Below is a reconciliation of net assets to available capital as at the reporting end date (after allowing for payment of a final dividend):
Net assets
Less:
nib health fund capital required
nib nz capital required
Investment in associates
Capital required looking forward 12 months
nib nz intangibles
iihi intangibles
nib travel intangibles
Charitable foundation
Borrowings
Other assets and liabilities
Final dividend
Available capital (after allowing for payment of final dividend)
nib health funds limited
2021
$m
706.2
(514.4)
(100.0)
(17.8)
(9.7)
(31.5)
(18.4)
(102.7)
(16.1)
230.7
3.5
(64.1)
65.7
2020
$m
603.1
(444.5)
(94.9)
(17.5)
(24.7)
(32.9)
(21.4)
(113.5)
(16.7)
230.9
4.1
(18.3)
53.7
nib health funds limited, controlled entities, are required to comply with the Solvency and Capital Adequacy Standards under
Schedule 2 and 3 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007, the Rules are made for the
purposes of Part 4-4 of the Private Health Insurance Act 2007.
To comply with the Solvency
Standard, nib health funds
limited:
(i) must ensure that, at all times, the value of cash must be equal to or greater than
a specified cash management amount, plus any solvency supervisory adjustment
(Section 4.2 of the Solvency Standard);
(ii) must have, and comply with, a board endorsed, liquidity management plan designed to
ensure compliance with the solvency requirements described above, and set minimum
liquidity requirements and management action triggers (Section 4.3 of the Solvency
Standard).
To comply with the Capital
Adequacy Standard, nib health
funds limited:
(i) must ensure that at all times the value of its assets is not less than the amounts calculated
under Section 4.2 (a) and (b) of the Capital Adequacy Standard (Capital Adequacy
Requirement);
(ii) must have, and comply with, a written, Board endorsed capital management policy.
98 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 nib health funds limited has a capital management plan which establishes a target for capital held in excess of the regulatory
requirement; the aim is to keep a sufficient buffer in line with the Board’s attitude to and tolerance for risk. The internal capital target
ensures nib has a minimum level of capital given certain stressed capital scenarios. This currently approximates to 21.2% of total
projected premiums for the next 12 months.
Any capital in excess of the benchmark, taking a 12-month forward looking view, will be reduced by way of dividend to nib holdings
limited. nib health funds limited paid dividends of $30.7 million in August 2020 and $58.8 million in February 2021 to nib holdings limited.
The surplus assets over benchmark at 30 June 2021 and 2020 were as follows:
2021
$m
2020
$m
Total assets nib health funds limited (excluding unclosed business contributions – unearned)
1,216.5
1,198.8
Capital adequacy requirement
Surplus assets for Capital Adequacy1
Net assets nib health funds limited
Internal capital target
Surplus assets over internal capital target
1. Surplus assets for Capital Adequacy based on most recent APRA return.
nib nz limited
823.7
392.8
540.2
514.4
25.8
792.6
406.2
461.4
444.5
16.9
nib nz limited, a controlled entity, is required to comply with the Solvency Standard for Non-Life Insurance Business (2014) published
by the Reserve Bank of New Zealand (RBNZ). The Solvency Standards determine the Minimum Solvency Capital (MSC) required.
A requirement of nib nz limited’s insurance licence is that it maintains capital above the MSC.
The overriding objective underpinning
nib nz limited’s capital management
approach is to operate with a level
of capital judged to be commercially
prudent and within the bounds of the
Board’s risk appetite which achieves a
balance between:
Maintaining a buffer above the RBNZ MSC for nib nz limited;
Maintaining a level of capital that ensures an appropriate financial strength rating;
and
Avoiding holding an excessive level of capital, which would otherwise act to reduce
returns on capital for the Group.
Any capital in excess of the benchmark, taking a 12-month forward looking view, will be reduced by way of dividend to
nib nz holdings limited, unless management decide to retain funds for strategic purposes. nib nz limited paid dividends of
NZD $4.7 million in February 2021 to nib nz holdings limited.
The surplus assets over benchmark at 30 June 2021 and 2020 are as follows:
Actual Solvency Capital
Minimum Solvency Capital
Solvency Margin
Net assets nib nz limited
Capital Adequacy Coverage Ratio
Internal benchmark
Internal benchmark requirement
Surplus assets over internal benchmark
2021
$m
38.7
13.2
25.5
111.4
2.93
2020
$m
30.4
12.6
17.8
97.1
2.42
2.25xMSC
2.25xMSC
29.6
9.1
28.3
2.1
nib holdings limited | Annual Report 2021 99
28. Commitments for expenditure
a) Capital expenditure commitments
Payable:
– not longer than one year
b) Charitable foundation commitments
Payable:
– not longer than one year
– longer than one year and not longer than five years
29. Contingent liabilities
a) Guarantees and financial support
2021
$m
1.9
1.9
2021
$m
–
–
–
2020
$m
1.5
1.5
2020
$m
0.9
0.2
1.1
nib holdings limited has provided a guarantee and indemnity to NAB on behalf of nib nz holdings limited in respect of the
NZD $70.0 million term loan facility.
nib holdings limited has in place a commitment to fund advances up to NZD $10.0 million to nib nz holdings limited upon written
request. NZD $2.1 million has been drawn down as at 30 June 2021. Any advances would be on the same terms as contained in
current intercompany loans between nib holdings limited and nib nz holdings limited.
nib holdings limited has given an undertaking to extend financial support to a number of other subsidiaries within the Group, and
Footprints Fundraising Inc. (Footprints) by subordinating repayment of debts owed by the entities to nib holdings limited, in favour
of all other creditors. The amount owed from Footprints at balance date is $24,135. This undertaking has been provided as a result
of each of these subsidiaries experiencing deficiencies of capital and reserves, and is intended to enable the entities to continue
their operations and fulfil all financial obligations now and in the future. The undertaking for Footprints is valid from 1 January 2021
to 31 December 2021.
30. Events occurring after the balance sheet date
In July 2021, the Board approved the return of $15.0 million in additional claims savings to members due to COVID-19 impacts by
way of an ex gratia payment on their next premium payment between the period 1 September and 31 December 2021.
There have been no other matters or circumstances that have arisen since the end of the financial year that has significantly affected,
or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial years.
100 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 31. Change in accounting policy
The Group previously capitalised costs incurred in configuring or customising Software-as-a-Service (SaaS) arrangements as
intangible assets, as the Group considered that it would benefit from those costs to implement the SaaS arrangements over
the expected renewable term of the arrangements. Following the IFRS Interpretations Committee (IFRIC) agenda decision on
Configuration or Customisation Costs in a Cloud Computing Arrangement in March 2021, the Group has reconsidered its accounting
treatment and adopted the treatment set out in the IFRS IC agenda decision, which is to recognise those costs as intangible
assets only if the implementation activities create an intangible asset that the entity controls and the intangible asset meets the
recognition criteria. Costs that do not result in intangible assets are expensed as incurred, unless they are paid to the suppliers of
the SaaS arrangement to significantly customise the cloud-based software for the Group, in which case the costs are recorded as a
prepayment for services and amortised over the expected renewable term of the arrangements.
As a result of this change in accounting policy, the Group has determined that costs totalling $9.0 million ($4.3 million relating to FY21
and $4.7 million to prior periods, of which $3.2 million relates to FY20 and $1.5 million to FY19) relating to the implementation of SaaS
arrangements would need to be expensed when they were incurred.
The change in policy has been applied retrospectively and comparative information has been restated. This had the following impact
on the amounts recognised in the financial statements:
Consolidated Income Statement
Other underwriting expenses
Underwriting expenses
Underwriting result
Operating profit
Profit before income tax
Income tax expense
Profit for the year
Profit/(loss) for the year is attributable to:
Owners of nib holdings limited
Earnings per share for profit from continuing operations attributable to the ordinary equity
holders of the company
Basic earnings per share
Diluted earnings per share
Earnings per share for profit attributable to the ordinary equity holders of the company
Basic earnings per share
Diluted earnings per share
Restated
2020
$m
(148.5)
(317.0)
Change
2020
$m
(3.2)
(3.2)
Previously
reported
2020
$m
(145.3)
(313.8)
170.8
(3.2)
174.0
114.9
(3.2)
118.1
121.8
(34.8)
87.0
87.9
87.0
(3.2)
1.0
(2.2)
(2.2)
(2.2)
125.0
(35.8)
89.2
90.1
89.2
Cents
Cents
Cents
19.3
19.3
19.3
19.3
(0.5)
(0.5)
(0.5)
(0.5)
19.8
19.8
19.8
19.8
nib holdings limited | Annual Report 2021 101
31. Change in accounting policy continued
Consolidated Balance Sheet
ASSETS
Intangible assets
Total assets
LIABILITIES
Current tax liabilities
Total liabilities
Net assets
EQUITY
Retained profits
Capital and reserves attributable to owners of nib holdings limited
Total equity
Consolidated Statement of Cash Flows
Cash flows from operating activities
Payments to suppliers and employees (inclusive of goods and services tax)
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Payments for property, plant and equipment and intangibles
Net cash inflow/(outflow) from investing activities
32. Remuneration of auditors
a) PricewaterhouseCoopers Australia
Audit and review of financial reports
Other statutory assurance services
Other services
Tax compliance services
International tax consulting and tax advice on mergers and acquisitions
Accounting advice and support including one-off transactions
Regulatory returns advice
Regulatory returns agreed upon procedures
Restated
2020
$m
Change
2020
$m
334.7
1,677.8
22.5
1,074.7
(4.7)
(4.7)
(1.4)
(1.4)
Previously
Reported
2020
$m
339.4
1,682.5
23.9
1,076.1
603.1
(3.3)
606.4
470.5
586.4
603.1
(3.3)
(3.3)
(3.3)
Restated
2020
$m
Change
2020
$m
(452.5)
207.6
(23.0)
(59.4)
4.0
4.0
(4.0)
(4.0)
473.8
589.7
606.4
Previously
Reported
2020
$m
(448.5)
211.6
(27.0)
(63.4)
2021
$
2020
$
993,865
153,988
837,697
180,400
12,563
–
–
24,786
21,420
–
1,416
47,940
24,480
–
Total remuneration of PricewaterhouseCoopers Australia
1,206,622
1,091,933
b) Network firms of PricewaterhouseCoopers
Audit and review of financial reports
Other statutory assurance services
Total remuneration of network firms of PricewaterhouseCoopers
Total auditors’ remuneration
102 nib holdings limited | Annual Report 2021
336,534
13,258
349,792
289,521
12,996
302,517
1,556,414
1,394,450
notes to the consolidated financial statementsfor the year ended 30 June 2021 33. Interest in other entities
a) Subsidiaries and trusts
The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance
with the accounting policy described in Note 1(b):
nib holdings limited
nib health funds limited
nib servicing facilities pty limited
nib Life pty limited
nib Global Pty Limited
IMAN Australian Health Plans Pty Limited
nib nz holdings limited
nib nz limited
nib Options Pty Limited
Realsurgeons Pty Limited
Realself Pty Limited
nib Options Holdings (Thailand) Co Limited
nib Options (Thailand) Co Limited
Digital Health Ventures Pty Limited
nib Philippines Pty Limited
nib Asia Pty Limited
Nuo Ban Business Information Consulting (Shanghai) Co. Ltd
nib International Student Services Pty Ltd
nib Travel Pty Limited (formerly World Nomads Group Pty Limited)
WNG Services Pty Limited
nib International Assistance Pty Limited
Suresave Pty Limited
SureSave Net Limited
Sure-Save.net Pty Ltd
Travel Insurance Direct Holdings Pty Limited
Travel Insurance Direct Pty Ltd
Travel Insurance Direct (New Zealand) Ltd
Cheap Travel Insurance Pty Limited
nib Travel Insurance Distribution Pty Limited
Surecan Technology Pty Ltd
The World Nomads Group Holdings Pty Ltd
World Nomads Pty Ltd
World Nomads Inc
World Nomads Limited
World Nomads (Canada) Ltd
WorldNomads.com Pty Ltd
nib Travel Services (Australia) Pty Limited
Get Insurance Group Pty Limited
World Experiences International Holdings Pty Ltd
World Experiences Seguros De Viagrem Brasil LTDA
nib Travel Services Limited
Nomadic Insurance Benefits Holdings Limited
nib Travel Services Europe Limited
World Nomads Travel Lifestyle (Europe) Ltd
nib Travel Services Ireland Limited
Travellr Pty Limited
Travel Insurance Compared Pty Limited
TravelClear Pty Limited
Hello Travel Insurance Pty Limited
World Experiences Pty Limited
World Experiences Group Pty Limited
World Experiences Travel Pty Limited
Place of Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Thailand
Thailand
Australia
Australia
Australia
China
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
United States of America
United Kingdom
Canada
Australia
Australia
Australia
Australia
Brazil
Cayman Islands
Ireland
Ireland
Ireland
Ireland
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Beneficial ownership by
Consolidated entity
2021
%
2020
%
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
nib holdings limited | Annual Report 2021 103
33. Interest in other entities continued
nib holdings limited also controls the following trusts:
• nib Holdings Ltd Share Ownership Plan Trust
• nib salary sacrifice plan and matching plan trust
• nib Salary Sacrifice (NZ) and Matching Plan (NZ) Trust
• nib holdings – nib nz Employee Share Purchase Scheme Trust
b) Consolidation of nib foundation trust and nib foundation limited
The constitution of nib foundation limited (as trustee for the nib foundation trust) is to enable receipt of unclaimed dividends of
the parent entity (nib holdings limited) to fund charitable donations to the community. The parent is required to consolidate the nib
foundation trust. The assets of the nib foundation trust are shown as restricted in use and the retained earnings are shown as a
restricted reserve of the Group given they can only be distributed for charitable purposes under the constitution of nib foundation trust
and are not available to owners of nib holdings limited.
c) Interest in associates and joint ventures
Set out below are the associates and joint ventures of the Group as at 30 June 2021 which, in the opinion of the Directors, are
material to the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the
Group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is
the same as the proportion of voting rights held.
Name of entity
Honeysuckle Health Pty Ltd
Aohua Insurance Consulting Co Ltd
(formerly Sino-Australia Insurance
Consulting Co., Ltd)
Kangaroo Technologies Ltd (formerly
Kangaroo Insurance Broker Co., Ltd.)
Total material equity accounting
investments
Place of
business/
country of
incorporation
Australia
% of ownership interest
2021
50.0%
2020
Nature of
relationship
Measurement
method
50.0% Joint venture
Equity
China
75.1%
75.1% Joint venture
Equity
China
24.9%
24.9% Joint venture
Equity
Carrying amount
$m
2021
5.6
8.2
4.0
2020
8.4
6.4
2.1
17.8
16.9
Honeysuckle Health Pty Ltd is a specialist healthcare data science and services company. It is a strategic investment complementing
the Group’s health insurance business.
Aohua Insurance Consulting Co Ltd and Kangaroo Technologies Ltd currently offers health checks and will offer lump-sum critical
illness products across China. It is a strategic investment which utilises the Group’s knowledge and expertise in health insurance but
will limit the Group’s exposure to underwriting risk through a reduced equity holding.
During the financial year nib Asia Pty Limited (a wholly-owned subsidiary) invested a further $3.8 million in Aohua Insurance
Consulting Co Ltd and $1.9 million in Kangaroo Technologies Ltd for the acquisition of an underwriting business, whilst maintaining
ownership interest percentage.
104 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 i) Summarised financial information for associates and joint ventures
The tables below provide summarised financial information for those joint ventures and associates that are material to the Group.
The information disclosed reflects the amounts presented in the financial statements of the relevant associates and joint ventures and
not the Group’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity
method, including fair value adjustments and modifications for differences in accounting policy.
Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets
Investment
Profit/(loss) for the period
Other comprehensive income
Dividends paid
Closing net assets
Group’s share in %
Group’s share in $
Goodwill
Carrying amount
Summarised statement of comprehensive income
Revenue
Interest income
Depreciation and amortisation
Interest expense
Income tax expense
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) for the period
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Aohua Insurance Consulting Co Ltd
2020
$m
2021
$m
Honeysuckle Health Pty Ltd
2021
$m
12.9
0.9
13.8
0.7
2.4
0.3
2.7
0.6
2020
$m
17.8
0.2
18.0
0.8
1.4
0.1
1.5
0.4
5.3
5.1
10.4
1.0
0.3
0.1
0.4
–
11.2
16.9
11.0
16.9
–
(5.7)
–
–
–
20.0
(3.1)
–
–
11.2
16.9
8.6
5.1
(2.7)
–
–
11.0
Kangaroo Technologies Ltd
2021
$m
10.8
2.3
13.1
5.3
2.5
–
2.5
–
15.9
8.3
7.6
–
–
–
15.9
2020
$m
2.6
8.1
10.7
0.1
2.5
–
2.5
–
8.3
9.7
–
(1.4)
–
–
8.3
4.8
3.4
8.2
0.7
0.3
–
0.3
–
8.6
10.2
–
(1.6)
–
–
8.6
50.0%
50.0%
75.1%
75.1%
24.9%
24.9%
5.6
–
5.6
5.5
–
(0.3)
–
–
(5.7)
–
(5.7)
–
(5.7)
8.4
–
8.4
–
–
(0.1)
–
–
(3.1)
–
(3.1)
–
(3.1)
8.2
–
8.2
6.6
–
(0.1)
(0.1)
–
(2.7)
–
(2.7)
–
(2.7)
6.4
–
6.4
1.2
0.1
(0.1)
–
–
(1.6)
–
(1.6)
–
(1.6)
4.0
–
4.0
0.7
–
(0.1)
–
–
–
–
–
–
–
–
2.1
–
2.1
–
–
–
–
–
(1.4)
–
(1.4)
–
(1.4)
–
Dividends received from associates and joint
venture entities
–
–
–
–
nib holdings limited | Annual Report 2021 105
33. Interest in other entities continued
ii) Individually immaterial associates
During the year, the Group disposed of the investment in the Whitecoat joint venture, resulting in a one-off profit of $9.7 million. In the
event that certain pre-determined revenues are achieved by Whitecoat over three years post sale, additional consideration may be
receivable. No contingent asset has been recognised as at 30 June 2021.
Aggregate carrying amount of individually immaterial associates and joint ventures
Aggregate amounts of the Group’s share of:
Profit/(loss) from continuing operations
Total comprehensive income
34. Related party transactions
2021
$m
–
–
–
2020
$m
0.7
(1.0)
(1.0)
a) Related party transactions with key management personnel
Key management personnel are entitled to insurance policies provided at a discount dependant on length of service; in all other
respects the policies are on normal terms and conditions.
There were no other related party transactions during the year, as there were no transactions where either party had the presence of
control, joint or significant influence to affect the financial and operating policies of the other entity.
b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Detailed remuneration disclosures are provided in the Remuneration Report on pages 21 to 42.
c) Transactions with other related parties
There were no transactions with other related parties during the year.
2021
$
2020
$
8,462,275
7,320,944
326,543
345,195
39,379
90,972
235,676
1,100,490
3,094,494
3,616,824
12,158,367
12,474,425
106 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021
35. Share-based payments
a) Long‑term incentive plan (LTIP)
Performance rights to acquire shares in nib holdings limited are granted to Executives under the Long Term Incentive Plan (LTIP).
Information relating to the LTIP is included in the Remuneration Report on page 34. The nib Holdings Ltd Share Ownership Plan Trust
administers the Group’s Executive management Short-Term Incentive and Long-Term Incentive Share Plans. This Trust has been
consolidated in accordance with Note 1(b).
Set out below is a summary of performance rights granted under the plan:
Balance at the start of the year
Granted as compensation
Exercised
Other forfeitures
Balance at the end of the year
Vested and exercisable at the end of the year
2021
Number of
rights
2020
Number of
rights
1,790,138
2,304,220
716,918
546,774
(141,334)
(628,895)
(354,570)
(431,961)
2,011,152
1,790,138
–
–
The valuation methodology inputs for performance rights granted during the year ended 30 June 2021 included:
a) Performance rights are granted for no consideration and vest subject to nib holdings limited EPS and TSR hurdle.
b) Exercise price: $nil (2020: $nil)
c) Grant date: 27 November 2020 and 8 April 2021 (2020: 11 December 2019 and 28 February 2020)
d) Expiry date: 1 September 2024 (2020: 1 September 2023)
e) Share price at grant date: $4.4760 (2020: $6.0675)
f) Expected dividend yield: Dividends are assumed based on the expected dividend payout ratio is 60% to 70% of normalised net
profit after tax (with the potential for special dividends above this range)
b) Employee Share Acquisition (tax exempt) Plan (ESAP)
Eligible Australian employees were offered the opportunity to receive part of their salary in the form of shares. All permanent
employees who were an employee at the date the offer was made were eligible to participate in the scheme. Employees may elect not
to participate in the scheme.
ESAP is administered by the Board. Shares granted to the employees by the Board were acquired on-market via a third party trustee
plan company.
Under the plan, participating employees were allocated an aggregate market value up to $1,000 worth of fully paid ordinary shares in
nib holdings limited. Subsequent offers under ESAP are at the Board’s discretion.
Shares issued under the scheme may not be sold until the earlier of three years after issue or cessation of employment. In all other
respects shares rank equally with other fully-paid ordinary shares on issue.
Number of shares purchased on-market under the plan to participating employees
2021
64,894
2020
69,440
The shares were allocated in two tranches. The first tranche of shares were for allocated on 26 August 2020 following nib’s FY20 full
year results presentation at a volume weighted average price of $4.66. The remaining tranche of shares were allocated on 24 February
2021 following nib’s FY21 half year results presentation at a volume weighted average price of $5.66.
nib holdings limited | Annual Report 2021 107
35. Share-based payments continued
c) nib NZ Employee Share Purchase Scheme (ESPS)
The scheme rules were adopted on 7 November 2013. On 9 December 2013 eligible employees were offered the opportunity to
receive part of their salary in the form of shares. All full-time and permanent part-time employees who were an employee as at
9 December 2013 and the date shares were allocated to employees were eligible to participate in the scheme. Employees may elect
not to participate in the scheme.
ESPS is administered by the Board. Shares granted to the employees by the Board were acquired on-market via a third party trustee
plan company.
Under the scheme, participating employees were allocated an aggregate market value up to NZD $1,000 worth of fully paid ordinary
shares in nib holdings limited. Subsequent offers under ESPS are at the Board’s discretion.
Shares issued under the scheme may not be sold until the earlier of three years after issue or cessation of employment. In all other
respects shares rank equally with other fully-paid ordinary shares on issue.
Number of shares purchased on-market under the plan to participating employees
2021
1,685
2020
4,780
The shares were allocated in two tranches. The first tranche of shares were for allocated on 26 August 2020 following nib’s FY20 full
year results presentation at a volume weighted average price of $4.66. The remaining tranche of shares were allocated on 24 February
2021 following nib’s FY21 half year results presentation at a volume weighted average price of $5.66.
d) nib Salary Sacrifice Plan and Matching Plan
Business unit managers were offered the opportunity to receive part of their salary in the form of shares, with an additional amount of
shares contributed by the Company. Employees may elect not to participate in the plan.
The plan is administered by the Board. Shares granted to the employees by the Board were acquired on-market via a third party
trustee plan company.
Under the plan, participating employees were allocated an aggregate market value up to $10,000 worth of fully paid ordinary shares in
nib holdings limited, made up of $5,000 salary sacrifice and $5,000 matching company component. Subsequent offers under the plan
are at the Board’s discretion.
Number of shares purchased on-market under the plan to participating employees
2021
52,814
2020
56,712
Shares issued under the plan may not be sold until the earlier of three or seven years after issue, or cessation of employment. In all
other respects shares rank equally with other fully paid ordinary shares on issue.
e) Salary Sacrifice Plan (NZ) and Matching Plan (NZ)
The plan rules were adopted on 28 October 2013. On 9 December 2013 New Zealand business unit managers were offered the
opportunity to receive part of their salary in the form of shares, with an additional amount of shares contributed by the Company.
Employees may elect not to participate in the plan.
The plan is administered by the Board. Shares granted to the employees by the Board were acquired on-market via a third party
trustee plan company.
Under the plan, participating employees were allocated an aggregate market value up to NZD $10,000 worth of fully paid ordinary
shares in nib holdings limited, made up of NZD $5,000 salary sacrifice and NZD $5,000 matching company component. Subsequent
offers under the plan are at the Board’s discretion.
Shares issued under the scheme may not be sold until the earlier of three or seven years after issue, or cessation of employment. In
all other respects shares rank equally with other fully paid ordinary shares on issue.
Number of shares purchased on-market under the plan to participating employees
2021
3,657
2020
3,386
108 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 f) Short‑Term Performance Incentive (STI)
All eligible employees have a STI opportunity. For the MD/CEO the maximum target bonus opportunity is 125% of the base
remuneration package with 50% of the calculated entitlement to be deferred into shares. For the CFO, CE ARHI and CEO NZ the
maximum target bonus opportunity is 100% of the remuneration package with 50% of the calculated entitlement deferred into
shares. For the CIO, COO and GELCRO the maximum target bonus opportunity is 80% of the remuneration package with 50% of the
calculated entitlement deferred into shares. For other executives the maximum entitlement is 40% of the remuneration package with
50% of the calculated entitlement deferred into shares.
The nib Holdings Ltd Share Ownership Plan Trust administers the Group’s Executive management Short-Term Incentive and
Long-Term Incentive Share Plans. This Trust has been consolidated in accordance with Note1(b).
Shares issued by the Trust to the employees are acquired on-market prior to the issue. Shares held by the Trust and not yet issued to
employees at the end of the reporting period are shown as treasury shares in financial statements; see Note 22(c).
Shares were purchased on market and brokerage fees are borne by nib health funds limited.
g) Expenses arising from share‑based payments transactions
Shares purchased on-market under ESAP and ESPS
Shares purchased on-market under nib salary sacrifice plan and matching plan and salary sacrifice (NZ) rules and
matching plan (NZ)
Performance rights granted under LTIP
Shares purchased on-market under STI
h) Accounting policy
2021
$m
0.3
0.3
1.7
0.9
3.2
2020
$m
0.4
0.4
(0.4)
2.0
2.4
The fair value of performance rights granted under the nib holdings Long-Term Incentive Plan is recognised as an employee benefit
expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the
performance rights granted, which includes any market performance conditions but excludes the impact of any service and non-
market performance vesting conditions and the impact of any non-vesting conditions. Non-market vesting conditions are included
in assumptions about the number of performance rights that are expected to vest. The total expense is recognised over the vesting
period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Group
revises its estimate of the number of performance rights that are expected to vest based on the non-market vesting conditions. It
recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The nib holdings Long-Term Incentive Plan is administered by the nib Holdings Ltd Share Ownership Plan Trust; see Note 22(d)(i).
When the performance rights are exercised, the trust transfers the appropriate amount of shares to the employee.
Under the Employee Share Acquisition (tax exempt) Plan, the nib Salary Sacrifice Plan and Matching Plan and the Short-Term
Performance Incentive, shares are acquired on-market and expensed.
nib holdings limited | Annual Report 2021 109
36. Parent entity financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
ASSETS
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
NET ASSETS
EQUITY
Share capital
Share-based payments
Retained profits
Total Equity
Profit for the year
Total comprehensive income for the year
Refer to Note 29 for contingent liabilities of parent entity.
a) Accounting policy
2021
$m
2020
$m
89.4
744.0
833.4
20.2
165.5
185.7
647.7
401.1
(7.9)
254.5
647.7
40.0
40.0
120.9
739.7
860.6
29.0
165.5
194.5
666.1
396.5
(8.7)
278.3
666.1
115.1
115.1
The financial information for the parent entity, nib holdings limited, has been prepared on the same basis as the consolidated financial
statements, except as set out below.
i)
Investments in
subsidiaries,
associates and joint
venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost less any
provision for impairment in the financial statements of nib holdings limited. Dividends received from
associates are recognised in the parent entity’s profit or loss, rather than being deducted from the
carrying amount of these investments.
ii) Tax consolidation
legislation
nib holdings limited and its wholly-owned Australian controlled entities have implemented the tax
consolidated legislation.
The head entity, nib holdings limited, and the controlled entities in the tax consolidated group account for
their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, nib holdings limited also recognises the current
tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax consolidated group.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully
compensate nib holdings limited for any current tax payable assumed and are compensated by nib
holdings limited for any current tax receivable and deferred tax assets relating to unused tax losses or
unused tax credits that are transferred to nib holdings limited under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly-owned
entities’ financial statements.
The amounts receivable/payable under the tax funding agreement is due upon receipt of the funding
advice from the head entity, which is issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay
tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised
as current amounts receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
110 nib holdings limited | Annual Report 2021
notes to the consolidated financial statementsfor the year ended 30 June 2021 Directors’ Declaration
directors’
declaration
In the Directors’ opinion:
for the year ended 30 June 2021
a)
the financial statements and notes set out on pages 44 to 110 are in accordance with the Corporations Act 2001, including:
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the
financial year ended on that date; and
b) there are reasonable grounds to believe that nib holdings limited will be able to pay its debts as and when they become due and
payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the Board
David Gordon
Director
Newcastle, NSW
20 August 2021
Anne Loveridge
Director
nib holdings limited | Annual Report 2021 111
Independent Auditor’s Report to the Members
independent auditor’s report
to the members of nib holdings limited
for the year ended 30 June 2021
Independent auditor’s report
To the members of nib holdings limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of nib holdings limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
●
the Consolidated Balance Sheet as at 30 June 2021
the Consolidated Income Statement for the year then ended
the Consolidated Statement of Comprehensive Income for the year then ended
the Consolidated Statement of Changes in Equity for the year then ended
the Consolidated Statement of Cash Flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300
T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
112 nib holdings limited | Annual Report 2021
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit we used overall Group materiality of $11.1 million, which
represents approximately 5% of the Group’s profit before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of
our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Audit Scope
● The Group provides health and medical insurance to Australian and New Zealand residents,
medical insurance to international inbound workers and students, as well as distributing travel
insurance products both in Australia and internationally.
● Our audit focused on where the Group made subjective judgements, for example, significant
accounting estimates involving assumptions in relation to inherently uncertain future events.
● PwC specialists in information technology, along with PwC valuations and actuarial experts
have assisted during the audit.
● We decided the nature, timing and extent of work that needed to be performed by us as well as
the component auditor operating under our instruction. For the procedures carried out by the
component auditor, we decided on the level of involvement required from us to be able to
conclude whether sufficient appropriate audit evidence had been obtained. Our involvement
included issuing written instructions, holding discussions, review of key workpapers, and review
of reporting to us by the component auditor.
nib holdings limited | Annual Report 2021 113
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit Committee.
Key audit matter
How our audit addressed the key audit
matter
Estimation of claims liabilities
(Refer to note 18) [$217.1 million]
Our audit procedures over the estimation of the
outstanding claims liability included, amongst others:
a) Outstanding claims liability [$183.1 million]
● Developing an understanding of how the Group
We focused on this balance because of the size of the
liability and the complexity and judgements involved
in the estimation process.
The liability is an estimate of expected payments to
customers for incurred but not settled insurance
claims. This includes an estimate for known and
reported claims as well as incurred but not yet
reported claims.
Determining a central estimate involves significant
judgement and statistical analysis and is based on a
number of factors including historical claims rates,
timeliness of reporting of claims and evidence around
any changes in the cost of claims.
The estimation of outstanding claims relied on the
quality of the underlying data. It involved complex
and subjective judgements about future events, both
internal and external to the business, for which small
changes in assumptions can result in material impacts
to the estimate.
identified the relevant methods, assumptions and
sources of data, and the need for changes in them,
that are appropriate for developing the estimates
in the context of the Australian Accounting
Standards.
● Developing an understanding of the relevant
control activities associated with developing the
estimate.
● Evaluating the design effectiveness and
implementation of relevant controls over claims
payments.
● Together with PwC actuarial experts, evaluated
the Group’s actuarial practices and the estimates
established. These procedures included, amongst
others:
o
o
o
o
Assessing the appropriateness of data used to
develop the estimates.
Testing on a sample basis, the accuracy of the
claims data used in the outstanding claims
liability valuation.
Assessing the appropriateness of the Group’s
methods for developing the estimate by
reference to the nature of the estimate and the
business, industry and environment in which
the Group operates.
Evaluating the appropriateness of the
significant assumptions used to develop the
estimates. This included assessing the
assumptions by comparing them to the
Group’s historical experience, audit of
114 nib holdings limited | Annual Report 2021
independent auditor’s reportto the members of nib holdings limitedfor the year ended 30 June 2021
Key audit matter
How our audit addressed the key audit
matter
subsequent payment patterns, and our own
industry knowledge.
Assessing the approach to setting the risk
margin, including an assessment of the
appropriateness of the actuarial calculation of
the probability of adequacy.
Testing the mathematical accuracy of the
Group’s actuarial model.
o
o
o Reconciling the results of the outstanding
claims liability valuation to the financial
statements and assessing the reasonableness
of the disclosures made in the financial
statements, including those related to
estimation uncertainty.
b) Provision for deferred and suspended
claims [$34.0 million]
We focused on this balance because of its size, the
unusual circumstances that have given rise to this
provision, and the complexity and judgements
involved in the estimation process.
Our audit procedures over the estimation of the
provision for deferred and suspended claims
included, amongst others:
● Evaluating the appropriateness of the Group’s
accounting policy to recognise deferred claims as
a result of the COVID-19 pandemic.
As described in Note 18, this provision has been
recognised to reflect the constructive obligation that
the Group has to pay claims after 30 June 2021 that
would ordinarily have been paid prior to 30 June
2021 if it were not for the temporary unavailability of
elective surgery and reduced access to ancillary
benefits as a result of the COVID-19 pandemic.
The estimation of the provision required estimating
the savings due to the gross reduction in claims due to
temporary unavailability of elective surgery and
reduced access to ancillary benefits, netted by the
impact on the risk equalisation adjustment, less
amounts determined to have been caught up during
the financial year ended 30 June 2021 and
quantifying the percentage of these savings that will
be caught up as claims after year end.
This is a key audit matter due to the complexities in
estimating the proportion of the deferred claims that
are expected to be paid post balance date.
● Developing an understanding of the impacts of
COVID-19 on claims payment patterns in the
previous and current financial years.
● Evaluating the adequacy of the process for
determining the provision, including audit
procedures over relevant data inputs into the
provision model and review processes in place
over the model's outputs.
● Together with PwC actuarial experts, evaluated
the estimation process and the estimates
established. This included assessing and
evaluating the appropriateness of the Group’s
significant assumptions and methods used for
determining claims deferred to future periods
including consideration of reasonable
alternatives.
● Reconciling the provision for deferred and
suspended claims to the financial statements and
assessing the reasonableness of the disclosures
made in the financial statements, including those
related to estimation uncertainty.
nib holdings limited | Annual Report 2021 115
Key audit matter
How our audit addressed the key audit
matter
Impairment testing of goodwill and indefinite
lived intangibles
(Refer to note 14) [$234.9 million]
Our audit procedures over the impairment testing of
goodwill and indefinite lived intangibles included,
among others:
The Group’s goodwill relates to the Australian
Residents Health Insurance, International Workers
Health Insurance, New Zealand Residents Health
Insurance & nib Travel Cash Generating Units (CGUs)
($218.7m) and indefinite lived intangible assets
relating to brands ($16.2m).
Impairment testing of goodwill and indefinite lived
intangibles was a key audit matter because of the
judgement involved in the determination and
application of assumptions and cash flow forecasts
within the ‘value in use’ modelling. The subjectivity of
the assessment was greater than normal due to the
effects of the COVID-19 pandemic increasing
uncertainty in respect of estimating future cash flows,
particularly in relation to the travel insurance
business.
The outcome of the nib travel Group CGU impairment
assessment is particularly sensitive to the values
attributed to a number of key assumptions. Note 14
details these key assumptions and the impact they
have on this impairment assessment.
● Assessing whether the division of the Group into
Cash Generating Units (CGUs) was consistent
with our knowledge of the Group’s operations
and internal Group reporting.
● Together with PwC valuation experts, evaluated
the appropriateness of the value in use
calculation methodology. These procedures
included, amongst others:
o Considering whether the forecast cash flows,
including probability weighted cash flows as
applicable, were appropriate and based on
supportable assumptions. Assessing the
appropriateness of key assumptions by
comparing actual cash flows to previous
forecasts, and comparing assumptions
underpinning the cash flows to corroborative
evidence including industry data.
o Assessing the appropriateness of the Group’s
assessment of COVID-19 impacts on the nib
Travel CGU cash flow forecasts by reference to
publicly available information regarding
possible implications of the pandemic on the
travel industry.
o Assessing whether the discount rates adopted by
the Group, including components calculated
using management’s expert, reflected the risks
of the CGUs by comparing the discount rate to
external market data.
o Evaluating the appropriateness of the terminal
growth rate assumptions by reference to
external market data.
o Assessing the appropriateness of the design and
testing the mathematical accuracy of the value
in use model.
● Assessing the appropriateness of the disclosures
made in note 14, including those related to
estimation uncertainty, against the requirements
of Australian Accounting Standards.
116 nib holdings limited | Annual Report 2021
independent auditor’s reportto the members of nib holdings limitedfor the year ended 30 June 2021
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2021, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor's report.
nib holdings limited | Annual Report 2021 117
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 21 to 42 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of nib holdings limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
SK Fergusson
Partner
Newcastle
20 August 2021
118 nib holdings limited | Annual Report 2021
independent auditor’s reportto the members of nib holdings limitedfor the year ended 30 June 2021 Shareholder Information
shareholder
information
as at 31 August 2021
The shareholder information set out below was applicable as at 31 August 2021.
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
There were 577 holders of less than a marketable parcel of ordinary shares.
B. EQUITY SECURITY HOLDERS
The 20 largest quoted equity security holders
The names of the 20 largest holders of quoted equity securities are listed below:
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
MIRRABOOKA INVESTMENTS LIMITED
MR MARK ANTHONY FITZGIBBON
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CPU SHARE PLANS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
POWERWRAP LIMITED
FITZY (NSW) PTY LTD
BNP PARIBAS NOMS PTY LTD
AMP LIFE LIMITED
MRS MICHELLE MCPHERSON
MODANE PTY LTD
Unquoted equity securities
Performance rights issued under the nib holdings Long-term Incentive Plan
Number of
holders
57,727
66,297
9,053
815
67
133,959
Ordinary Shares
Percentage of
issued shares
%
16.77
7.43
7.22
3.45
1.69
1.19
0.96
0.29
0.28
0.27
0.23
0.22
0.21
0.20
0.19
0.18
0.17
0.16
0.13
0.10
Number held
76,781,000
33,999,128
33,045,560
15,798,859
7,731,251
5,440,256
4,381,265
1,350,000
1,296,366
1,239,620
1,050,124
1,013,776
960,641
913,923
889,889
824,621
769,996
732,813
587,911
459,744
189,266,743
41.35
Number on
issue
2,011,152
Number of
holders
14
nib holdings limited | Annual Report 2021 119
C. SUBSTANTIAL HOLDERS
In a substantial holding notice dated 30 August 2019, Vanguard Group advised that as at 27 August 2019, it had an interest in
28,858,838 ordinary shares, which represented 5.018% of nib’s ordinary shares at this time.
D. VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall
have one vote.
Performance rights
No voting rights.
120 nib holdings limited | Annual Report 2021
shareholder informationas at 31 August 2021 Corporate Directory
corporate
directory
DIRECTORS
Chairman
David Gordon
Managing Director/Chief Executive Officer
Mark Fitzgibbon
Lee Ausburn
Jacqueline Chow
Peter Harmer
Anne Loveridge
Donal O’Dwyer
COMPANY SECRETARIES
Roslyn Toms
Jordan French
EXECUTIVE MANAGEMENT
Managing Director/Chief Executive Officer
Mark Fitzgibbon
Chief People Officer
Martin Adlington
Chief Executive – International Visitors
James Barr
Chief Executive – Australian Residents Health Insurance
Edward Close
Chief Financial Officer
Nick Freeman
Chief Executive – nib travel
Anna Gladman
Group Executive – nib New Zealand
Rob Hennin
Chief Information Officer
Brendan Mills
Group Chief Operations Officer
Matt Paterson
Group Executive – Legal and Chief Risk Officer
Roslyn Toms
NOTICE OF ANNUAL GENERAL MEETING
The AGM of nib holdings limited will be held as a virtual
meeting on Thursday, 4 November 2021. Shareholders will
be able to participate in the AGM in a number of ways with
details to be provided in the Notice of Meeting.
A formal Notice of the Meeting is being distributed with the
Annual Report.
SHARE REGISTER
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
1300 664 316
STOCK EXCHANGE LISTING
nib holdings limited shares (nhf) are listed on the Australian
Securities Exchange.
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
22 Honeysuckle Drive
Newcastle NSW 2300
13 14 63
AUDITOR
PricewaterhouseCoopers
PricewaterhouseCoopers Centre
Level 3, 45 Watt Street
Newcastle NSW 2300
LEGAL ADVISERS
King & Wood Mallesons
Level 61, Governor Philip Tower
1 Farrer Place
Sydney NSW 2000
BANKERS
National Australia Bank Limited
1 Old Castle Hill Road
Castle Hill NSW 2154
WEBSITE
nib.com.au
nib.com.au