In-line with the prior month, Macquarie estimates around 85 basis points (bps) of industry-margin expansion in the 2H21 versus 1H21, with every 50bps equating to 5-6% EPS impact for nib Holdings.
The broker concludes claims growth is around -20bps lower than the 4.7% experienced pre-covid, which is comfortably lower than provisions. It’s therefore implied there will be sizeable releases over the coming 18 months.
With post-covid exposures of travel insurance, and international students and workers taking longer to rebound, Macquarie maintains a preference for Medibank Private over nib Holdings ((NHF)). The Neutral rating and $2.80 target are maintained.
Sector: Insurance.
Target price is $2.80.Current Price is $3.14. Difference: ($0.34) – (brackets indicate current price is over target). If MPL meets the Macquarie target it will return approximately -12% (excluding dividends, fees and charges – negative figures indicate an expected loss).
