Despite the stock looking reasonably appropriately-valued I have been adding to my holdings in recent weeks given the weak market conditions being articulated by the listed private health operators (which, by implication mean private health insurers would have been seeing muted levels of claims).
Nine months ago, they were expecting FY2018 Underlying Operating Profit of $155m; four months before the end of the year they reckoned it would be $165m. As it happens, they came in at $184m !
But I'm not sure if this kind of short-term boost to earnings is necessarily a good thing for companies like NIB, given the political sensitivies around private health insurance.
Unfortunately I can foresee some significant turmoil in the Australian health industry in the years ahead, in the form of a potential crisis in the over-burdened public hospital sector; and I'm not sure a future federal government - which could easily be of a decidedly less business-friendly disposition - is likely to look to sympathetically on a private health insurer generating >30% ROE.
NHF Price at posting:
$6.25 Sentiment: None Disclosure: Held
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