NIB : Investor Presentation - nib to acquire GU Health

This presentation (Presentation) has been prepared by nib Holdings Limited (ABN 51 125 633 856) (nib) in relation to an offer of new fully paid ordinary shares in nib (New Shares) pursuant to an institutional placement (Placement) and a share purchase plan (SPP) to be made to eligible persons under the Corporations Act 2001 (Cth) (Corporations Act), the proceeds of which will be applied to partially fund nib's acquisition all of the ordinary shares in Grand United Corporate Health Limi ted ACN 002 985 033 (GU Health) from Australian Unity Limited ACN 087 648 888 (Transaction).

Summary information: This Presentation contains summary information about nib and its associated entities current as at the date of this Presentation. The information is of a general nature and does not purport to include or summarise all information that an investor should consider when making an investment decision nor does it contain all the information which would be required in a disclosure document prepared in accordance with the requirements of the Corporations Act. It should be read in conjunction with nib's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. Certain information in this Presentation has been sourced from publicly available information and information provided by Australian Unity Limited. While steps have been taken to review that information, no representation or warranty, express or implied, is made as to its fairness, accuracy, correctness, completeness or adequacy. Certain market and industry data used in connection with this Presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. Neither nib nor its representatives have independently verified any such market or industry data provided by third parties or industry or general publications.

Not an offer: This Presentation is for information purposes only and is not a disclosure or offering document under Australian law (includi ng under Chapter 6D of the Corporations Act) or any other law (and will not be lodged with ASIC). This Presentation is not and should not be considered an offer or an invitation to acquire New Shares or any other financial product and neither this Presentation nor any of the information contained herein shall form the basis of any contract or commitment. The distribution of this Presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Not financial product advice: The information contained in this Presentation does not constitute investment or financial product advice (nor taxation, acco unting or legal advice), is not a recommendation to acquire New Shares and does not and will not form the basis of any contract or commitment for the acquisition of New Shares. This Presentation has been prepared without taking into account the investment objectives, financial position or needs of any particular individual. Before making an investment decision, prospective investors should consider the appropriateness of the information (including but not limited to the assu mptions, uncertainties and contingencies which may affect future operations of nib and the values and the impact that different future outcomes may have on nib) having regard to their own investment objectives, financial situation and needs and should seek legal, accounting and taxation advice appropriate to their jurisdiction. nib is not licensed to provide investment or financial product advice in respect of nib shares. Cooling off rights do not apply to the acquisition of New Shares pursuant to the Placement and SPP.

Not for release or distribution in the United States: This Presentation may not be released or distributed in the United States. In particular, this Presentation does not constitu te an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction in which such an offer would be illegal. The New Shares have not been, and will not be, regi stered under the U.S. Securities Act of 1933, as amended (U.S. Securities Act) or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States unless the New Shares have been registered under the U.S. Securities Act (which nib has no obligation to do or procure) or are offered and sold in a transacti on exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any other applicable state securities laws in the United States.

Investment Risk: An investment in nib shares is subject to known and unknown risks, some of which are beyond the control of nib, including possible loss of income and principal invested. nib does not guarantee any particular rate of return or the performance of nib, nor does it guarantee any particular tax treatment. Investors should have regard to (amongst other things) the risk factors outlined in this Presentation when making their investment decision. See the "Key Risks" section (Appendix A) of this Presentation for certain risks relating to an investment in nib shares.

Future performance and forward looking statements: This Presentation contains certain forward looking statements and comments about future events, including nib's expectations about the performance of its businesses, the effect of the funds raised under the Placement and SPP on those businesses, the outcome of the Transaction and the future performance (including potenti al or expected synergies) of nib and GU Health post acquisition. Forward looking statements can generally be identified by the use of forward looking words such as, "expect", "anticipate", "likely", "intend", "should", "could", "may", "predict", "plan", "propose", "will", "believe", "forecast", "estimate", "target" and other similar expressions. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward looking statements and include statements in this Presentation regarding the conduct and outcome of the Placement and SPP, the use of proceeds, the outcome of the Transaction, the future performance (including potential or expected synergies) of nib and GU Health post acquisition and nib's outstanding debt. You are cautioned not to place undue reliance on any forward looking statement. While due care and attention has been used in their preparation, forward looking statements, opinions and estimates provided in this Presentation are based on assumptions and co ntingencies which are subject to change without notice, as are statements about market and industry trends which are based on interpretations of current market conditions. Forward looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performa nce and may involve known and unknown risks, uncertainties and other factors, many of which are outside the control of nib, its directors and management. A number of important factors could cause nib's actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements, including the risk factors described in the "Key Risks" section (Appendix A) of this Presentation, Actual results, performance or achievements may vary materially from any forward-looking statements and the assumptions on which statements are based. nib disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise.

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Past Performance: Past performance and pro-forma historical information in this Presentation is given for illustrative purposes only and should not be relied upon (and is not) an indication of future performance including future share price information. Historical information in this Presentation relating to nib is information that has been released to the market. For further information, please see past announcements released to ASX.

Financial data: All dollar values are in Australian dollars ($ or AUD) unless stated otherwise. All references starting with "FY" refer to the financial year for nib, ending 30 June. For example, "FY17" refers to the financial year ending 30 June 2017. All references starting with "CY" refer to the calendar year ending 31 December. For example, "CY16" refers to the calendar year ending 31 December 2016. All references in this Presentation to "1H17" are a reference to the six months to 31 December 2016 and all references in this Presentation to "2H17" are a reference to the six months to 30 June 2017. All references in this Presentation to FY18 refer to the 12 month forecast period ending 30 June 2018.

In addition, the pro forma financial information in this Presentation does not purport to be in compliance with Article 11 of Regulation S-X of the rules and regulations of the US Securities Exchange Commission, and such information does not purport to comply

with Article 3-05 of Regulation S-X.

In addition, financial data in this Presentation includes "non-IFRS financial information" under ASIC Regulatory Guide 230 Disclosing non-IFRS financial information published by the Australian Securities and Investments Commission, including premium revenue, underlying operating profit, pro forma NPAT, gross margin and gearing. nib believes this non-IFRS financial information provides useful information to users in measuring the financial performance and conditions of nib. The non-IFRS financial information do not have a standardised meaning prescribed by Australian Accounting Standards and, therefore, may not be compa rable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financia l measures determined in accordance with Australian accounting standards. Investors are cautioned, therefore, not to place undue reliance on any non-IFRS financial information and ratios included in this Presentation.

Effect of Rounding: A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Presentation.

Lead Manager: nib has engaged J.P. Morgan Australia Limited (ABN 52 002 888 011 / AFSL 238188) (Lead Manager) to act as sole bookrunner, lead manager and underwriter of the Placement. The Lead Manager, together with its related bodies corporate, shareholders or affiliates and each of their respective officers, directors, employees, affiliates, partners, associates, agents or advisers (together, the "Limited Parties") do not make or purport to make any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this Presentation and there is no statement in this Presentation which is based on any statement by a Limited Party. None of the Limited Parties accepts any fiduciary obligations to or relationship with any investor or potential investor in connection with the Placement, SPP or otherwise. By accepting this Presentation each recipient expressly disclaims any fiduciary relationship and agrees that it is responsible for making its own independent judgements with respect to the Placement, SPP and any other transaction or other matter arising in connection with this Presentation. None of the Limited Parties accepts liability for any loss arising from the use of this Presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability fr om fault or negligence, or liability for any direct, indirect, consequential or contingent loss or damage arising from the use of information contained in this Presentation or in relation to the accuracy or completeness of the information, statements, opinions or matters, express or implied, contained in, arising out of or derived from, or for omissions from, this Presentation including, with out limitation, any financial information, any estimates or projections and any other financial information derived therefrom.

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Transaction overview

• nib has entered into an agreement to acquire specialist corporate private health insurer Grand United Corporate Health Limited (GU Health) for a total consideration of $155.5 million1 from Australian Unity Limited (the Acquisition)

• The transaction will be funded by a fully underwritten institutional equity placement of $60 million, a non-underwritten Share Purchase Plan of $15 million2 and a new debt facility for the balance

  • nib's post transaction gearing ratio is expected to be approximately 31.7%, consistent with its long term target gearing ratio of 30%3

• Completion is expected to occur in the final quarter of the 2017 calendar year, subject to conditions precedent

• nib and Australian Unity have jointly developed a comprehensive transition plan to ensure seamless integration into the nib Group

GU Health overview

• GU Health is Australia's only established specialist corporate group health insurer, servicing over 34,000 policyholders across more than 260 corporate clients

  • Market leader in the corporate health insurance segment in Australia

  • Long-term and stable client, distribution partner and corporate broker relationships

  • Experienced team with specialist knowledge and skills

  • Leading technology platforms and underwriting functionality customised for the corporate market

Strategic rationale

• Materially expands nib's existing well established businesses of Australian residents health insurance (arhi) and international workers health insurance (iwhi)

• Accelerates nib's strategic ambition to further grow in the corporate segment from a strong existing position

• Builds on nib's existing capability in an attractive niche segment and results in combined policyholders of ~80,000, approximately doubling nib's existing number of

  policyholders4

• Opportunity for nib to leverage GU Health's corporate PHI expertise, technology capabilities and embedded, long-term relationships with customers and distribution partners

Attractive acquisition metrics

• Acquisition expected to be immediately EPS accretive5

  • EPS accretion expected to be over 3% in the first full year of ownership excluding any future capital release and before fully phased long-run synergies

• Expected annual synergies in excess of $3 million once fully integrated

• Implied acquisition multiple of approximately 15.0x FY18E adjusted pro forma NPAT pre-synergies. The acquisition multiple should reduce as a result of expected benefits from future capital efficiencies

1 The final purchase price will be adjusted for movements in net asset value based on completion accounts; 2 The nib Board retains discretion on the final amount of Share Purchase Plan proceeds to be accepted based on take up; 3 Gearing calculated as debt / (debt + equity). For a significant transaction gearing may be above the 30% target for a short time if necessary to effect the transaction; 4 Includes both Australian residents and international workers' policyholders; 5 Excludes one-off transaction costs and amortisation of acquired intangibles. Transaction metrics assume a total of $75 million equity is raised

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