Government-owned Medibank Private is ready for sale despite challenges in its core private health division, says managing director George Savvides.
Speaking at the first Senate estimates hearing since the Coalition announced steps to sell Medibank, Mr Savvides confirmed the business had paid $1 billion in dividends to the government since it converted to profit several years ago.
Medibank, Australia's biggest private health insurer, was "busy and working well", he said.
"The issue around competition, if you look at the other funds, NIB floated on the ASX and its behaviour seems to be of a health fund that's dealing with competitive tension ... the Bupa organisation, through a series of acquisitions, is comparable to the size of Medibank," Mr Savvides said. "Other privatisations, like the Commonwealth Bank and others ... go on to be both competitive and successful."
It has long been Coalition policy to privatise Medibank Private. But a sale was seen as controversial given Medibank's capital base is almost entirely built on taxpayer contributions and previous demutualisations have rewarded members.
Mr Savvides said Medibank's 2013 profit of $315 million, up 60 per cent on the previous year, had been driven by cost-cutting and improvements in investment income.
However, he said, people were searching for cheaper products - in response to moves by the former government to reduce taxpayer support for private health insurance - and claims were growing faster than premiums.
Advisers for the long-mooted sale will be appointed by the end of November, senators were told, and a scoping study will be completed by the 2014 budget.