Medibank chief shrugs off sale talk

Medibank Private managing director George Savvides is pleased with the performance of Australia's largest health insurer this financial year, as the market prepares for a possible sale of the government-owned enterprise.

Medibank Private managing director George Savvides is pleased with the performance of Australia's largest health insurer this financial year, as the market prepares for a possible sale of the government-owned enterprise.

He said Medibank had been living with speculation about its ownership for years and was instead focused on challenging market conditions, such as the growth of insurance comparison sites and member downgrades and dropoffs as government income-testing of private health insurance bites.

"We don't sit around waiting for somebody to say who should own the shares," Mr Savvides said. "It's just part of the journey of being a government business enterprise."

While Labor does not support a sale, the Coalition recently reaffirmed its support for one. The Greens have said they would consider a sale if the proceeds were directed at the public health sector.

Medibank's 2012 annual report flagged that it would pay the government a special dividend of $300 million, on top of a $91 million ordinary dividend. If Medibank's board approves the proposed special dividend, this will mean the government has extracted $850.6 million in surplus capital from Medibank since it converted to "for-profit" status in 2009.

Medibank's net profit slumped 57 per cent to $126.6 million in the 2012 financial year, due to higher claims costs and a sharp fall in investment income. But revenue reached a record high for a second year running - $5.4 billion.

Medibank has 4500 employees and 3.7 million customers, or more than a quarter of the market. Next is Bupa Australia, with 3.5 million members.

Mr Savvides' comments follow remarks by Medibank's former chairman, Paul McClintock, that the government's ownership is an "aberration".

Bupa's chief executive for Australia and New Zealand, Dean Holden, was quoted as saying that "to make Medibank a true competitor in the open market is a very positive thing".

NIB has described the privatisation of Medibank as "inevitable" and tipped the private health insurance system to grow by 3 per cent to 3.5 per cent a year, with government measures having only a "moderate impact".

Related Articles