The market has overreacted to the Mark Fitzgibbon comment that “
FY16 will be a hard act to follow and the pressures of competition and premium affordability means pressure on margins.” I mean Mark like his ALP Shadow Minister brother Eric thinks the Federal Government may get its act together on medical insurance and stop the claim inflation prevention strategy. It is in the interests of the Federal Government to also stop the claim inflation IMHO but pls DYOR.
Mark's words were not great but the market has overreacted to that statement and the guidance "
UOP in the range of $130 to $140 million for the 2017 FY".
When you consider his comments that "lower premium increases than those of recent years when the combination of increasing treatment cost and the actual number of treatment episodes have driven claims inflation rates of between 5% and 7%" will reduce the number of customers lost and allow NHF to better compete against MPL and BUPA then you will unexpectedly get growth IMHO.
Pardon my cynicism but could Mark's motivation be to lower expectations and make lots of money off a perceived outperformance in the future years not to mention the ESOP, IMHO it is a possibility especially given Craig Drummond at MPL is remunerated now a little better than the former CEOs of the listed private health companies were in Australia.
IMHO NHF and MPL are both strong conviction buys based on the NHF and MPL Annual Results.
The main threat is Sussan Ley and the Federal Government to both NHF and MPL and if that is ur only major threat, that is a great place to be whatever the macroeconomic climate.
http://www.insurancebusinessonline....premium-increases-at-fy16-earning-221919.aspx
