nib holdings has delivered underlying operating profit of $260.9 million for FY2026, achieving the upper end of its guidance range of $257-267 million and demonstrating continued progress in operational execution. The 9.1 percent year-on-year increase reflects strength across the group, with the core Australian residents health insurance business maintaining disciplined margins and adjacent segments delivering increasingly material earnings contributions.
The group’s operating performance was underpinned by a sustained productivity agenda that generated $61 million in benefits during FY2026, extending a cumulative $79 million in efficiency savings since FY2024. This productivity momentum delivered an operating expense ratio of 16.6 percent, down 110 basis points year-on-year and marking continued improvement in cost management. The Australian residents segment achieved a non-marketing expense ratio of 5.3 percent, the lowest level since 2007, while maintaining net margins at 6.3 percent on an underlying basis, comfortably within the company’s stated 6-7 percent target range.
The Australian residents segment, which accounts for the bulk of group earnings, navigated a complex operating environment during the year. Revenue grew 6.4 percent to $3.01 billion, driven by both pricing and 1.9 percent policyholder growth, while claims inflation moderated to 4.1 percent when excluding the impact of NSW bed rate changes. The business absorbed elevated industry risk equalisation volatility and increased offer costs stemming from regulatory clarification on Australian Government Rebate treatment, with management offsetting these headwinds through pricing discipline and ongoing claims management initiatives. Policyholder net promoter score remained elevated at plus 32.
The accelerating contribution from adjacent businesses represents a meaningful strategic development. Health and insurance services generated underlying operating profit of $86.1 million, a $41.9 million increase year-on-year, and now accounts for approximately one third of group earnings. International health insurance delivered exceptional performance with UOP growth of 15.1 percent and net margin improvement of 120 basis points, while the New Zealand business achieved a significant turnaround with underlying operating profit of $27.5 million compared to a loss of $2.9 million in the prior year, underpinned by disciplined pricing and claims recovery initiatives.
The balance sheet has strengthened materially, with gearing improved 490 basis points to 15.2 percent and net operating cash inflows up 20.2 percent. The company expects to receive approximately $97 million in net proceeds from the nib Travel sale, which is expected to complete in the first half of FY2027. Management has increased its target dividend payout ratio to 65-75 percent and declared a final dividend of 21.0 cents per share inclusive of a 5 cent special dividend, with the Travel sale proceeds providing additional capital management optionality.
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Become an AR or CARFor FY2027, the company has guided group underlying operating profit of $265-285 million, excluding the Travel business. Management intends to focus on further productivity gains through digital and AI acceleration, while maintaining disciplined capital allocation and targeting continued improvement in the operating expense ratio. The extent to which claims inflation moderates and risk equalisation outcomes develop will merit close monitoring.
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About nib holdings limited (ASX: NHF)
nib holdings limited is an insurance underwriter and distributor operating across Australia and New Zealand, providing private health, life, and living insurance to residents, international students, and visitors. The company operates through multiple segments including Australian Residents Health Insurance, International Health Insurance, New Zealand Insurance, nib Travel, nib Thrive, and nib Health Services.
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