Why Nib shares are edging higher after today’s update

Shares in NIB Holdings Ltd (ASX: NHF) are slightly higher in mid-morning trade following a fresh announcement from the private health insurer.

At the time of writing, the NIB share price is up a modest 0.31% to $6.40. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 1.1% following losses on Wall Street overnight.

NIB has confirmed it has agreed to a transaction involving one of its business segments.

Here is what investors need to know.

Details of the agreed transaction

According to the ASX announcement, NIB has signed a binding agreement to sell the World Nomads international travel insurance brand.

The business will be sold to International Medical Group, a subsidiary of SiriusPoint Ltd, for $67.5 million.

The company expects net cash proceeds of around $70 million on completion.

The sale only includes the international World Nomads brand. It does not include NIB’s other travel insurance assets or its Australian and New Zealand travel insurance operations.

The transaction is subject to regulatory approvals and is expected to complete during the 2026 financial year. NIB will provide transitional support to ensure a smooth handover.

Management said the decision reflects its focus on simplifying the group and concentrating capital on its core health insurance businesses.

How the core business is tracking

NIB is a private health insurer operating across Australia and New Zealand. It provides private health cover for residents, international students and workers, as well as travel and related insurance products.

The group reported underlying operating profit of $239.2 million in its most recent full year result, with revenue of $3.6 billion. The majority of earnings come from its Australian residents health insurance segment.

Over the past 12 months, NIB shares have traded between $5.82 and $8.26. At around $6.40, the stock remains below its recent peak.

NIB also pays dividends. Based on the current share price, the stock offers a dividend yield of roughly 4.5%, which is broadly in line with other ASX listed insurers.

What investors should focus on next

The sale of the international travel insurance business is relatively small compared with the size of NIB’s overall operations. However, it signals a clear strategy to focus on core health insurance and reduce complexity.

Investors will likely watch how the company deploys the sale proceeds. This could include reinvestment into higher return areas of the business or potential capital management initiatives.

NIB is due to release its half year results on 23 February, which may provide further detail on trading conditions and capital allocation plans.

The post Why Nib shares are edging higher after today’s update appeared first on The Motley Fool Australia.

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