How Did nib Holdings Maintain $82.9M Profit Amid Rising Claims Costs?

• Net profit steady at $82.9 million, unchanged from prior period
• Revenue increased 6% to $1.89 billion, driven by policyholder growth and price rises
• Underlying operating profit up 22% to $129.1 million on productivity gains
• Interim dividend maintained at 13.0 cents per share, fully franked
• Strategic sale of World Nomads international travel insurance underway

Stable Profit Amid Revenue Growth

nib holdings limited has reported a net profit of $82.9 million for the half year ended 31 December 2025, consistent with the same period last year. This steady bottom line comes despite a 6% increase in revenue to $1.89 billion, reflecting strong policyholder growth and strategic price adjustments to offset rising claims costs.

The company’s underlying operating profit rose 22% to $129.1 million, highlighting effective cost control and productivity improvements across its operations. While statutory earnings per share dipped slightly by 0.6% to 17.0 cents, this was largely due to higher one-off expenses and reduced investment income compared to the previous period.

Segment Performance Highlights

The Australian residents health insurance segment remains the core driver, delivering a 4.3% increase in underlying operating profit to $104.3 million. Margins were maintained within the targeted 6-7% range, supported by above-expected policy growth of 2.2% and disciplined expense management. Claims inflation, including hospital indexation, rose by 5.3%, but nib continued to invest in customer benefits and provider support.

International inbound health insurance also showed robust growth, with underlying operating profit up 23.3% to $15.9 million and policyholders increasing by 1.6%, driven by schemes such as the Pacific Australia Labour Mobility program. The New Zealand business rebounded from a prior loss to a $3.9 million profit, despite a 3.2% decline in policyholders and elevated claims inflation at 17%.

Other divisions showed mixed results. nib Health Services improved to a modest profit, while nib Thrive, operating under the National Disability Insurance Scheme, grew underlying operating profit by 4.8%. nib Travel experienced a slight profit decline amid soft domestic market conditions and is undergoing a strategic review, including the announced sale of its World Nomads international travel insurance business for $67.5 million.

Capital Position and Dividend

nib’s capital position remains strong with net assets of $1.11 billion and a gearing ratio of 18.7%, well below the 45% covenant limit. The company holds $514.2 million in capital above the Australian Prudential Regulation Authority’s minimum requirements, ensuring resilience under stressed conditions.

The Board declared a fully franked interim dividend of 13.0 cents per share, unchanged from the prior year, payable on 8 April 2026. The dividend reinvestment plan will be available to shareholders for this payment.

Outlook and Strategic Considerations

While nib’s financial results demonstrate stability and growth in key segments, the company faces ongoing challenges from claims inflation and competitive pressures. The strategic review of nib Travel signals a focus on core health insurance operations. No impairment was recorded on goodwill except for possible indicators in the nib Thrive segment, reflecting cautious optimism about future performance.

The financial report was audited with no qualifications, underscoring the company’s solid governance and financial reporting standards.

Bottom Line?

nib’s steady profit and dividend underscore resilience, but watch for updates on travel insurance and claims inflation impact.

Questions in the middle?

• How will nib manage ongoing claims inflation pressures in Australia and New Zealand?
• What are the strategic plans for nib Travel’s remaining Australian and New Zealand businesses?
• Could further goodwill impairment arise in nib Thrive if market conditions deteriorate?