Annual Report 2022
Doing more for
better health
Contents
Medibank Group – our story
2022 highlights
Chair’s message
CEO’s message
Delivering value to stakeholders through our strategy
Deliver leading experiences
Differentiate our insurance business
Expand in health
Our sustainability highlights
Operating and financial review
Directors
Executive Leadership Team
Corporate governance statement
Directors’ report
Remuneration report
Financial report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Auditor’s independence declaration
Independent auditor’s report
Shareholder information
Financial calendar
Corporate directory
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133
Sustainability Report 2022
For healthy futures
2022 full year
results
Investor presentation
18 August 2022
David Koczkar – Chief Executive Officer
Mark Rogers – Group Executive
Chief Financial Officer & Group Strategy
Medibank Private Limited
ABN 47 080 890 259
Annual Report 2022
Doing more for
better health
This report is part of our suite of reporting for the 2022 financial
year. You can find more information about our performance in our
Full Year Results Investor Presentation and Sustainability Report
Cover – Medibank employee and Live Better member, Ella at Half Moon Bay, Victoria. Ella is an active Live Better member who
enjoys weight training, meditating through the Smiling Minds app, walking her dog and spending time with her young family.
Medibank Group – our story
We’re a health company working to create Better Health
for Better Lives by providing the best health and wellbeing
experience for people across Australia. Building upon our
46-year history as one of Australia’s leading health insurers,
our Medibank and ahm brands now support millions of
customers to manage their health and wellbeing through
personalised products and services.
We’re investing in preventative health and reimagining
healthcare to give people greater choice, better access and
more control over their care. We’re partnering with doctors,
hospitals and governments to deliver care in new ways –
and growing and developing new health services through
our Amplar Health business. We’re also working together
to drive the change within Australia’s healthcare system to
help ensure it can support our generation and those to come.
Purpose
Vision
Better Health for Better Lives
The best health and wellbeing for Australia
Values
Customer obsessed
Show heart
Brilliance together
Break boundaries
Strategy
Growing as a health company
Deliver leading
experiences
Differentiate our
insurance business
Expand in health
Our brands
Health insurance
Diversified insurance
Travel
Pet
Life
Car and home
Health services
Health and wellbeing including Live Better
Preventative programs
Clinical homecare and virtual care
Investments in primary care, virtual care and
health system navigation support
Investments in no gap healthcare programs
Sustainability focus areas
Customer
health
Employee
health
Community
health
Environmental
health
Governance
Annual Report 2022 1
2022 highlights
Customer
3.96m
total customers
at 30 June 2022
27.45%
market share
(+14 bps since FY21)
$5.4b
total claims paid
c. $682m
total COVID financial support
to date – includes c. $368m customer
give backs
60.9k (+3.2%)
reported net resident
policyholder growth
45.345.3 (+8.2) Medibank
42.442.4 (-0.6) ahm
customer advocacy
(average Service NPS)
c. 568k
customers engaged
with Live Better and
preventative programs
Services supported
1.21.2m+m+
24.724.7m+m+
476476k+k+
hospital admissions
extras services
surgical procedures
Health services
10,086 (+40%)
customers engaged
with preventative
health programs
7,239 (-5%)
c. 7,239
customers used
Medibank at Home
$10m
investment in
health tech
company
Medinet
c. 3.53.5mm
3,245
3,245
virtual
health
interactions
patients used
My Home Hospital
since Jan 2021 launch
2 Medibank
Our performance
$393.9m (-10.7%)
Group net profit after tax
7.3 cps (+5.8%)
final ordinary dividend
fully franked
13.4 cps (+5.5%)
total ordinary dividend
fully franked
$6,859.8m
Health Insurance
segment revenue
$321.8m
Medibank Health
segment revenue
-$24.8m
net investment
income / loss
Composition of
2022 segment
operating profit
92.992.9%
$592.6m
Health Insurance
7.17.1%
$45.5m
Medibank Health
c. $15m
in productivity
savings
7.97.9⁄⁄ 1010
employee engagement
All data is presented on a statutory basis
33,768768
including around
11,300300
employees
health professionals
Headcount at 30 June 2022
Annual Report 2022 3
Chair’s message
Mike Wilkins AO
4 Medibank
Creating greater value for our customers, community and shareholders has always
been important to Medibank and we have sought to again deliver this over the past 12
months – guided by our purpose of Better Health for Better Lives and our commitment
to being a responsible and sustainable business that is contributing to our society.
As a result of this focus, we have grown
policyholder numbers, achieved record levels
of customer advocacy and created double-
digit growth in Medibank Health, to deliver
another strong result. We have done this while
maintaining a focus on productivity and costs
as part of our ongoing disciplined approach
to growing and running our business.
While Health Insurance operating profit
and Medibank Health segment profit both
increased, our net profit after tax of $393.9
million was down 10.7% on last year. This
was as a result of financial market volatility,
which led to a $24.8 million loss in net
investment income. Our capital position
remains strong and the Board determined
a final fully franked ordinary dividend of 7.3
cents per share, bringing the total full year
dividend to 13.4 cents per share fully franked.
Throughout the pandemic we have committed
to, and continued to, support our customers
and the community. Through the COVID Care
at Home program we deliver with Calvary,
we have now helped around 165,000 people
and we continue to support the broader
public health response to COVID. Part of
this support for our customers has been our
commitment to return known permanent net
claims savings due to COVID to them. Our
total COVID support now stands at around
$682 million including our recent premium
give back and the deferral of our most recent
premium increases for seven months.
At Medibank we are working to drive real
change in our communities as we seek to
achieve our 2030 Vision to create the best health
and wellbeing for Australia. A key component
of this is our focus on environmental, social
and governance issues (ESG). This year we
refreshed our ESG materiality assessment, to
ensure we were focusing on the sustainability
issues that our customers, employees,
shareholders and the wider community
believe are most important for us to address.
Chief among these is the ongoing need for
affordable, innovative and personalised
healthcare. This is underlying the work we
are doing to give people greater access,
choice and control of their healthcare,
such as expanding our no gap program
and growing our Live Better and preventative
health programs, developing new extras
products and building partnerships with
health professionals to provide new care
settings and models of delivery.
How we work, and the culture that we
cultivate is paramount to delivering for our
customers and for you, our owners. To this
end we continue to champion diversity and
inclusion across our business, through
our Future Fit way of working, our focus
on employee health and wellbeing, and
our values-based culture in support of our
continuing desire to be an employer of choice.
It’s pleasing to report that women hold 44% of
both Board and senior leadership roles and we
further enhanced our parental leave policy this
year. In addition to launching our first Human
Rights Policy, we reinforced our commitment
to improving prosperity and addressing
health equity for First Nations People
through our fifth Reconciliation Action Plan.
We also released our second Accessibility
and Inclusion Plan outlining our approach to
supporting people living with a disability.
We accelerated our commitment to Net
Zero that we first announced in September
2021, bringing forward our timelines and
setting a pathway to achieve Net Zero by
2040 (including Net Zero against our Scope
1 and 2 emissions by 2025) on our current
business as usual operations. We have also
begun exploring our investment portfolio’s
greenhouse gas emissions exposure so we
can work towards setting science-based
targets to create a pathway to Net Zero across
our investment portfolio. You can find more
detail on this in our Sustainability Report 2022.
I’m proud of Medibank and the role that
it plays in our community. David Koczkar
and the executive team have shown
great leadership throughout another
challenging year and I would like to thank
and congratulate them, along with everyone
at Medibank, for all that they have done and
achieved in 2022. I would also like to express
my gratitude to my fellow directors for their
wise counsel and to all our shareholders for
your ongoing support. Together, we continue
working to make a difference to the health
and wellbeing of our customers, our people
and our community.
CEO's message
2022 has seen Medibank deliver another strong result, reflecting
the work of our amazing team and their unwavering focus on our
customers. It is a year that our company can be truly proud of.
We saw standout customer growth of 3.2%,
increasing our resident policyholders by
nearly 61,000. Most of our new customers
were younger people and those taking out
cover for the first time. We also saw strong
growth in Medibank Health as we focused
on supporting the health and wellbeing
needs of our customers and community.
Differentiating our core insurance
business is central to our strategy. Our
two brands, combined with one of the
most extensive provider networks in the
industry, continues to set us apart from
others as we offer leading products and
services across the full spectrum of our
customers' needs in health.
Customer retention over the past two
years across the Medibank Group has been
stronger than at any point in the decade
previously, and high levels of customer
advocacy and brand leadership among the
top health insurers show our customers
are valuing the support we provide.
We have managed to achieve this growth
despite the fact that this year has been
tough for many people as the impacts
of COVID continue to be felt and costs of
living rise. What is clear is that health
has remained top of mind with a record
number of people wanting greater choice
and control and electing to participate
in the private health system.
Our strategy to grow as a
health company is enabling
us to deliver for our
customers not only today,
but is also setting us up to
do the same into the future.
Delivering leading experiences continues
to be key. For our customers, we’re
focused on making things better for them.
Our digital and analytics capabilities are
supporting more self-service interactions
as customer preference increasingly
shifts towards technology. These same
capabilities are enabling more personalised
conversations with customers to better
support their health and wellbeing.
Of course, none of this would be possible
without our team. I am pleased to report
that our people remain highly engaged,
driven in part by the launch of our
2030 Vision to deliver the best health
and wellbeing for Australia, including
progressing our sustainability agenda.
The growing number of customers engaging
with our Live Better and preventative
programs reflects the unmet need in
the community and the role we can play
to provide support to fill this gap. As
we expand in health, our focus in areas
such as virtual health, mental health
and integrated care offers tremendous
benefits for our customers, community
and the health system at large. The same
can be said of our investments in new care
settings including our no gap network,
which we more than doubled over the year.
Our rebranded Health Services business,
Amplar Health, is focused on these
opportunities as we look to meet the
needs of our customers and our
government and community partners.
We are also seeking to drive change across
the health system so it is fit and sustainable
for the future. For health insurers these
changes will help keep premium increases
low for our customers, improve access
to private health, and in turn alleviate
pressure on the stretched public system.
Some challenges require a rethink of
the status quo. Other challenges require
reform. Prostheses reform is a prime
example of this, with a chance to deliver up
to $900 million of savings to consumers in
the private system over the next four years.
With challenges, come opportunity, and I
want to thank our people for managing both
incredibly well throughout the year. Their
commitment and focus continue to be the
driving force as we support our customers,
and take our next steps to deliver the best
health and wellbeing for Australia. I also
want to thank Mike and the Board, and of
course all our shareholders whose ongoing
support enables these steps to be made.
David Koczkar
Annual Report 2022 5
Delivering value to stakeholders through our strategy
Impacts and trends influencing our stakeholders
Customers
Employees
Community
Shareholders
Government /
health system
Impacts of
COVID
Flexibility and
health and
wellbeing
Highly competitive
talent market
Pressure on
household
budgets
Health and
wellbeing
Higher customer
experience
expectations
Simple,
personalised
digital service
Impacts of
COVID
Sustainable
financial returns
Pressure on
health system
Climate change
Equality, diversity
and inclusion
Expectation of
businesses to
contribute to
society
Transparency
in reporting
Growing chronic
disease and ageing
Environmental, social
and governance
(ESG) issues –
Net Zero, diversity
and inclusion and
data privacy and
technology
Healthcare
worker shortages
and burnout
Acceleration of
new care settings
– telehealth and
virtual care
How we’re responding to deliver value through our strategy
We’re supporting
our customers’
health and wellbeing,
offering greater
healthcare access,
choice and control
and creating a more
connected experience
We’re empowering
our people to
achieve their best
through flexible
working, health and
wellbeing support,
with a culture that
celebrates diversity
and inclusion
We’re addressing
some of Australia’s
biggest health and
community concerns
such as loneliness,
mental health,
reconciliation,
climate change, and
diversity and inclusion
We’re delivering
sustainable returns
to our shareholders
while meeting
the expectations
of our customers
and community by
embedding ESG
practices in our
strategy
We’re driving change
to reshape Australia’s
health system,
investing in prevention
and partnering with
doctors, hospitals
and governments on
new care models to
support the long-term
sustainability of our
health system
6 Medibank
The material issues our stakeholders care most about
Affordable,
innovative
and
personalised
healthcare
Engaged, purpose-
led culture, attract
and retain talent
Diverse and
inclusive
workforce
Support healthy
communities
Work together to
build a stronger and
more sustainable
health system
Environmental
health and
climate change
Ethical and
sustainable
business
Our strategy – growing as a health company
Deliver leading
experiences
Differentiate our
insurance business
Expand in health
Create personalised
and connected
customer experiences
Empower our people
Collaborate with
our communities to
make a difference
Deliver more value, choice
and control for customers
Offer products and services
to meet all customer needs
Leverage our dual brands
and provider networks
Focus growth on
prevention and
integrated care models
Scale and connect
our health businesses
Bring benefits back
to our core
Better Health for Better Lives
Annual Report 2022 7
Deliver leading
experiences
Our goals:
Our FY22 milestones
> Create personalised and
connected customer experiences
> Empower our people
> Collaborate with our communities
to make a difference
Target
Achieved
Customer advocacy Service NPS (average)
>35
Medibank
>35
ahm
45.3 (+8.2)
42.4 (-0.6)
Employee advocacy (eNPS)
Place to work
Products and services
≥+24
≥+19
+27
+29
8 Medibank
We’re working to deliver a brilliant experience every time for our
customers, by investing in our digital capabilities, engaging our people
in our purpose and vision, and helping improve the communities we are
part of. The strong technology foundations we’ve built are enabling us to
have deeper, more meaningful relationships with our customers that are
helping them better manage their health and wellbeing.
A better experience across every channel
We’ve risen to meet our customers’ changing
expectactions – delivering information
personalised to their own needs, the benefits
that come from connected experiences and
the control and ease offered by self-service
tools and support.
This year, we’ve achieved our highest ever
customer advocacy service NPS scores for
Medibank and were above target for ahm. We are
also leading our health insurer peers on brand
advocacy. Like most companies, we experienced
workforce challenges throughout the year, which
we managed by enabling our customer channels
and Amplar Health team members to work
across multiple channels and by improving the
effectiveness of our digital self-service channels
to provide the support our customers expect
of us. Our Amplar Health team undertook over
440,000 digital COVID Care assessments this
year, assisted by other team members.
We checked in with more than half a million
customers to make sure their health cover
was delivering to their needs. We’ve invested
in our analytics capabilities to help us tailor
the information and support we offer to our
customers, so it is personalised to deliver greater
value. We’ve also been piloting health clinicians
working in a number of our retail stores to enable
more detailed conversations about healthcare
and support programs available.
We’ve continued enhancing our digital customer
experience. We’ve expanded the range of claims
and payments that can be done through the
My Medibank app and introduced authenticated
messaging to make it quicker for people to
access support. We continued integrating more
Live Better functionality, making it easier for
customers to manage their health and wellbeing
in a single digital experience. Around 70% of ahm
customers have logged in to the app or website
this year, as we made it easier to pay digitally,
revamped the claims experience and introduced
on-the-spot orthodontics claims. We’ve also seen
more people take up digital membership cards
with both Medibank and ahm cards available on
both iOS and Android platforms.
The convenience and simplicity of our self-
service channels has seen them continue to
grow and increasingly become the support
channel of choice, managing more than 40%
of all Medibank service queries this year.
We’ve added new functionality to our online
messaging service to guide people through
payments and claims queries. We’ve also
strengthened our privacy and data security
capabilities and requirements to ensure
our customers are better protected.
We’re bringing Medibank to our customers
through VANgo – our mobile store on wheels that
has been travelling throughout regional and rural
Queensland to provide a face-to-face experience
for customers in areas where stores aren’t close
by. VANgo has been so popular, we will soon
have two more vans travelling through WA and
northern Victoria/southern New South Wales.
c. 504504kk
customer check ins
c. 1.41.4mm
c. 4040%
customers registered
for My Medibank app
of Medibank service interactions
through self-service channels
1.5m+
people have engaged
in free Live Better
events and activities
since 2017
Annual Report 2022 9
Deliver leading experiences
Inspiring our people to deliver
It is the passion and commitment of our people
that enables us to deliver for our customers
– they are the heart and soul of who we are
and what we do. Already strongly committed
to our purpose and values-based culture, the
launch of our bold new 2030 Vision this year
– to create the best health and wellbeing for
Australia – has inspired and motivated our
people even further.
Our people are also empowered by our Future
Fit ways of working, which we’ve continued to
evolve, drawing on the lessons learnt through
the pandemic. They choose where they work,
based on what they are doing and where it’s best
to get that work done. This is one of the reasons
our people continue to be so highly engaged.
Our employee survey this year highlighted how
much our team value the approach to flexibility
we offer and feel well supported in their health
and wellbeing and opportunities for professional
development. In a highly competitive market for
talent, people are attracted to our purpose, our
progressive way of working, and our caring and
inclusive workplace.
We remain strongly committed to showing
leadership on diversity and inclusion. We
continued to champion gender equality with
more than 40% of women in both senior
leadership and Board positions and maintained
a genderpay equity of less than 1% this year.
We’ve strengthened cultural awareness and
understanding among our people, launching
our 5th Reconciliation Action Plan (RAP) this
year and working with the Australian Indigenous
Doctors’ Association (AIDA) and members of the
Health RING (a network of health organisations)
to support a more culturally safe health sector.
We’ve also set ourselves a new target of $1 million
(inc GST) in Aboriginal and Torres Strait Islander
business procurement spend each year by 2025.
The launch of our 2nd Accessibility and Inclusion
Plan built upon our work to create an inclusive,
safe and disability confident workplace. We
introduced accessible membership cards for
Medibank customers, launched our 1st disability
awareness training module, and began piloting
a support program for employees caring for
ageing parents or someone with a disability
or chronic illness.
4444%
of Board roles
held by women
4444%
1 1,674,674
163 163
of senior leadership
roles held by women
employees participated in
cultural awareness training
employees self-identify
as living with disability
10 Medibank
Building better communities
We’re committed to supporting the health of our
community and making a positive contribution
to help address the issues we face as a society.
We reached our goal of engaging 1.5 million
people in our free Live Better events and
activities, 10 months ahead of schedule. The
many free activities we supported included
online dance classes in collaboration with the
Sydney Dance Company, family mindfulness
activities through our partnership with Smiling
Mind, and health and wellbeing classes as part
of the Medibank Feel Good program in Brisbane.
Since 2016, we've been partnering with parkrun
Australia to make exercise and community
engagement something everyone could enjoy.
More than 750,000 people have participated in
parkrun's free weekly events since 2011. We
know the positive social impact parkrun has on
communities, particularly so in terms of tackling
loneliness, and this year we extended our
partnership to 2025.
We raised the public conversation about
loneliness as part of our 10-year commitment
to helping address an issue that our research
showed is impacting more than half the people
in Australia, based on our latest survey results.
We launched the podcast series We Are Lonely
to explore the theme of loneliness and drive
positive conversations around mental health and
wellbeing. Featuring interviews with the likes of
actor Hugo Weaving and musician Darren Hayes,
the podcast has been listened to by more than
55,000 people to date.
We launched our Better Minds hub to provide
a range of resources about mental health
and wellbeing, as well as an app featuring
wellbeing checks, mental fitness training
and one-on-one coaching sessions.
We also undertook research to better understand
the longer-term implications COVID is having
on the mental health and wellbeing of young
people. We continued to drive health research
and patient advocacy initiatives; partnering with
universities and research leaders, industry and
advocacy groups. We supported 25 projects this
year, including a University of Sydney program
assessing the use of digital health services to
help people in rural and remote communities
manage musculoskeletal pain.
In addition to supporting our customers
through our COVID financial support package
and give back program, we helped customers
impacted by the floods in New South Wales and
Queensland with assistance packages including
policy suspensions and financial support to
cover premiums for up to three months.
We know we have a role to play in fighting
climate change, which is why we’ve brought
forward our Net Zero commitment to 2040
and set science-based targets to achieve Net
Zero on Scope 1 and 2 emissions by 2025 and
a 50% reduction in Scope 3 emissions by 2030.
Our pathway is based on Medibank Group’s
current business-as-usual operations and does
not account for any future partnership and
investment activity. Our investment portfolio is
also currently out of scope, but we are working
to create a pathway to Net Zero for this. We’re
actively working to protect human rights and
help prevent modern slavery. This year we
strengthened our commitment to ensuring
respect and equality for our customers,
employees, communities and suppliers with
the launch of our 1st Human Rights Policy.
We also published our 2nd Modern Slavery
Statement, which detailed the extension of
our risk assessments to our hospital partners
and overseas agents that distribute products
on our behalf.
c. $$1.11.1mm
invested in research
1 July 2021 to 30 June 2022
More than
5555k+ k+
people have
listened to the
We Are Lonely
podcast to date
For more information
about the work we’re
doing in the community
and our commitments
to sustainability, see our
Sustainability Report 2022
Annual Report 2022 11
Differentiate our
insurance business
Our goals:
Our FY22 milestones
> Deliver more value, choice
and control for customers
> Offer products and services
to meet all customer needs
> Leverage our dual brands
and provider networks
Net policyholder growth
Market share –
FY24 aspiration
Target
3.1-3.3%
Up 25-75bps
Health Insurance
productivity delivered
$40m including
$15m in FY22
Achieved
+3.2%
27.45%
(+14bps since FY21)
c. $15m
12 Medibank
As the impacts of the pandemic persist in our health system and the broader
community, people are continuing to prioritise their health, even though
cost of living pressures are increasing. They are looking to us to provide
real value and support for their health and wellbeing, and we are delivering
– with products and services that do more for our customers and growing
our network of partners and providers to better meet their needs.
70%
of our new customers
are younger people
and those new
to industry
People have responded to the choice we are
providing through our two distinct brands and
we increased our market share by 14 basis
points. Younger people and those new to industry
made up around 70% of our new customers
this year. Together our Medibank and ahm
brands now represent 27.45% of people with
private health insurance.
Ongoing COVID support
for our customers
As COVID continued to impact our customers’
ability to access healthcare services, we
returned around $368 million in COVID
permanent net claims savings to customers
through cash give backs and deferring premium
increases. We also rolled over extras annual
limits for ahm customers. In total we’ve
now provided around $682 million in COVID
customer support since the pandemic first
began and we continue to assess known
permanent net claims savings due to COVID
to return to our customers in the future.
Products and services
built for better
We’ve listened to our customers and refined our
products and services to offer greater value. We
launched a new suite of extras cover products to
give customers the flexibility to be able to choose
and pay for the services they want. In doing so
we've introduced a new, intuitive way for new
customers to buy the health insurance that best
meets their needs, and have seen increased
levels of satisfaction for these products.
We partnered with doctors and hospitals to
expand our short stay network, forming a new
partnership with Healthe Care to grow our no
gap program. By October 2022, we will have 24
hospitals across seven states and territories
participating in our no gap program, which
covers selected procedures such as hip and knee
replacements and endoscopies with no medical
out-of-pocket costs and the opportunity to
recuperate at home, where clinically appropriate.
Almost two thirds of Medibank customers will
live within 25km of a no gap site by October 2022
and we’re now expanding the program to new
procedures, including some general surgery
procedures. We were also the first major health
insurer to adopt the Federal Government’s
voluntary age dependent reforms, extending the
age that young adults can stay on their parents’
policy from 24 years old until their 31st birthday.
3.963.96mm
customers
at 30 June 2022
c. 6464%
of Medibank
customers to live
within 25km of a
no gap hospital
by October 2022
24 hospitals
in 7 states in our
no gap network
by October 2022
1,200
$$1,200
average out-of-pocket
cost savings for patients
in our no gap joint
replacement program
Annual Report 2022 13
Differentiate our insurance business
As borders began to reopen, we saw strong
growth in the number of overseas students,
workers and visitors choosing our health
insurance options. We enhanced our Overseas
Student Health Cover products to provide
greater support for international students,
introducing an online GP service within the
app and launching a student rewards program
to help students to save money, find work and
enhance their skills and knowledge. This year,
Canstar named Medibank and ahm joint
winners of its Outstanding Value Award for
overseas health cover.
Better value
Our Members’ Choice Advantage network
has delivered around $31.2 million in
out-of-pocket savings this year, providing
better value, more cost transparency and
a wider range of services to our customers.
In July this year, we expanded this network to
include physiotherapy, chiropractic, podiatry,
acupuncture and remedial massage and we
now cover more types of services than any
other health insurer. Through our Live Better
Rewards program, we’re rewarding our
customers for looking after their health by
visiting one of our Members’ Choice Advantage
dentists or optical providers or shopping with
our partners like Fitbit, Brooks, Amcal Pharmacy
or HelloFresh. Customers have also been able
to redeem points on products and services from
our growing range of partners including adidas,
Apple and more.
c. $$31.231.2mm
out-of-pocket savings
through Members’ Choice
Advantage network
14 Medibank
The program is helping us improve customer
engagement and retention, with our data
showing customers participating in Live
Better are more likely to stay with us.
We were one of the first insurers to introduce
COVID benefits to our travel insurance cover
when travel restrictions lifted this year.
We also supported customers to better protect
their pets, simplifying access to pet insurance
by integrating it into the My Medibank app
and improving our cover options – for which
we were recognised by the Canstar Award
for outstanding value pet insurance.
We’ve paid $5.4 billion in claims and this
year’s annual health insurance premium
increase, which we postponed for seven
months, was our lowest in 21 years. We also
continued to manage our own costs, delivering
around $15 million in cost savings this year
as part of our target to deliver $40 million in
productivity savings between FY22 and FY24.
Advocating for reform
We’ve worked to encourage healthcare
reforms that could reduce costs and improve
sustainability across the system, increase
care options where clinically appropriate
and make private health insurance more
affordable through improved incentives.
We’ve continued to strongly advocate for
prostheses reform, which presents an
opportunity to deliver around $900 million in
cumulative savings over four years to private
health consumers. While we anticipate the
Federal Government’s agreement with medical
device manufacturers will see real price
reductions flow through the health system over
the next four years, more needs to be done as
Australians continue to pay some of the highest
prices for medical devices in the world. We
remain committed to returning the prostheses
reform savings realised to our customers
through lower premium increases.
Prostheses
costs are around
3030%
higher
than in NZ, France
or the UK
Private Healthcare Australia
$$5.45.4bb
total claims paid
Lowest average premium
increase in 21 years
years
deferred for 7 months until
1 Nov
2022
c. $$1515mm
in productivity savings
Annual Report 2022 15
Expand in health
Our goals:
> Focus growth on prevention
and integrated care models
> Scale and connect our
health businesses
> Bring benefits back to our core
10,086
10,086
people enrolled
in preventative
health programs
1 1 in
in 44
Medibank joint
replacement patients
are having rehab
at home
16 Medibank
Together with doctors, hospitals and governments, we’re creating
new models of care that are better for patients and better for Australia’s
health system. We’re working to drive down costs, offer more choice and
improve the healthcare experience for our customers and for patients
across the country.
We’re supporting healthcare innovation, building partnerships with others
in the healthcare system and investing in companies that are utilising
technology to make healthcare simpler, easier and more accessible.
c. 27%
of Medibank customers
going to hospital
were supported by
Health Concierge
Helping our customers be better
The latest census data highlighted one of
the biggest challenges facing our health
system – Australia’s ageing population and
the growing number of people with one or
more chronic health conditions. This is why
we are so invested in preventative healthcare,
helping our customers and our communities
to stay healthy and avoid unnecessary
hospital treatments.
More than half a million people have joined
our Live Better program which is designed
to encourage and reward people for healthy
actions. Through the Live Better app we have
been running preventative health campaigns,
rewarding customers for getting flu and COVID
vaccinations, taking their blood pressure
or having skin checks. We also developed a
children’s eye check challenge after research
highlighted the increased use of screens during
the pandemic was leading to an increase in
childhood myopia.
Our preventative health programs continue
to grow with enrolments increasing by more
than 40% across our eight programs this
year. Results from our Better Knee, Better Me
program demonstrate up to four out of five
participants experienced clinically significant
improvements in knee pain, and the program –
developed with the University of Melbourne
– received the inaugural Australian Clinical Trials
Alliance (ACTA) Industry Partnership Award this
year. We have now launched a new pilot that
aims to help people manage osteoarthritis hip
pain that utilises the same successful approach.
Our Medibank Type 2 Diabetes program has
also seen promising early results and feedback
from participants.
Our Health Concierge team supported almost
27% of Medibank customers going to hospital
this year and launched two new pilots. Our
Dietician Support service is designed to help
elderly people going to hospital who are at risk
of malnutrition. In July 2022 we also launched
our Mental Health Concierge that prepares
customers and their family for a psychiatric
admission and supports them throughout
their experience.
As well, many of our corporate customers
are looking to us for support with developing
health and wellbeing programs tailored to the
needs of their employees. From customised
preventative programs and virtual health
solutions, to specialised mental health support,
we are helping businesses, organisations and
universities to better support their people.
Our FY22 milestones
Customers engaged with Live Better*
Medibank Health segment profit
Target
c. 480k
Replace the reported FY18 $30m
operating profit of Garrison by FY22**
Achieved
c. 568k (+55%)
$45.5m
(FY18: $47.3m)
* Includes total customers who have engaged with our preventative health offering, including Live Better Rewards,
Live Better Activities, preventative health programs and any new offerings developed
** Milestone updated to align with Medibank Health segment profit and to reflect FY21 statements that the temporary
travel insurance earnings impact is expected to be largely offset by the contribution from investments in FY22
Annual Report 2022 17
Making healthcare personal
As we work to create more options that give
people greater access, choice and control
over their healthcare, we reshaped our health
services business this year under the new name,
Amplar Health. Through Amplar, we’ve continued
to support patients in both the private and public
health systems by growing and developing the
health services we deliver and invest in – virtual
health, homecare, short stay hospitals, primary
care and allied health. The Amplar team is also
focusing on ways to improve health system
navigation and create a more digitally connected
healthcare experience for our customers.
Central to this work is the partnerships we have
built across the business with doctors, hospitals
and health stakeholders. During the year we
invested $10 million in leading health technology
company Medinet, expanded the My Home
Hospital program we deliver for Wellbeing SA
in a joint venture with Calvary, and assisted the
Myhealth GP network to expand their network of
local GP practices, as well as helping strengthen
their clinical operations and core business
processes. We also continued working with a
group of more than 40 doctors to develop a
new short stay hospital in Melbourne which
we expect to open in 2024.
7,239
7,239
customers used
Medibank at Home
3,245
3,245
patients used
My Home Hospital
since Jan 2021
c. 7979kk
Better Minds hub
users and app
downloads
18 Medibank
Expand in health Redesigning healthcare
for our customers
We partnered with Myhealth and Medinet to
launch a new telepsychology clinic pilot designed
to reduce the wait time to access a psychologist
from three months to two weeks, that utilises
video consultations supported by an innovative
phone and digital concierge support program.
We’ve continued to invest in our telehealth
capabilities and expand our virtual care
technology. Through our joint venture with
Calvary we created a COVID Care at Home
program that utilised remote monitoring and
artificial intelligence to assist local health
authorities to support around 165,000 COVID
patients across New South Wales, Victoria,
Queensland and Western Australia this year.
We also helped take the pressure off emergency
departments and support local hospitals through
the Nurse Triage and After Hours GP programs
that we deliver on behalf of healthdirect.
We worked closely with one of our largest
corporate clients to implement virtual GP
services, health management programs and
provide 24/7 care to support their fly in fly out
and regional and rural employees in remote
parts of Australia.
In addition to providing our own 24/7 general
health and mental health phone support lines
for our customers, we have continued to deliver
the NSW Mental Health Line, and after a decade
of delivering 1800RESPECT and Beyond Blue,
our contracts came to an end this year.
Community support for homecare has continued
to increase, despite services being impacted by
COVID restrictions on elective surgery. We cared
for more than 7,000 people in the comfort of
their home this year, and our My Home Hospital
service, delivered on behalf of Wellbeing SA
through a joint venture with Calvary, expanded to
provide a broader range of treatments and care
to patients in additional areas near Adelaide.
$$1010mm
investment in health tech
company Medinet
c. 3.53.5mm
virtual health interactions
c. 165165kk
patients supported
through joint
Calvary-Medibank
COVID Care at Home
Annual Report 2022 19
Our sustainability highlights
FY22 highlights
Giving back to customers c. $368m in
COVID permanent net claims savings
through cash give backs and postponing
premium increases for 7 months
c. $682m total COVID financial
support package to date
Rolling over unclaimed ahm FY22
extras annual limits for another year
More than doubled our no gap network
(including short stay) across 7 states
and territories
c. 568k customers engaged with Live
Better and preventative programs
c.7.2k customers used Medibank at Home
c. $31.2m out-of-pocket savings through
Members’ Choice Advantage network
Managed c.3.5m virtual health interactions
Supported c.165k patients through
COVID Care at Home program
delivered with Calvary
Lowest average premium increase
in 21 years
Invested $10m in health
technology company, Medinet
c.79k Better Minds hub users
and app downloads
c.100k+ people engaged with the
Smiling Mind Families program
Launched We Are Lonely podcast series
to raise awareness of loneliness
Rewarded 70k+ Live Better members
for getting COVID vaccinations
40k+ customers accessed
free flu vax vouchers
Women represent 44%
of Group and senior leaders
44% of our Board are women
Maintained gender pay equity
of less than 1%
24% of parental leave taken by men
11th globally in Equileap
Gender Equality Index
Employer of choice by WGEA,
7th year in a row
Certified as a Family Friendly
Workplace by UNICEF
Published 1st
Human Rights Policy
Published 2nd
Modern Slavery Statement
Paid community leave and charity
gift voucher donations to support
employees to get COVID vaccinations
Extended modern slavery risk
assessments of suppliers
Sought independent limited
assurance of selected ESG metrics
c. 85% of employees worked flexibly
COVID care and pregnancy support
programs extended to employees
In the top 25% of companies
globally for employee health
and wellbeing engagement
(Q1 2022 Peakon global benchmark)
Extended commitments to partner
with Aboriginal and Torres Strait
Islander businesses in RAP
c. $596k (inc GST) spend with Aboriginal
and Torres Strait Islander businesses
Ensure healthy lives and
promote wellbeing
for all ages
Material topics
Affordable, innovative and
personalised healthcare
Support healthy communities
Achieve gender equality and
empower all women and girls
Material topics
Diverse and inclusive
workforce
Engaged, purpose-led culture,
attract and retain talent
Promote sustained, inclusive
and sustainable growth, full
and productive employment
and decent work for all
Material topics
Engaged, purpose-led culture,
attract and retain talent
Ethical and sustainable
business
20 Medibank
FY22 highlights
Increased employee engagement
among Aboriginal and Torres
Strait Islander employees
163 employees identified
as having a disability
Piloted a carers support program
for employees
Published 2nd Accessibility
and Inclusion Plan
Reduce inequality within
and among countries
Material topics
Diverse and inclusive
workforce
Ethical and sustainable
business
Ranked 11 on the Australian Network
on Disability Access & Inclusion index
Published 5th RAP
11 years partnering with the
Wadeye community in NT
1,674 employees participated
in cultural awareness training
Take urgent action to combat
climate change and its impacts
Material topic
Environmental health
and climate change
Strengthen the means of
implementation and revitalise
the global partnership for
sustainable development
Material topics
Ethical and sustainable
business
Work together to build
a stronger and more
sustainable health system
Support healthy communities
Accelerated commitment to achieving
Net Zero by 2040 including Net Zero
against our Scope 1 and 2 emissions
by 2025
c.$15m invested in green bonds
Begun analysis to understand
the sustainability profile of our
investment portfolio
Maintained our carbon neutral status
for our Scope 1, 2 and 3 emissions
Ongoing commitment to low carbon
domestic and international equity
investments
Further integration of ESG into
enterprise risk management
c. $1.1m invested in
25 health research projects
Advocated for healthcare
system reform
Partnered with La Trobe University
to research impacts of COVID and
health delivery services
6 years partnering with the
Grattan Institute
3 years partnering with the
Australian Patients Association
Community partnerships
• parkrun Australia
• Smiling Mind
• Feel Good Program, Brisbane
• Sydney Dance Company
• Dr Michael Mosley and
The Fast 800 Program
Aboriginal and Torres Strait Islander
partnerships
• Australian Indigenous Doctors’
Association
• Thamarrurr Indigenous Youth
Corporation
• Wadeye community, Northern Territory
• Indigenous Defence and Infrastructure
Consortium (iDiC)
• Supply Nation
• Dhiira
For more detail see our Sustainability Report 2022
Annual Report 2022 21
Operating and financial review
1. About Medibank
Medibank Private Limited (Medibank) is a health company
providing health insurance and health services to more
than 4 million people in Australia. Our core business is
Health Insurance, whereby we underwrite and distribute
private health insurance policies under the Medibank and
ahm brands. Medibank Health complements our Health
Insurance business by providing a number of services: our
health services business, which is being rebranded as Amplar
Health, supports the healthcare needs of our core Medibank
and ahm customers and the broader community; our Live
Better program supports customers and the community to
make better choices for their health and wellbeing; and we
offer a range of diversified insurance products such as travel,
life and pet insurance. Additionally, as we maintain assets
to satisfy our regulatory reserves, we generate investment
income from our portfolio of investment assets.
Medibank was founded in 1976 as a private health insurer
owned and operated by the Australian Government. We have
operated on a for-profit basis since 2009. On 25 November
2014, Medibank was sold by the Australian Government
by way of an initial public offering (IPO) and listed on the
Australian Securities Exchange. As at 30 June 2022, we had
3,291 full-time equivalent (FTE) employees, including 970
health professionals (excluding employees in associates
and joint ventures).
2.1 Group summary income statement
Year ended 30 June ($m)
Group revenue from external customers
Health Insurance operating profit
Medibank Health segment profit
Segment operating profit
Corporate overheads
Group operating profit
Net investment income/(expense)
Amortisation of intangibles
Other income/(expenses)
Profit before tax
Income tax expense
Group net profit after tax (NPAT)
Effective tax rate
Earnings per share (EPS) (cents)
Normalisation of growth asset returns
Normalisation of defensive asset returns
Underlying NPAT1
Underlying EPS (cents)1
Dividend per share (cents)
Dividend payout ratio1
2. Financial and operating performance
References to “2021”, “2022” and “2023” are to the financial
years ended on 30 June 2021, 30 June 2022 and 30 June 2023
respectively, unless otherwise stated. The “Group” refers
to the consolidated entity, consisting of Medibank and its
subsidiaries.
Despite the challenging environment over the last year, our
results show continuing momentum in our Health Insurance
business and strong growth in Medibank Health, including
a meaningful uplift in the contribution from our healthcare
partnerships.
2022
7,128.5
592.6
45.5
638.1
(44.0)
594.1
(24.8)
(2.0)
(7.3)
560.0
(166.1)
393.9
29.7%
14.3
22.7
18.5
435.1
15.8
13.4
84.8%
2021
6,910.4
538.6
31.4
570.0
(41.7)
528.3
120.0
(4.6)
(11.4)
632.3
(191.1)
441.2
30.2%
16.0
(31.2)
(11.3)
398.7
14.5
12.7
87.7%
Change
3.2%
10.0%
44.9%
11.9%
5.5%
12.5%
n.m.
(56.5%)
(36.0%)
(11.4%)
(13.1%)
(10.7%)
(50bps)
(10.7%)
n.m.
n.m.
9.1%
9.1%
5.5%
(3.3%)
1. Underlying NPAT is statutory NPAT normalised for growth asset returns to historical long-term expectations, credit spread movements and one-off items.
Dividend payout ratio based on underlying NPAT
22 Medibank
Group operating profit increased by $65.8 million or 12.5%,
with $54.0 million or 10.0% growth in Health Insurance
operating profit, and $14.1 million or 44.9% growth in
Medibank Health segment profit. However, continued volatility
within financial markets drove a $24.8 million loss in net
investment income compared to a $120.0 million gain in
2021, and as a consequence Group NPAT was down 10.7%.
Underlying NPAT, which adjusts for the normalisation of
investment returns, increased $36.4 million or 9.1% to
$435.1 million.
The key reasons for the movements in the Health Insurance
and Medibank Health results, as well as net investment
income, are outlined in this report.
Health Insurance
Year ended 30 June ($m)
Premium revenue
Net claims expense (including risk equalisation)
Gross profit
Management expenses
Operating profit
Gross margin
Management expense ratio
Operating margin
2022
6,859.8
(5,731.1)
1,128.7
(536.1)
592.6
16.5%
7.8%
8.6%
2021
6,680.3
(5,610.8)
1,069.5
(530.9)
538.6
16.0%
7.9%
8.1%
Change
2.7%
2.1%
5.5%
1.0%
10.0%
50bps
(10bps)
50bps
Strong Health Insurance performance was driven by
continued policyholder growth, a subdued level of cover
downgrading and ongoing cost control, and was achieved
despite the impact of border closures on the non-resident
health insurance business.
Health Insurance revenue grew 2.7% to $6,859.8 million with
strong policyholder growth and improved downgrading. When
adjusted for our COVID-19 customer support measures of
$369.4 million in 2022 and $226.0 million in 2021, underlying
revenue grew 4.7%.
The resident Health Insurance market remains buoyant
with the trend of high quality industry policyholder growth
continuing, including new to industry and younger customers.
Our reported net resident policyholders increased by more
than 60,000 or 3.2% with the Medibank and ahm brands
growing 1.9% and 7.3% respectively. The Medibank brand
acquisition rate increased 30 basis points, reflecting strong
growth in the corporate segment and through digital channels.
ahm continued its strong growth trajectory and now has more
than 500,000 policyholders, although the acquisition rate was
lower than the prior period due to declining sales through
aggregator platforms and increased policyholder numbers.
Reported net resident policyholder growth
FY22
FY21
FY20
FY19
3.2%
4.6%
0.6%
0.8%
0
1
2
3
4
5
The lapse rate for Medibank was stable, while an increase
in ahm’s lapse rate in part reflects the benefit of the extras
annual limit rollover last year. Despite deteriorating economic
conditions, the lapse rate in the second half for both
brands improved compared to the second half of 2021, and
throughout the year there was no notable increase in policy
suspensions.
Gross claims expense increased 1.9% and net claims,
which includes risk equalisation, increased 2.1%. The risk
equalisation payment increased $11.5 million, reflecting our
claims growth continuing to be below industry growth and
strong policyholder growth in ahm which has a younger and
lower claiming customer demographic. There was also a
$368.8 million reduction in claims expense with lower than
expected claims as a result of COVID-19 and an increase in
the deferred claims liability.
Underlying resident claims growth per policy unit (which
excludes COVID-19 impacts) was 2.3% with the increase in
hospital claims more than offset by the reduction in extras
claims. Extras claims growth in the prior period was elevated
due to investment in additional product benefits, and the
modest increase in hospital claims this period reflects sales
mix and the benefits of claims initiatives in the prior period.
The COVID-19 deferred claims liability, which is in
recognition of claims that have likely been deferred since the
commencement of COVID-19 restrictions, increased $224.5
million to $448.3 million with lower hospital volumes due to
elective surgery restrictions and staff shortages resulting
from COVID-19 isolation periods. Overall, COVID-19 had a
modest impact of $0.6 million on operating profit with the
cost of our customer give back program offset by further
permanent claims savings. Removing these COVID-19
impacts, underlying gross profit increased 5.3%.
Annual Report 2022 23
Operating and financial review
Reported gross profit increased 5.5% to $1,128.7 million with
improving revenue and lower claims growth per policy unit
in the resident portfolio more than offsetting a decline in
the non-resident portfolio. The second half saw a material
improvement in gross profit for the non-resident portfolio
as the opening of international borders led to an increased
student intake.
Management expenses were up 1.0% to $536.1 million
with approximately $15 million of productivity savings and
lower non-cash costs largely offsetting cost inflation of
approximately 2.5%, additional statutory costs and growth
in non-resident commissions. The growth in non-resident
commissions reflects the reopening of borders in the
second half. While we expect cost inflation to increase to
approximately 3.5% to 4.0% in 2023, this will largely be offset
by further productivity savings. Despite this modest increase
in management expenses, the increase was lower than the
increase in revenue resulting in an improved management
expense ratio of 7.8%, or 7.4% on an underlying basis.
Going forward we will continue to leverage the benefits of
growth and scale to target further modest improvement in
the management expense ratio. While we will remain
disciplined, we will continue to focus on balancing this
objective with our medium-term growth aspirations.
Health Insurance management expense ratio
2022
2021
2020
2019
7.8%
7.9%
8.3%
8.7%
0
2
4
6
8
10
Our Health Insurance operating profit of $592.6 million
increased 10.0% this year, or 9.5% on an underlying basis,
with continued cost discipline and the benefit of increasing
scale contributing to a 50 basis point improvement in
operating margin. On an underlying basis, operating margin
improved 40 basis points to 8.2% due to the 30 basis point
improvement in underlying management expense ratio.
Medibank Health
The role of Medibank Health is to strengthen and
complement our core Health Insurance business, support
long-term customer retention and to build successful
standalone businesses. It includes the provision of health
management, telehealth services for government and
corporate customers, hospital care in the home, preventative
health and wellbeing programs, and diversified insurance
products. Our investments in associates and joint ventures
also form part of this segment. This includes our non-
controlling investments in East Sydney Private Hospital
24 Medibank
and Myhealth, a leading operator of primary care clinics, and
our joint venture with Calvary to deliver My Home Hospital, a
Wellbeing SA service, and COVID Care at Home services.
During 2022 there were a number of largely offsetting
COVID-19 impacts to Medibank Health. Closed borders
continued to impact travel insurance sales, and lockdowns
impacted homecare patient numbers and margins, although
this was largely offset by the provision of COVID-related
services. Revenue increased 13.4% to $321.8 million with
strong growth in telehealth and health and wellbeing services,
and a strong second half of travel insurance sales, offset by
lower homecare revenue due to elective surgery restrictions.
Gross margin was down 110 basis points to 40.1% with
constrained labour availability impacting labour costs and
the ability to deliver services in homecare, and the impact of
transitioning out of telehealth contracts.
Management expenses increased $3.6 million, including
$2 million due to contract exits and other one-off costs,
however the management expense ratio improved 240 basis
points to 27.5% due to strong revenue growth, reinforcing the
opportunity to create scale in this business.
With the strong momentum in the remainder of the Medibank
Health business and growth opportunity around the needs of
the Medibank customer, we expect on average at least 15%
organic segment profit growth per annum over the next three
years, with the potential for further growth from M&A activity.
While revenue and costs will be lower in 2023 as a result
of the exit of 1800RESPECT and Beyond Blue telehealth
contracts, these contracts did not make a material
contribution to 2022 operating profit, which increased
26.7% to $40.8 million and excludes our share of the results
of Myhealth and other investments. Medibank Health
segment profit improved 44.9% to $45.5 million.
Net investment income/(expense)
Medibank’s investment portfolio was $3.4 billion as at
30 June 2022. This investment portfolio, which includes
$3.2 billion relating to the health fund, provides liquidity to
cover insurance liabilities related to the Health Insurance
business and satisfies Medibank’s obligations to maintain
regulatory reserves to meet health claims and to fund
ongoing operations. It includes additional assets, largely in
cash to fund claims deferred due to COVID-19 and customer
give back programs, and sits outside our target allocation of
growth and defensive assets of 20% and 80% respectively.
Volatile investment markets significantly impacted net
investment income in both years with a $24.8 million expense
in 2022 compared to income of $120.0 million in 2021. The
decreased income was driven by the significant correction
across equity markets within the growth portfolio assets, and
a reduction in income from the defensive portfolio including
a $26.5 million loss due to widening of credit spreads,
compared to a gain of $16.1 million last year.
Our investment portfolio is subject to and compliant
with our Responsible Investment Policy. Domestic and
international equity investment portfolios remain aligned
with socially responsible investment principles.
2.2 Group financial position
Medibank’s net asset position decreased by $39.5 million
or 2.1% to $1,945.6 million as at 30 June 2022.
Some of the major movements in the consolidated statement
of financial position include:
• An increase in financial assets at fair value to fund our
commitment to return permanent net claims savings due
to COVID-19 to customers (customer give back programs)
and COVID-19 deferred claims liability.
• An increase in claims liabilities due to the ongoing
recognition of the COVID-19 deferred claims liability.
• An increase in unearned premium liability and provisions due
to the recognition of customer give back provision relating to
the return of permanent net claims savings due to COVID-19
to customers through premium relief and cash returns.
As at 30 June 2022, Medibank’s consolidated statement of
financial position remained debt-free.
2.3 Capital management and dividends
Medibank’s capital management objective is to maintain a
strong financial risk profile and capacity to meet financial
commitments. As at 30 June 2022:
• Our total Health Insurance business-related capital was
$983.7 million; equivalent to 13.0% of premium revenue
after the allowance for determined but unpaid dividends. This
was at the top end of Medibank’s target range of 11%-13%.
• Non-fund required capital was $187.2 million.
• Unallocated capital surplus was $148.0 million.
In November 2018, the Australian Prudential Regulation
Authority (APRA) announced its intention to harmonise the
health insurance capital framework with Life and General
Insurance Capital (LAGIC) standards. Since then, APRA
has consulted with the industry and undertaken a
Quantitative Impact Study (QIS). Draft capital standards
were released in December 2021 with the intention
to release the final standards in September 2022 for
implementation on 1 July 2023. We are well placed to
implement this framework as our Capital Management
Policy is already closely aligned with LAGIC and do not
expect it will negatively impact our capital position.
Dividends paid or payable in respect of profits from the
financial year totalled 13.40 cents per share fully franked,
amounting to $369.0 million comprising:
• An interim ordinary dividend of 6.1 cents per share fully
franked, amounting to $168.0 million paid on 24 March 2022
in respect of the six-month period ended 31 December 2021.
• A final ordinary dividend of 7.30 cents per share fully franked,
amounting to $201.0 million to be paid on 29 September 2022
in respect of the six-month period ended 30 June 2022.
The full year 2022 ordinary dividend represents an 84.8%
payout ratio of underlying NPAT, normalising for investment
market returns. This is at the top end of our dividend target
payout ratio range of between 75% and 85% of underlying
NPAT, and reflects our strong capital position.
2.4 Management changes
There have been no changes to Medibank’s Executive
Leadership Team this year.
3. Strategy and future prospects
Medibank’s purpose is Better Health for Better Lives.
Our 2030 vision is to create the best health and wellbeing
for Australia. By working to provide affordable and quality
health outcomes, we seek to sustainably build our customer
base and grow shareholder value. Our strategy puts our
customers and people at the centre of everything we do.
Our strategy – growing as a health company
Deliver leading
experiences
Differentiate our
insurance business
Expand in health
Create personalised and connected
customer experiences
Empower our people
Collaborate with our communities
to make a difference
Deliver more value, choice
and control for customers
Offer products and services
to meet all customer needs
Leverage our dual brands
and provider networks
Focus growth on prevention
and integrated care models
Scale and connect
our health businesses
Bring benefits back
to our core
Better Health for Better Lives
Annual Report 2022 25
Operating and financial review
Our employees are our most valuable asset. It is only by
empowering our people that we can deliver on our vision, so
we’ve built a culture anchored by the three pillars of purpose,
people and performance so they can make the greatest impact
on our customers and communities. We are committed
to ensuring Medibank remains a great place to work,
differentiating ourselves in the market through our approach
to flexibility and health and wellbeing. We’re embedding our
purpose and values throughout our business, and building a
highly engaged, skilled team. We’re also committed to driving
a culture of wellbeing and supporting the diverse physical,
emotional and mental health needs of our people.
Since the start of the COVID-19 pandemic we have seen
a shift of people in Australia prioritising their health and
wellbeing. Combined with heightened pressure on the public
health system, this has resulted in private health insurance
becoming more compelling for many people including those
who were previously uninsured. We have continued to focus
on differentiating and growing our health insurance business
by leveraging our dual brand strategy to create a competitive
advantage. The pandemic has also resulted in an increased
awareness and acceptance of integrated care models. We’re
partnering with doctors, hospitals and governments to deliver
care in new ways – and growing and developing new health
services through our Amplar Health business.
We have worked hard to deliver our lowest premium increase
in 21 years, with premiums scheduled to rise by an average
of 3.10% from 1 April 2022. Due to our commitment to return
all COVID-19 permanent net claims savings, we deferred this
premium increase for seven months to 1 November 2022 for
eligible policyholders. Additionally, we have announced a cash
give back to eligible customers, which they will receive in
September 2022. To date, our total COVID-19 support for our
customers stands at around $682 million and has included two
rounds of premium deferrals, give backs to customers through
premium relief and cash give backs, ancillary limit rollovers
for ahm customers, and financial hardship support. We are
committed to returning all permanent net claims savings
due to COVID-19 to our customers once they are known.
We have focused on making our business more efficient and
to reduce and eliminate unnecessary costs in the health
system, so that we can deliver greater value and choice for
our customers. We maintained strong cost discipline and have
delivered approximately $55 million of productivity savings
over the past three years, including approximately $15 million
in 2022, and will continue to target further productivity.
Customers are at the heart of what we do and we are working
to better support their healthcare needs by providing greater
choice and more personalised advice, while helping to reduce
out-of-pocket medical costs. We’ve expanded the no gap
program to more participating providers across the country
to provide eligible customers with the option of paying no
out-of-pocket medical costs for a range of selected
procedures including hip and knee replacements,
endoscopies, and some general surgery procedures.
26 Medibank
Our no gap network, which includes a short stay care model,
has continued to grow with 64% of Medibank customers
to live within 25km of a no gap site by October 2022. The
network includes East Sydney Private Hospital, which we have
a 49% interest in. We also continue to work with a group of
more than 40 doctors on the development of Adeney Private
Hospital – a short stay surgical facility in Melbourne due to
open in 2024.
The My Home Hospital service delivers hospital level care to
patients in their homes in Adelaide and surrounding areas.
This year the service expanded to provide a broader range of
treatments and operate in additional areas in South Australia.
A Wellbeing SA service delivered by a joint venture between
Calvary and Medibank, My Home Hospital utilises remote
monitoring technology to enable clinicians to track the clinical
status of admitted patients and allows the care team to stay
in touch 24/7. More than 3,200 patients have used the service
since launch in January 2021. In the future, opportunities exist
to use market leading technology platforms, like those used
for My Home Hospital, across public and private settings.
We continue to work with GPs given the vital role they play
in primary health. Our investment in the Myhealth Medical
Group supports GPs to enhance the health and quality of
life of their patients which helps reduce high-cost hospital
admissions and alleviate pressure on the health system. The
investment also gives the GPs access to additional capabilities
to improve data analytics and information management and
enables Myhealth to continue its rapid growth. There were
106 Myhealth clinics at the end of 2022 and further growth
will be supported by investment in greenfield practices and
acquisition of existing practices. Our investment in digital
health services company Medinet to support the virtual
capability and connectivity of GPs and their patients also
reflects our support for primary care in the community.
We have deepened relationships with our customers through
other avenues and we have seen substantial growth in
members supported in navigating and managing their health.
More than 40,000 customers, equating to approximately
27% of customers going to hospital, were supported by our
telephone and digital Health Concierge, and we’re trialling the
introduction of specialist health concierge clinicians across five
Victorian stores to engage with customers on the many health
and wellbeing support options available to access. We’ve made
progress in mental health solutions with the Better Minds
hub and app attracting approximately 79,000 users and app
downloads. We also launched a telepsych clinic pilot this year
in partnership with Myhealth and Medinet, and partnered to
deliver out-of-hospital care models for mental health.
Our Members’ Choice network is one of the largest health
provider networks in Australia, and offers better value,
more cost transparency and a wider range of services to
our customers. Customers using our Members’ Choice
Advantage for their dental and optical needs saved
approximately $31.2 million in out-of-pocket costs in 2022.
We have now expanded the network to also include physio,
chiro, podiatry, acupuncture, and remedial massage, covering
more types of services than any other health insurer.
Our Live Better program continues to scale, with more than
522,000 Live Better Rewards participants, and we are targeting
more than 800,000 participants in FY25. We are continuing
to integrate the Live Better app into the My Medibank app
to provide a single digital health experience across health
insurance and health and wellbeing. We are also integrating
Live Better into preventative health, acquisition and retention
journeys to evolve the way we inform and inspire customers
about health and wellbeing, making it even more relevant,
accessible and easy to use.
We’ve invested in growing our suite of preventative healthcare
programs designed to support our customers stay healthy
and avoid unnecessary treatments, and have seen more than
10,000 enrolments in our programs, an increase of more
than 40% over the past 12 months. Our national Better Knee,
Better Me program was awarded the Australian Clinical Trials
Alliance (ACTA) inaugural Industry Partnership Award this year.
Following the success of Better Knee, Better Me, we recently
launched a Better Hip pilot that aims to help people manage
osteoarthritis hip pain.
The macroeconomic environment and ongoing impacts of
COVID-19 cannot be predicted with any certainty in 2023.
Although we are seeing rising inflation impacting the cost
of items such as groceries and fuel, and households
navigating a higher interest rate environment, Medibank
remains positioned for growth with strong customer
advocacy, positive policyholder growth outlook, a continued
focus on cost discipline, and a strong balance sheet to
support our growth ambitions.
In the year ahead we will build on further understanding
our customers’ needs to develop a broader and deeper
relationship with them and their health. We will continue
to differentiate and add value to the core health insurance
proposition by strengthening our product range, and
leveraging our technology and data capabilities to deliver
increasingly personalised propositions. We will work with
partners and providers to deliver more proactive and
preventative healthcare to support affordability, drive down
costs, and improve the choice and experiences for our
customers. We will embed and scale our existing health
assets to deliver earnings growth in their own right, utilising
the synergies between the individual assets as well as the
core Health Insurance business and expedite health system
change. Connection between our various health assets will
be key to delivering a better and more customer/patient-
centric health experience.
Our strategy is the right strategy for our business and will
continue to inform our decisions. Aligned with our strategy,
our milestones are detailed below.
FY23 – FY25 milestones
Pillars
Milestones
Deliver leading
experiences
Customer advocacy: Service NPS (average)
Employee advocacy: eNPS
FY22
Medibank 45.3
42.4
ahm
FY23 benchmark1
>35
>35
Place to work
Products and services
FY22
+27
+29
FY23 benchmark2
≥+24
≥+26
Differentiate our
insurance business
Market share3 – updated for FY23
Q3FY22
27.35%
(+4bps since FY21)
FY25 aspiration
Up 25-75 bps
on FY22
Health Insurance productivity delivered
FY22
c. $15m
FY22-FY24 target
$40m
(including $15m in FY22)
Expand in health
Health and wellbeing
Medibank Health segment profit
Live Better Rewards
participants
Preventative program
participants4
FY22
FY25 target
c. 522k > 800k
FY22
$45.5m
c. 10k > 50k
FY23-FY25 target
Average at least 15% p.a. organic segment
profit growth
Aim to invest $150 - $250m in total to grow
Medibank Health inorganically as suitable
opportunities arise over the next 3 years
1. Benchmark reflects sustaining service levels while continuing to digitise the service delivery model
2. FY23 benchmark has been corrected from originally reported in operating and financial review in FY22 Appendix 4E and Financial Report issued
on 18 August 2022 and includes the global average benchmark for Place to Work eNPS and the historical trend for Products and Services eNPS.
3. APRA PHI quarterly data to March-22
4. Includes total customers who have engaged with eitght preventative health programs (e.g. Better Knee, Better Me, Better Hip) and any new offerings
developed
Annual Report 2022 27
Operating and financial review
4. Material business risks
The material business risks which could affect Medibank’s operations, business strategies and financial prospects are
summarised below.
The COVID-19 pandemic has, and will continue to have in 2023, the potential to impact Medibank’s material and strategic
business risks. Medibank continuously monitors the uncertainty introduced by COVID-19 and its impact on its risk profile,
both on financial and non-financial risks. Where appropriate, Medibank has strengthened its governance, monitoring and
internal control system to address increased risk exposures caused by the pandemic in relation to its operational, financial
and strategic risks.
Risk
Strategic
The risk that we are
unable to identify
and execute the right
strategic initiatives and
projects on target and
on time that deliver
measurable and agreed
outcomes to support our
goals
Operational (including regulatory
compliance)
The risk of financial
loss resulting from
inadequate or failed
internal processes,
people and systems or
from external events
Mitigations
Medibank’s strategic risks are identified and assessed as
part of our annual strategic planning process and endorsed
by the Board. Key strategic risks identified include loss
of private health insurance customers, healthcare costs
and utilisation, regulatory risk, and execution of non-
private health insurance growth. These risks influence the
prioritisation of investments and resources in the Corporate
Plan, which is approved by the Board. To effectively
understand and assess some key strategic risks that are
broad in nature (e.g. regulatory and customer risks), we
undertake detailed analysis on threats or opportunities that
specific scenarios may pose to our business.
We have established risk management policies and
procedures for identifying, assessing, monitoring and
reporting operational risks and controls. This includes
the important areas of information security, technology,
business continuity, outsourcing, fraud, people, and
health and safety risks. We have established compliance
management policies and procedures for identifying and
managing regulatory obligations and incidents that may
arise. Management of operational risk is overseen by
divisional risk committees, the Executive Risk Committee
and the Board’s Risk Management Committee.
Material sustainability
categories
Customer health
Community health
Employeer health
Environmental
health
Governace
Credit
The risk of financial loss
due to counterparties
failing to meet all or
part of their contractual
obligations
Exposure to this risk is primarily through Medibank’s
investment portfolio. This risk is managed through the
application of the Investment Management Policy. The
effective implementation of this policy is overseen by the
Board’s Investment and Capital Committee to ensure that
credit risk is managed in line with the risk appetite set by
the Board.
Capital & liquidity
The risk of not being
able to meet financial
commitments as and
when they are due and
in complying with APRA
prudential standards on
solvency and liquidity
Medibank has a Board-approved Liquidity Management
Policy and a Board-endorsed plan designed to ensure it
meets or exceeds regulatory solvency requirements and
is able to meet all payments as and when they fall due.
Liquidity risk is managed by our treasury function through
daily cash management of cash flows and liquid asset
positions and projected future cash flows, supported by
actuarial forecasts that take into account anticipated
seasonality as well as stressed market conditions.
Governace
Governace
28 Medibank
Risk
Mitigations
Market & investment
The risk of adverse
financial impact market
factors e.g. foreign
exchange rates, interest
rates and equity prices
Insurance
The risk of
misestimation of
incurred and expected
costs, frequency
and severity of
insured events
Clinical
The risk of unexpected,
adverse clinical
outcomes from a health
service provided by
Medibank, or a third
party acting on behalf
of Medibank
We have a Board-approved Investment Management
Policy. The Board’s Investment and Capital Committee
oversees the investment process and compliance with
investment mandates, performance against benchmarks
and asset allocation. Our strategic asset allocation is
weighted largely towards defensive assets and with limits
applied to illiquid assets.
The Board approves the Pricing Policy, which includes
pricing and profitability objectives and forms a key part of
the Capital Management Plan. Our objective is to support
customer growth through balancing the offer of competitive
value to all customers with profitability objectives and
the need to meet capital management and regulatory
requirements. Insurance risk is a key part of regular
portfolio monitoring and treatment plans are formulated
and implemented in response to any potential for deviation
from target measures.
Clinical risk arises from clinical services that Medibank
provides and procures, the provision of health-related
information, and customer health initiatives. We
have implemented a clinical governance and quality
management framework that defines the principles,
structures and processes that underpin service quality,
continuous improvement and patient safety. Our Chief
Medical Officer, supported by a clinical governance team,
provides oversight and assurance. The Risk Management
Committee and Board receive regular reporting on the
performance of clinical risk management.
Material sustainability
categories
Governace
Governace
Customer health
Community health
Customer
health
Employee
health
Community
health
Environmental
health
Governance
For further information about our material categories please see our Sustainability Report 2022.
This Operating and Financial Review is dated as at 18 August 2022.
Annual Report 2022 29
Directors
44%*
are women
11%*
were born
overseas
100%*
identify primarily
as Australian
(non-Aboriginal and
Torres Strait Islander)
*Including CEO
Top L to R: Mike Wilkins, David Koczkar, Tracey Batten. Middle L to R: Anna Bligh, Gerard Dalbosco, Peter Everingham.
Bottom L to R: David Fagan, Kathryn Fagg, Linda Bardo Nicholls.
Name and title
Biography
Mike Wilkins AO
Chair and Independent
Non-executive Director
Mike was appointed a director in May 2017 and Chair effective 1 October 2020. He is Chair of the
Nomination Committee and a member of the Investment and Capital Committee and the People
and Remuneration Committee.
BCom, MBA, FAICD, FCA
Age: 65
Mike is the Chair (since March 2020) and a director (since November 2016) of QBE Insurance
Group Limited. He is also a director of Scentre Group Limited (since April 2020).
Mike has more than 30 years of experience in financial services, predominantly in Australia and
Asia. He served as Managing Director and Chief Executive Officer at Insurance Australia Group
(November 2007 to November 2015), Managing Director and Chief Executive Officer at Promina
Group Limited and Managing Director at Tyndall Australia Limited. He also served as Acting Chief
Executive Officer (April 2018 to December 2018), Executive Chairman (April 2018 to June 2018)
and a director (September 2016 to February 2020) of AMP Limited. He was previously a director
of Maple-Brown Abbott Limited, Alinta Limited, The Geneva Association and the Australian
Business and Community Network.
David Koczkar
David was appointed Chief Executive Officer in May 2021.
Chief Executive Officer
BCom, PG Dip Finance, MAICD
Age: 49
He commenced at Medibank in 2014, holding the roles of Chief Operating Officer from March 2014
and then Group Executive – Chief Customer Officer from September 2016, where he was responsible
for the Health Insurance and Diversified financial portfolios, Live Better and the ahm business.
David was also appointed Acting Chief Executive Officer between April 2016 and June 2016.
Prior to joining Medibank, David was the Group Chief Commercial Officer at Jetstar where he was
responsible for the airline group’s commercial businesses, sales and marketing and customer
channels and served as a director of Jetstar Pacific (Vietnam), Jetstar Hong Kong and NewStar
(Singapore) JV airlines.
David has more than 25 years of strategy, customer, commercial and operational experience,
including previous work in the strategy consulting and financial services industries.
30 Medibank
Name and title
Biography
Dr Tracey Batten
Independent
Non-executive Director
MBBS, MHA, MBA,
FAICD, FRACMA
Age: 56
Tracey was appointed a director in August 2017. She is Chair of the People and Remuneration
Committee and a member of the Risk Management Committee and the Nomination Committee.
Tracey has extensive experience in the health services sector, with strong commercial, business
and change leadership skills.
Tracey is currently a director of EBOS Group Limited (since July 2021), the National Institute of
Water and Atmospheric Research in New Zealand and the New Zealand Accident Compensation
Corporation, and a former director of Abano Healthcare Group.
Anna Bligh AC
Independent
Non-executive Director
BA (QLD)
Age: 62
Gerard Dalbosco
Independent
Non-executive Director
M.AppFin, B.Comm,
FCA, FFIN, GAICD
Age: 59
Peter Everingham
Independent
Non-executive Director
BEc, MBA, GAICD
Age: 53
Tracey was previously the Chief Executive of the Imperial College Healthcare NHS Trust in the
United Kingdom. In that role, Tracey focused on change leadership, in particular improving
organisational culture and strengthening patient safety and experience. Tracey also oversaw
the implementation of a range of digital initiatives as Chief Executive. Tracey is a former
Chief Executive of St Vincent’s Health Australia, which runs a group of public hospitals,
private hospitals and aged care facilities.
Anna was appointed a director in December 2012. She is a member of the Risk Management
Committee and the Investment and Capital Committee.
Anna is currently the Chief Executive Officer of the Australian Banking Association and a director
of the International Banking Federation (IBFed).
Anna has extensive experience in leadership and public policy, including in the fields of healthcare,
finance, infrastructure and project management. She has held several roles in the Queensland
Government, including Premier, Treasurer, Minister for Finance, Minister for State Development,
Minister for Trade and Innovation and Minister for Education. She was also a member of the
Queensland Cabinet Budget Review Committee for 11 years. Anna was a director of Bangarra Dance
Theatre Australia (2012-2020) and is currently a non-executive director of Australian Plays Transform.
Gerard was appointed a director in May 2021. He is Chair of the Audit Committee and a member
of the Risk Management Committee and the Nomination Committee.
Gerard held a number of senior leadership roles as a Partner of EY until September 2020.
His most recent role was Melbourne Managing Partner where he led a large team responsible
for EY’s go-to-market and client service strategies. Prior to this, Gerard held other roles at
EY including Asia Pacific Managing Partner – Markets and Co-Deputy CEO where he led EY’s
client-serving activities across the Asia Pacific market. He was also Oceania Managing Partner
and CEO, and Oceania Managing Partner of Transaction Advisory Services where he was
responsible for EY’s Transaction Advisory Services business across Oceania.
Gerard is currently Chair of Melbourne Archdiocese Catholic Schools. He has previously held
roles as a director and Chair of the Finance & Audit Committee of Mercy Health & Aged Care,
director and member of the Finance Committee of Berry Street Victoria and director and
Co-Deputy Chair of the Committee for Melbourne.
Peter was appointed a director in March 2022. He is a member of the Audit Committee and the
People and Remuneration Committee.
Peter has over 25 years of corporate experience and is highly respected in the digital sector, having
held senior executive roles in that sector for 18 years. His senior leadership experience includes
key roles at companies with a strong consumer and technology focus.
Peter is currently a director of Super Retail Group Limited (since December 2017), the owner of
several notable Australian brands including BCF, Macpac, Rebel and Supercheap Auto. He is also
a director of WWF Australia.
He was previously a director of iCar Asia Limited (July 2017 to May 2022), Managing Director of the
international division of Seek Limited (and concurrently Chair of Seek’s subsidiary, Zhaopin), a director
of ME Bank and IDP Education Ltd, and a senior executive for Yahoo! in Australia and Southeast Asia.
Annual Report 2022 31
Directors
Name and title
Biography
David Fagan
Independent
Non-executive Director
LLB, LLM, GAICD
Age: 65
Kathryn Fagg AO
Independent
Non-executive Director
FTSE, BE (Hons), MCom (Hons),
Hon.DBus, Hon.DChemEng,
GAICD
Age: 61
David was appointed a director in March 2014. He is Chair of the Risk Management Committee and
a member of the Audit Committee and the Nomination Committee.
David was a commercial lawyer for over 40 years. He held a variety of leadership positions at
Clayton Utz culminating in the role of Chief Executive Partner for nine years. In this role, David had
responsibility and accountability for leadership and transformation, strategy, finance, stakeholder
engagement, and governance, including risk management. During David’s tenure as Chief Executive
Partner, Clayton Utz entrenched itself as a first class top tier commercial law firm.
David also chaired the Medibank Privatisation Committee which operated during 2014 in preparation
for the privatisation process. David is a former director and Chair of the Audit Committee of The Global
Foundation, a former director of Grocon Funds Management Group, the Hilco Group and UBS Grocon
Real Estate Investment Management Australia Pty Limited and a former member of the advisory board
of Chase Corporate Advisory.
David is currently a director of PayGroup Limited (since November 2017). He is Chair of BDO Group
Holdings Limited and a member of the ASIC Corporate Governance Consultative Panel.
Kathryn was appointed a director in March 2022. She is a member of the Audit Committee and
the People and Remuneration Committee.
Kathryn is a highly respected director and Chair with significant, wide-ranging senior commercial and
operational experience. She is currently a director of National Australia Bank Ltd (since December
2019), Djerriwarrh Investments Ltd (since May 2014) and she is the Chair of CSIRO. In the non-for-
profit sector, she is Chair of Watertrust Australia Ltd and Breast Cancer Network Australia, a director
of The Myer Foundation, the Grattan Institute and the Champions of Change Coalition.
Kathryn was a non-executive director of Boral Limited from September 2014 to July 2021
including as Chair from July 2018, a non-executive director of Incitec Pivot Limited from April 2014
to December 2019, and a member of the board of the Reserve Bank of Australia from 2013
to 2018. She is a former President of Chief Executive Women (CEW), a former Chair of Parks
Victoria and the Melbourne Recital Centre and a former board member of the Australian Centre
for Innovation, and has held senior executive roles at Linfox, Bluescope Steel and ANZ.
Linda Bardo Nicholls
AO
Linda was appointed a director in March 2014. She is Chair of the Investment and Capital
Committee and a member of the Risk Management Committee and the Nomination Committee.
Independent
Non-executive Director
Linda has more than 30 years of experience as a senior executive and director in banking,
insurance and funds management in Australia, New Zealand and the United States.
BA, MBA (Harvard), FAICD
Age: 74
She is currently a director of Inghams Group Limited (since November 2016). Linda is also Chair
of the Board of Melbourne Health and a member of the Museums Victoria Board.
Linda’s previous directorships include Japara Healthcare Limited as Chair (March 2014 to
November 2021), Fairfax Media Limited and Sigma Pharmaceuticals Limited.
Company Secretary
Name and title
Biography
Mei Ramsay
Group Executive –
Legal, Governance
& Compliance and
Company Secretary
BA, LLB, LLM
Mei was appointed Group Executive – Legal, Governance & Compliance (previously Legal, Governance &
Regulatory Affairs) in September 2016 and has been the Company Secretary for Medibank Private Limited
since 2014. Mei previously held the position of Group General Counsel from 2011.
She is responsible for leading the legal and governance functions, including compliance, regulatory
affairs and company secretariat, and providing legal and corporate governance advice to Medibank’s
Board, Chief Executive Officer and senior management.
Mei has more than 25 years of experience in the legal profession, both as a senior in-house legal
adviser for multinational and international companies, as well as a private practitioner. Prior to joining
Medibank, Mei was the General Counsel and Company Secretary for the Asia Pacific region at Cummins
Inc, and before that held various senior legal positions at Coles Myer Ltd and Southcorp Limited. Mei
started her legal career at Arnold Bloch Leibler and also worked as a Senior Associate at Minter Ellison.
Mei is currently the President of the Association of Corporate Counsel (ACC) Australia, a member of the
Executive of the ACC GC100 and former Chair of the ACC GC100, and a member of Chief Executive Women.
32 Medibank
Executive
Leadership
Team
25%*
are women
50%*
were born overseas
75%*
identify primarily as Australian
(non-Aboriginal and Torres Strait Islander)
Top L to R: David Koczkar, Kylie Bishop, Rob Deeming. Middle L to R: John Goodall, Milosh Milisavljevic, Mei Ramsay.
Bottom L to R: Mark Rogers, Andrew Wilson.
*Including CEO
Name and title
Biography
Kylie Bishop
Group Executive –
People, Culture &
Sustainability
Kylie has held the position of Group Executive – People, Culture & Sustainability (previously People
& Culture) with Medibank since 2013. She is a registered psychologist, specialising in organisational
psychology and is responsible for leading the key people functions, as well as environment, social
and governance across Medibank. This includes culture, talent and capability, performance and
rewards, shared services, talent acquisition, diversity and inclusion, workplace relations, health,
safety and wellbeing, employee experience and community.
Rob Deeming
Group Executive –
Customer & Brands
Kylie is responsible for leading Medibank’s culture and new ways of working program focused on
purpose and inclusion, customer first and health and wellbeing. This includes leading the design
and build of a new Melbourne workspace to be delivered in 2024. Kylie began her career in human
resource consulting and prior to joining Medibank in 2010, held senior positions with National
Australia Bank (NAB).
Kylie is also currently a non-executive director of Melbourne Health and Basketball Victoria,
and was previously a director with Rugby Victoria.
Rob was appointed Group Executive – Customer & Brands in June 2021. He is responsible for
the Medibank and ahm brands and our customer channels, as well as our digital platforms and
capabilities. He is accountable for growing and sustaining Medibank’s consumer businesses, and
creating leading customer experiences to improve the advocacy, engagement and experience for our
customers. Prior to this role, Rob held the role of Senior Executive within Medibank since August 2020
where he was responsible for leading ahm, Australia’s fastest growing private health insurance brand.
Rob has extensive experience in entrepreneurial leadership, leading consumer brands and growing
digital-led businesses. Before joining Medibank Rob was the CEO of Billy, a multi
award-winning hardware/software business supporting older people living independently at
home across Australia and the US. In this role he built and led the vision, strategy and team
for the business alongside the two technical founders.
Rob also spent several years in commercial leadership roles at Jetstar and Qantas. At Jetstar, he led
the commercial teams that looked after the digital channels, as well as the ancillary products and
hotels businesses. Prior to this he was the CEO of the travel booking engine, Jetsetter, with teams
based in New York, Boston and London. Rob led the sale of Jetsetter to TripAdvisor in 2013.
Annual Report 2022 33
Executive Leadership Team
Name and title
Biography
John Goodall
Group Executive
– Technology &
Operations
John was appointed Group Executive – Technology & Operations in December 2016. He is
responsible for Medibank’s core IT platforms, property, procurement and operations with a focus
on leveraging our systems, processes and information to deliver improved, personalised digital
experiences for Medibank’s customers.
John has more than 25 years of experience working in and leading IT functions across the retail
and financial services industries and utilising technology to drive business growth and align
business systems and processes to customer needs.
Prior to joining Medibank, John held the role of General Manager Enterprise Technology at
Sportsbet, and before his time at Sportsbet he spent 20 years at GE Capital Australia and
New Zealand where he held a number of roles, including Chief Information Officer.
Milosh
Milisavljevic
Group Executive –
Customer Portfolios
Milosh was appointed Group Executive – Customer Portfolios in June 2021. He is responsible for
Medibank‘s customer portfolios, including member health programs, Live Better and diversified
insurance portfolios. He is also accountable for growing and sustaining Medibank’s consumer,
corporate and overseas portfolios, managing our relationship with our provider network and
diversifying our propositions to improve the quality of life and health of our customers.
Milosh joined Medibank in 2016 and has held a number of roles, most recently as the Senior Executive
Customer Strategy & Portfolio. In these roles he led Medibank’s customer strategy, commercial
transformation, product innovation and portfolio management, strategic partnerships and data science.
Milosh has extensive experience leading customer focused and data driven transformations across
health, media and telecommunications industries, including proposition innovation and new business
growth. Prior to joining Medibank, Milosh held senior roles at SEEK and McKinsey & Company.
Mark Rogers
Group Executive –
Chief Financial
Officer
& Group Strategy
Mark was appointed Group Executive – Chief Financial Officer & Group Strategy in May 2021.
Previous to this, he held the role of Group Executive – Chief Financial Officer since January 2017.
Mark is responsible for the finance, actuarial, treasury, internal audit and investor relations
functions across Medibank as well as strategy development and M&A.
He has more than 20 years of global experience across the healthcare, pharmaceuticals and
financial services sectors.
Before joining Medibank, Mark held the role of General Manager, Group Performance and Planning
at National Australia Bank (NAB) since 2013, where he was responsible for management reporting,
performance management, planning and forecasting, and capital allocation. Preceding this, Mark was
General Manager, Group Development. Prior to this, Mark was responsible for Group Strategy and
Development for the Mayne Group, a diversified healthcare, pharmaceuticals and pharmacy business,
where he was accountable for the management of the Group’s strategy, capital management and
mergers and acquisitions. Prior to that role, Mark led Group Investor Relations at Mayne Group.
Mark is a director of Private Healthcare Australia Limited and East Sydney Private Hospital,
and Chairman of Myhealth Medical Group.
Dr Andrew Wilson
Group Executive –
CEO Amplar Health
Andrew was appointed Group Executive – CEO Health Services (now Amplar Health) in May 2021.
Previous to this, he held the roles of Group Executive – Healthcare & Strategy since September 2016
and Executive General Manager – Provider Networks & Integrated Care since 2013.
He is responsible for Medibank’s growing role as a broader health services provider. This includes
responsibility for the health services we deliver on behalf of business and government, including
telehealth, virtual healthcare, in-home care, and services into residential aged care. Andrew is
also responsible for Medibank’s hospital and healthcare investments and joint venture healthcare
partnerships, which support both Medibank customers and other Australians in acute care and
community settings.
Andrew has 25 years of experience in the health system, and remains a practising clinician and lecturer.
He was a founder and Co-president of McKesson Asia-Pacific, which was acquired by Medibank in 2010.
Andrew is a director of Calvary Medibank JV Pty Ltd, Myhealth Medical Group and Medinet Australia
Pty Ltd. He is also a director of a joint venture between Medibank and specialists
to develop a private hospital facility in Kew, Melbourne.
34 Medibank
Corporate governance statement
Medibank was founded in 1976 as a private health insurer
and was operated by the Australian Government. In 1998,
Medibank Private Limited became the operating entity with
the Commonwealth of Australia as the sole shareholder. In
2014 the Australian Government sold Medibank by way of an
initial public offering, and divested all its shares in Medibank.
Medibank listed on the Australian Securities Exchange (ASX)
on 25 November 2014.
The Medibank Board is committed to improving our
customers’ experience and providing them with greater value.
In line with this, the Board seeks to ensure that Medibank
is properly managed to protect and enhance shareholder
interests, and that Medibank, its directors, officers and
employees operate in an appropriate environment of
corporate governance.
Governance structure
The Board has a framework in place for governing Medibank. This
includes adopting internal controls, risk management processes
and corporate governance policies and practices, designed to
promote responsible management and ethical conduct.
During the year, Medibank had in place policies and
practices which comply with the recommendations in the
ASX Corporate Governance Council Corporate Governance
Principles and Recommendations (CGPRs), 4th edition. As
a registered private health insurer, Medibank also complies
with the CPS 510 governance standard issued by the
Australian Prudential Regulation Authority (APRA). The key
corporate governance practices applied at Medibank are
described in this statement and the key corporate governance
policies are available on the corporate governance section of
our website at medibank.com.au.
The governance and performance of Medibank is overseen
by the Board elected by the shareholders.
Medibank Private Limited Board
Oversees management of Medibank on behalf of shareholders
Audit
Committee
Oversees
financial
reporting
Risk Management
Committee
Oversees current
and future risk
management
Investment and
Capital Committee
Oversees investment
and capital management
activities
People and Remuneration
Committee
Oversees key remuneration
and people policies
and practices
Nomination
Committee
Oversees board and
committee membership
and succession planning
Chief Executive Officer
Responsible for the day-to-day management of Medibank and implementation of the strategic objectives
Executive Leadership Team
Supports the Chief Executive Officer with running the business and delivering on the strategic objectives
Roles and responsibilities of the Board and management
The Board provides overall strategic guidance for Medibank
and effective oversight of management. Responsibility for
the governance of Medibank, including establishing and
monitoring key performance goals, rests with the Board.
The Board monitors the operational performance and
financial position of Medibank, as well as overseeing the
business strategy and approving strategic goals.
In performing its role, the Board is committed to ensuring
sound corporate governance practices.
The Board Charter, which is available on our website,
articulates the Board’s roles and responsibilities, its
membership and operation, and which responsibilities
may be delegated to committees or to management.
Specific responsibilities have been reserved by the
Board in key areas of: strategy (including approval and
monitoring of the corporate strategy and performance
objectives); governance (including disclosure); appointment,
performance evaluation and remuneration of the CEO and
other senior executives, including the Company Secretary;
approving the Code of Conduct and overseeing Medibank’s
purpose, culture and values; financial approvals and
reporting; risk management, compliance and workplace
health and safety; and culture (including diversity and
inclusion). The Board has established standing committees
to assist in performing its responsibilities. These
committees examine particular issues in detail and make
recommendations to the Board. A description of these
committees can be found on pages 40 to 41.
Annual Report 2022 35
Corporate governance statement
The Chief Executive Officer (CEO) has responsibility for
managing the day-to-day affairs of Medibank. The CEO, with
the support of the Executive Leadership Team (ELT), manages
Medibank in accordance with the Board-approved Corporate
Plan, the corporate strategy and Medibank’s policies within
the risk appetite set by the Board. A detailed delegation
of authority framework defines the decision making and
expenditure limits that apply at various levels of management.
Key areas of focus for the Board in 2022
Corporate governance (including COVID-19)
• Oversight of COVID-19 impacts and response, including:
– Ensuring the health and wellbeing of our customers,
people and the community.
– Ensuring we don’t profit from COVID-19 by returning
any permanent net claims savings via customer
give backs and hardship policies.
– Accounting and regulatory responses, including in
relation to claims liability and capital stress testing.
– Business continuity management.
– Continuing to ensure safe workplaces and practices in
our retail stores, offices and while delivering health care
in customer homes and residential aged care facilities.
• Oversight of the enhancement of the enterprise risk
and compliance management framework and risk and
compliance culture, including review and monitoring of
financial and non-financial material risks and emerging risks.
• Setting environmental, social and governance (ESG)
strategy, including net zero pathway.
• Oversight of our people frameworks, ensuring we provide
a safe environment for our people focused on health and
wellbeing and diversity and inclusion.
• Oversight of talent attraction, development and retention,
including succession planning for the executive leadership team.
• Review of remuneration framework and reward governance
practices in preparation for the implementation of APRA
Prudential Standard CPS 511 in FY24.
Structure and composition of the Board
The Board comprises nine directors in total – eight non-executive
directors, including a non-executive Chair, and the CEO.
The Chair of the Board is responsible for providing leadership
to the Board and Medibank as a whole. The Chair’s other key
responsibilities are outlined in the Board Charter.
The current Chair is Mike Wilkins AO, an independent non-
executive director who has served as Chair since October
2020 and on the Board since May 2017. The current CEO is
David Koczkar, who commenced in the role in May 2021.
Biographies of the directors, including their skills, experience
and year of appointment, are set out on pages 30 to 32 of the
Annual Report 2022. Details of directors’ attendance at Board
and committee meetings during the year ended 30 June 2022 are
on page 49. The length of service of the non-executive directors
ranges from four months to nine years and eight months.
Non-executive director tenure profile
Strategy and execution
• Review of strategy, including growing as a health company
and evaluation of opportunities to execute on our strategic
pillars and key objectives.
>9 years
(1 director)
• Oversight of investments, partnerships and organic growth
initiatives to support execution of the strategy.
6-9 years
(2 directors)
• Oversight of the group’s capital management policies and
level of capital, including review and implementation of
APRA’s new capital standards (expected to apply 1 July 2023).
<3 years
(3 directors)
3-6 years
(2 directors)
• Review and approval of the Corporate Plan, budget
and performance targets and oversight of business
performance against these targets.
People, remuneration and culture
• Oversight of Medibank’s 2030 Vision, values, strategy
and culture.
• Oversight of new CEO transition and alignment of
executive leadership team (ELT) roles.
• Review of Board composition and consideration
of succession planning, including selection of new
non-executive directors.
36 Medibank
Independence
Directors are expected to bring an independent judgement
to bear on all Board decisions. A director is considered
independent if they are a non-executive director who is not
a member of management and are free of any business or
other relationship that could materially interfere with the
exercise of their unfettered and independent judgement or
could reasonably be perceived to do so.
Each director provides periodic updates of their interests,
positions, associations and relationships, and all directors
must keep the Board advised on an ongoing basis of any
interest that could potentially conflict with those of Medibank.
Directors will be required to abstain from participating in
discussions or voting on any matters in which they have, or
may be perceived to have, a material personal interest.
The Board regularly assesses the independence of each
director in light of the interests disclosed. The Board
has assessed the interests, positions, associations and
relationships of each director. It has determined that all non-
executive directors are independent in accordance with the
principles outlined by the ASX Corporate Governance Council
and APRA and as set out in Medibank’s Board Charter.
To provide an opportunity for independent discussion, the
non-executive directors meet without management present
at the commencement of each Board meeting.
Appointment and re-election of directors
Medibank’s Constitution provides that a director may be
appointed by the Board, and if so, is subject to election
by shareholders at the annual general meeting (AGM)
following their appointment if they wish to remain a director
(other than the CEO). Individuals may also be nominated by
shareholders to stand for election as a director at the AGM.
The Constitution requires an election of directors at each
AGM, and a director must retire and may stand for re-election
by the third AGM following the director’s election. David Fagan
and Linda Bardo Nicholls will retire and offer themselves for
re-election at the upcoming AGM on 16 November 2022, while
Kathryn Fagg and Peter Everingham will stand for election at
the upcoming AGM, having been appointed on 31 March 2022.
Further information about these directors is set out on pages
30 to 32 of the Annual Report 2022, and in the notice of annual
general meeting.
Before appointing a person as a director, the Board
undertakes checks as to that person’s character, experience
and background, including criminal and bankruptcy checks.
Medibank has a Fit and Proper Policy that complies with APRA’s
Fit and Proper Prudential Standard. This standard requires
that a person in a position of responsibility, including a director,
be assessed prior to appointment (or in some cases, as soon
as possible after appointment) and on an ongoing basis as to
whether the person meets the fit and proper requirements.
The person must have the appropriate skills, experience and
knowledge to perform the role and act with the requisite
character, diligence, honesty, integrity and judgement.
Upon appointment, each non-executive director enters into a
service agreement setting out the terms of their appointment.
This includes the requirement to build a shareholding in
Medibank in order to align the interests of directors with those
of shareholders. The Minimum Shareholding Policy requires
non-executive directors to acquire shares equal to the value
of one year’s base fee after tax over a period of five years.
As part of the appointment process, Medibank enters into a
deed of indemnity, insurance and access with each director.
Each director is indemnified against liability in connection
with their role as a director and Medibank is required
to maintain a directors’ and officers’ insurance policy.
The deed confirms and extends the director’s general law rights
of access to Board papers and other records of Medibank.
Director induction, continuing education and
access to information
The Board is committed to enhancing the capabilities of each
director and the performance of the Board generally. Upon
joining the Board, all new non-executive directors undertake
a tailored induction program. This includes meetings with the
Chair, CEO, ELT and senior leaders on Medibank’s business,
strategy and operation.
The Board is provided with ongoing professional development
opportunities during the year to maintain the skills and
knowledge needed to effectively perform their role. This
involves formal briefing sessions on a range of subjects by
key stakeholders, including regulators and industry experts,
to provide deeper insights on industry context and trends.
This also includes visits to Medibank’s retail stores, customer
engagement, conference attendance, and participation in the
management-led Executive Risk Committee and Divisional
Risk Committees. The professional development program is
periodically reviewed by the Nomination Committee to ensure
it meets the needs of the directors.
The directors have complete and open access to the CEO, ELT
and senior management following consultation with the CEO.
A director may, following consultation with and consent from
the Chair, seek independent professional advice at Medibank’s
expense in respect of any matter connected with the discharge
of the director’s responsibilities. Directors also have direct
access to the advice and services of the Company Secretary,
who is directly accountable to the Board through the Chair, and
advises the Board and the Chair on all governance matters.
Board skills, experience and diversity
The Nomination Committee regularly reviews the balance
of skills, experience, independence, knowledge and diversity
of the Board, and is committed to ensuring that the directors
collectively have the appropriate skills mix. The evolution
of the mix of skills and diversity of the Board is a long-
term process and must reflect the current and emerging
challenges for the organisation.
The Nomination Committee takes into account the
organisation’s strategic areas of focus, customer needs and
external environment, including stakeholder sentiment, and
assesses these various factors to ensure that an appropriate
balance of skills and diversity is achieved on the Board.
The skills and expertise that the Board has identified as
relevant to the performance of its role and the success of the
organisation, along with the collective strength of the Board
for each skill, are summarised in the Board skills matrix.
Annual Report 2022 37
Corporate governance statement
The very nature of diversity means that not all members
of the Board have all the skills listed below to the same
degree. However, the Board believes the current mix of
expertise and experience of members of the Board creates
a diverse range of views and perspectives, and results in
the Board providing effective governance, oversight and
strategic leadership for Medibank.
During the reporting period, the Nomination Committee
considered the mix of skills on the Board given the above
considerations, and appointed Ms Kathryn Fagg and
Mr Peter Everingham to the Board effective 31 March 2022.
Ms Fagg and Mr Everingham have significant experience and
a proven track record of delivery, and strengthen the Board’s
collective skills and expertise.
Board skills matrix
Skills and experience
Collective strength1
Strategy
Experience in developing and implementing
organisational strategies, and appropriately
challenging management on delivery of
strategic objectives
Financial acumen and capital management
Strong financial acumen and proficiency
in corporate finance and internal financial
controls and/or experience in overseeing
corporate funding, capital management and
investments
Corporate transactions and major projects
Experience in overseeing complex business
transactions and major projects, including
mergers and acquisitions (and integration
of those acquisitions)
Risk and compliance management
Experience in establishing risk and
compliance management frameworks,
setting the risk appetite, and overseeing
organisational risk culture
Governance
Experience in establishing and overseeing
operations in a complex regulated
environment, and demonstrated commitment
to the highest governance standards
Insurance and healthcare industry
experience
Experience in the insurance and/or
healthcare industry
Customer
Experience in developing product and/or
customer management strategies, marketing
and/or digitised customer initiatives
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
38 Medibank
Skills and experience
Collective strength1
People and culture
Understanding the link between strategy,
culture, performance, long-term shareholder
value creation and remuneration outcomes
Government relations and public policy
Interacting with government and/or regulators
and/or involvement in public policy decisions
Technology
Understanding technology and innovation
(including associated risks), and experience
with businesses that have developed and
implemented technology based initiatives
to enhance productivity and/or customer
experiences
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
1. This represents the collective strength of the Board including David Koczkar, CEO.
Committees of the Board
The Board has established five standing committees to
assist in the execution of its responsibilities – the Audit
Committee, Risk Management Committee, Investment and
Capital Committee, People and Remuneration Committee
and Nomination Committee. Each committee is governed by
a charter setting out the committee’s role, responsibilities,
membership and processes. The membership, roles and
responsibilities of each committee are summarised in the
table below. The charters can be accessed on our website.
The relevant qualifications and experience of the members
of each committee can be found in the director biographies
on pages 30 to 32 of the Annual Report 2022. The number of
meetings of each committee, and the individual attendance
of their members, are provided on page 49.
Board performance evaluation
The Nomination Committee is responsible for reporting
on the evaluation of the performance of the Chair, Board,
committees and individual directors to the Board. The
evaluation is conducted annually either through an internal
review process or an external process.
In 2022, the Chair of the Nomination Committee led an
internal Board evaluation by way of a detailed directors’
survey seeking feedback in the areas of the role of the
Board, people on the Board, procedures and practices, and
behaviours. The internal Board evaluation in 2022 followed the
external Board evaluation that was undertaken in 2021.
Following the survey, the Board discussed and evaluated
the outcomes and committed to relevant action items. The
performance evaluation of the Board included assessment
of the handling by committees of the issues and challenges
which arose during the year.
The Chair continues to be responsible for the assessment
of each individual non-executive director’s performance and
contribution. The Chair met with each of the non- executive
directors in 2022 to review their performance and professional
development needs.
Annual Report 2022 39
Corporate governance statement
Committee
membership as at
18 August 2022
Audit Committee1
• Gerard Dalbosco
(Chair)
• Peter Everingham
• David Fagan
• Kathryn Fagg
Composition
Key roles and responsibilities
• At least three members, all of whom are
non-executive directors, a majority of
whom are independent directors and at
least one of whom is a member of the
Risk Management Committee.
• Structured so that members are all
financially literate, and between them
have accounting and financial expertise
and experience and an understanding of
Medibank’s industries.
• The chair must be an independent non-
executive director and must not be the
chair of the Board (but the chair of the
Board may sit on the committee).
• Overseeing and reviewing the integrity of external
financial reporting and financial statements.
• Endorsing and recommending the appointment
and removal of, and reviewing the terms of
engagement, performance and independence of
external auditors.
• Reviewing management processes for
compliance with relevant laws, regulations
and other accounting and external reporting
requirements.
• Overseeing and reviewing internal and external
audit processes and internal control framework.
Risk Management
Committee2
• David Fagan (Chair)
• Tracey Batten
• Anna Bligh
• Gerard Dalbosco
• Linda Bardo Nicholls
• At least three members, all of whom are
non-executive directors, a majority of
whom are independent directors and at
least one of whom is a member of the
Audit Committee.
• Structured to have the necessary
knowledge and a sufficient understanding
of Medibank’s industries.
• Approving and recommending to the Board the
adoption of policies and procedures on risk
oversight and management to ensure effective
risk management systems are in place.
• Ensuring that Medibank has in place a robust
risk management framework and procedure
to support the effective identification and
management of risks.
• The chair must be an independent non-
executive director and must not be the
chair of the Board (but the chair of the
Board may sit on the committee).
• Evaluating the adequacy and effectiveness of the
management and reporting and control systems
associated with material risks.
• Establishment and monitoring of Medibank’s
overall risk appetite.
• Monitoring and review of Medibank's risk culture.
• Oversight of, and monitoring progress against,
Medibank's sustainability strategy.
• Oversight and prior endorsement of the
appointment and replacement of the Chief
Risk Officer.
Investment and
Capital Committee3
• At least three members, all of whom are
• Assisting and advising the Board on capital and
non-executive directors.
investment related matters.
• Linda Bardo Nicholls
• The chair must be an independent non-
• Overseeing the investment strategy and Capital
(Chair)
• Anna Bligh
• Mike Wilkins
executive director, appointed by the Board.
Management Policy.
• Monitoring the effectiveness of the investment
process.
• Authorising delegated investment decisions.
1. Gerard Dalbosco was appointed Chair of the Audit Committee effective 18 November 2021, following Christine O’Reilly’s retirement from the Board.
Peter Everingham and Kathryn Fagg were appointed members of the Audit Committee effective 31 March 2022. Mike Wilkins was a member of the
Audit Committee during the period from 18 November 2021 until his retirement from the Committee effective 31 March 2022.
2. Anna Bligh was appointed to the Risk Management Committee effective 31 March 2022. Linda Bardo Nicholls was appointed to the Committee
effective 1 June 2022. Christine O’Reilly was a member of the Committee until her retirement from the Board effective 18 November 2021.
3. Linda Bardo Nicholls was appointed to the Investment and Capital Committee as Chair effective 1 June 2022. David Fagan was a member of the
Committee until his retirement from the Committee effective 1 June 2022. Peter Hodgett was Chair of the Committee until his retirement effective
18 November 2021.
40 Medibank
Composition
Key roles and responsibilities
Committee
membership as at
18 August 2022
People and
Remuneration
Committee4
• Tracey Batten (Chair)
• Peter Everingham
• Kathryn Fagg
• Mike Wilkins
• At least three members, all of whom are
non-executive directors, a majority of
whom are independent directors and at
least one of whom is a member of the
Risk Management Committee.
• The chair must be an independent non-
executive director, appointed by the Board.
• Reviewing and overseeing people and
organisational culture strategies, including
employee engagement, values and behaviours.
• Reviewing and making recommendations to
the Board on the remuneration framework,
policy and arrangements for the non-executive
directors, CEO, ELT and certain nominated
personnel.
• Reviewing executive succession planning, talent
management, industrial relations and diversity
strategies.
• Reviewing and overseeing key incentive schemes
and equity incentive plans.
• Recommending to the Board the measurable
objectives for diversity.
• Reviewing and monitoring Medibank’s health,
safety and wellbeing performance.
• Director selection and appointment.
• Director induction and professional development.
• Board composition.
• Board succession planning and renewal.
• Performance evaluation of the Board,
committees and individual directors.
Nomination
Committee5
• Mike Wilkins (Chair)
• Tracey Batten
• Gerard Dalbosco
• David Fagan
• At least three members, comprising the
chair of the Board and the chair of each
standing Board committee (unless the
Board resolves otherwise).
• All members of the committee must be
independent directors.
• The chair of the Board will be the chair of
• Linda Bardo Nicholls
the committee.
4. Tracey Batten was appointed Chair of the People and Remuneration Committee effective 31 March 2022. Peter Everingham and Kathryn Fagg were
appointed to the Committee effective 31 March 2022. Linda Bardo Nicholls was Chair of the Committee until 31 March 2022, and a member of the
Committee until her retirement from the Committee effective 1 June 2022. Anna Bligh was a member of the Committee until her retirement from the
Committee effective 31 March 2022.
5. Gerard Dalbosco was appointed to the Nomination Committee effective 18 November 2021. Tracey Batten was appointed to the Committee effective 31
March 2022. Linda Bardo Nicholls was a member of the Committee until her retirement from the Committee effective 31 March 2022, and rejoined the
Committee effective 1 June 2022.
Executive Leadership Team
The CEO, supported by the ELT, is responsible for the
day-to-day management and performance of Medibank.
ELT members have a clear understanding of their roles
and responsibilities through position descriptions and a
structured performance management system. Profiles and
accountabilities for ELT members are set out on pages 33 to
34. Each ELT member has entered into a service agreement
with Medibank which sets out the terms of their employment.
Remuneration policies and practices applying to the ELT are
detailed in the remuneration report from page 51.
The remuneration report from page 51 contains the
performance measures applied to Executive KMP
members and the process for the annual evaluation of
their performance. The same process is also undertaken
for the annual performance of each other ELT member.
A performance evaluation was undertaken during 2022
in accordance with that process for each ELT member.
Values and ethical standards
Central to the Board’s governance framework is a culture
of integrity and ethical behaviour based on Medibank’s key
values: Customer Obsessed; Show Heart; Brilliance Together;
and Break Boundaries. These values are intended to guide the
way employees work together and engage with customers,
business partners, governments and the wider community,
and are supported by a range of policies and procedures.
Our values are further articulated on our website and in the
Sustainability Report 2022.
Annual Report 2022 41
Corporate governance statement
Key policies
Details of key policies supporting our commitment to integrity and ethical behaviour are set out below.
Copies of each policy can be found on our website.
Purpose
Key provisions
Code of
Conduct
Whistleblower
Policy
Anti-Bribery
and
Corruption
Policy
Medibank employees are
required to conduct their
activities ethically and
with integrity. The Code of
Conduct sets out the ethical
standards that are expected
of all directors, managers,
employees and contractors
in their dealings with
customers, suppliers and
each other.
Medibank is committed to a
culture where our people are
encouraged to speak up if
something doesn’t look right,
and to support them when
they do. The Whistleblower
Policy establishes what is
reportable conduct, how to
contact Medibank Alert, and
the protections available to
whistleblowers.
Medibank has zero tolerance
for bribery and corruption.
The Anti-Bribery and
Corruption Policy describes
conduct that is prohibited
for directors, employees
and contractors when
conducting business on
behalf of Medibank, and how
breaches can be reported.
Share Trading
Policy
The Share Trading Policy
describes restrictions on
buying and selling Medibank
shares for the Board, the ELT,
senior executives and other
Medibank employees.
42 Medibank
Requires directors, managers, employees
and contractors to behave with high
standards of personal integrity, and in a
manner that:
• complies with applicable laws, standards
and internal policies;
• promotes health, safety and wellbeing;
• fosters relationships of trust,
accountability and transparency;
• avoids conflicts of interest (including not
offering or accepting inducements, secret
commissions or bribes); and
• respects privacy and protects confidential
information.
Sets out the types of conduct that can be
disclosed, who may make a disclosure under
the policy and what to include in a report.
Sets out support and protection available
to whistleblowers, and the processes
for managing whistleblower complaints
(including key roles and responsibilities).
Requires that directors, employees and
contractors:
• not offer, pay or accept inducements,
bribes, kickbacks, secret commissions or
improper payments, or engage in corrupt
business practices;
• not accept gifts, hospitality or anything
of value which may have obligations
attached;
• not offer or give anything of value, or
solicit any inducement, that may conflict
with their work or duties to Medibank; and
• ensure approved grants and donations are
appropriately recorded.
Prohibits directors, executives and
employees from dealing in Medibank or other
securities if they possess inside information.
Prohibits trading by directors, executives and
certain restricted employees in Medibank
securities during blackout periods, which
apply in the lead-up to the release of financial
results and at other times as required.
Breaches and reporting
Sets out different
approaches to dealing
with breaches of the
Code, depending on the
circumstances – including
raising concerns with
immediate or senior
managers, the People,
Culture & Sustainability
team, the CEO, or via the
Whistleblower Policy.
Breaches of the Code of
Conduct are reported to the
People and Remuneration
Committee.
Provides details of
the Medibank Alert
whistleblower service, which
is available through an
external provider, enabling
whistleblowers to report
anonymously or limit who is
informed of their identity.
Material incidents reported
under the the policy are
reported to the Risk
Management Committee.
Requires requests for bribes
or facilitation payments to
be reported to the Chief Risk
Officer.
Requires other breaches
or potential breaches to be
reported to the Chief Risk
Officer or the Whistleblower
Hotline.
Breaches of the policy
are reported to the Risk
Management Committee.
Details the penalties at
law for breaches of insider
trading laws and the
consequences as a director
or employee for a breach
of law and the policy.
Ethical conduct is also supported by a range of other
corporate policies, including in the areas of health, safety
and wellbeing and modern slavery. Copies of these policies
are also available on our website.
The Health, Safety and Wellbeing Policy underpins our
objective of preventing injury and illness and inspiring our
people to eat, move and feel good in a way that works for
them. Medibank has a health and safety management system
in place to ensure it meets legislative requirements and
proactively addresses its key risks in health and safety.
Diversity and inclusion
Medibank is committed to creating an inclusive culture that
acknowledges and embraces difference in all its forms and
ensures that every voice is heard. Medibank recognises that
all employees are different, and these differences benefit our
employees, shareholders, customers and the community.
The Board has adopted a Diversity and Inclusion Policy that
supports and facilitates an inclusive environment.
The policy outlines the role of the People and Remuneration
Committee in recommending to the Board measurable
objectives for diversity and annually assessing progress against
these. The policy is reviewed annually and is available on
Medibank’s website. A Diversity and Inclusion Strategy supports
the policy and sets out the measurable objectives established
by the Board.
The Board emphasises the importance of having a gender
diverse leadership team, which is supported by Medibank’s
commitment to having and maintaining at least 40% women
representation in the Group and senior executive population
and on our Board. As at 30 June 2022, the actual representation
across Group and senior executives was 44%.
In June 2022, Medibank completed the reporting of its gender
equality indicators under the Workplace Gender Equality Act
2012 (Cth). The reports can be accessed on the corporate
website. As at 30 June 2022, the respective proportions of
men and women on the Board, in senior executive positions
and across the whole organisation were as follows:
Position
Board (including CEO)
Group Executives (including CEO)1
Senior executives2
Group and senior executive total
Senior managers
Other managers
Non-managers
Overall (including Board)
Women
Men
Other
% Women
4
2
22
24
100
353
2,258
2,739
5
6
24
30
115
292
578
0
0
0
0
1
1
8
1,019
10
44%
25%
48%
44%
46%
55%
79%
73%
1. Group Executive positions refer to the CEO and the Executive Leadership Team (ELT). All of the ELT report directly to the CEO.
2. Senior executive positions include all roles classified as senior executives as part of Medibank’s broad based banding framework.
Annual Report 2022 43
Corporate governance statement
In 2021 the Board set measurable objectives for achieving diversity at Medibank, including gender diversity,
and committed to reporting progress achieved against these in the 2022 corporate governance statement.
The table below shows our progress against these objectives:
Measurable objective
Progress towards achievement
Medibank will remain committed
to ensuring a representation of
at least 40% women across our
senior leadership population,
and at least 40% women on
the Medibank Board.
Medibank will aim to improve
the gender balance across our
manager and non-manager
population by maintaining at least
40% women across our manager
workforce and improving the
representation of men in our
non-manager workforce.
Medibank will continue to focus on
the representation of Aboriginal and
Torres Strait Islander employees with
a target set of at least 42 employees
(approx. 1.4% of our organisation)
and their improved self-reported
engagement through the delivery
of a new Reconciliation Action Plan.
Medibank will cultivate a disability
confident culture leading to an
increase in the representation
and self-reported engagement of
employees with a disability.
As at June 2022, women represented 44% of Group and senior executive roles (down
from 50% in FY21). Representation of women on the Medibank Board is still above
target at 44% (including the CEO), aligned with FY21.
Women represented 53% of all manager roles (excluding Group and senior
executives), up from 51% in FY21 and 79% of non-manager positions (compared to
77% in FY21). This is largely driven by our Health Services and Homecare divisions
(now Amplar Health) where women made up 87% of the non-manager workforce,
compared to other Medibank divisions which sit at 63%. This is in line with the
broader Australian health workforce, which is comprised of approximately 80%
women1.
In FY22, the number of employees identifying as Aboriginal and Torres Strait Islander
in our annual engagement survey decreased to 25 people, which equates to 0.9% of
survey respondents2 and 17 employees less than our target of 42 employees. This
may be reflective of a reduction in overall participation in the survey. Engagement
for this cohort was 8.1 which is above the Medibank average of 7.9 and above FY21’s
result of 6.9.
Through the launch of our fifth Reconciliation Action Plan this year, we have set out
our key focus areas from 2022 – 2024, including 16 new actions with deeper delivery
accountability across the business. Cultural capability has been identified as a
key priority and we are working on the development of a cultural responsiveness
framework to provide practical and appropriate guidelines for the development and
growth of cultural safety within Medibank, to be delivered by the end of this year.
In FY22, the number of employees identifying as having a disability in our
annual engagement survey rose to 163 people, which equates to 5.9% of survey
respondents2, an increase from 4% in FY21. Engagement for this cohort was 7.7,
which is below the Medibank average of 7.9 and 0.1 lower than FY21’s result of 7.8.
We continued to focus on the inclusion of people with disabilities through the
development of our second Accessibility and Inclusion Plan. It details our areas
of focus for the next three years, including the creation of an inclusive, safe and
disability confident workplace. As part of this focus, we launched our first disability
awareness training module at the end of 2021. We are now working to include this
training in our onboarding and annual compliance training programs.
Medibank will provide a market
leading comprehensive and targeted
support carers package to improve
the engagement of employees with
caring responsibility for elderly
parents, or person with a disability
or chronic condition.
A significant proportion of our people have caring responsibilities; either elderly
parents, or a family member with a disability or chronic condition (19.3%, as
measured by our employee survey). In FY21 we began developing a targeted carers
support package, including a carers support network. This year, we launched a
carers information hub and piloted a carers support program with a small group
of employees, which we will review in FY23 to determine its potential to scale to
all employees.
1. Workplace Gender Equality Agency (2020). Australia’s gender equality scorecard.
2. Based on employee engagement survey response rate of 76% (2,758) from 3,628 employees invited to participate.
44 Medibank
For 2023, the Board has set the following measurable
objectives for achieving diversity at Medibank, including gender
diversity, and is committed to reporting progress achieved
against these in the 2023 corporate governance statement:
Medibank will remain committed to ensuring a
representation of at least 40% women across
our executive leadership and senior leadership
populations, and at least 40% of women on the
Medibank Board.
Medibank will aim to improve the gender
balance across our manager and non-manager
population by maintaining at least 40% women
across our manager workforce and improving
the representation of men in our non-manager
workforce.
Medibank will continue to focus on increasing
the representation and engagement of
Aboriginal and Torres Strait Islander employees
with a target set of at least 43 employees
(approx. 1.6% of survey respondents) as
self-reported in our annual engagement survey.
Medibank will continue to focus on increasing
the representation and engagement of
employees with disability with a target set of
at least 178 employees (approx. 6.5% of survey
respondents) as self-reported in our annual
engagement survey.
Medibank will provide a market leading
comprehensive and targeted support carers
package to improve the engagement of employees
with caring responsibility for elderly parents, or
person with a disability or chronic condition.
Market and shareholder communication
Market disclosure
We promote investor confidence and the rights of shareholders
by ensuring the immediate disclosure of market sensitive
information regarding Medibank. The measures to further
these commitments are detailed in the Disclosure and
Communication Policy approved by the Board, which is
available on our website.
This policy is designed to facilitate compliance with Medibank’s
obligations under the ASX Listing Rules and the Corporations
Act 2001 (Cth) by assigning authorisation processes for market
announcements and reserving certain matters for approval by
the Board. The policy also requires the Board to receive copies
of all material market announcements promptly after they
have been made. Processes for engagement with analysts and
investors are detailed in the policy as well as the assignment
of spokespersons for market and media communications.
Awareness and compliance is promoted by compulsory
periodic online employee training and additional information
sessions for those likely to become aware of potentially market
sensitive information.
The Board is supported by a management Disclosure
Committee responsible for considering potentially market
sensitive information and monitoring Medibank’s disclosure
processes and reporting framework. The Disclosure
Committee Charter is available within the Disclosure and
Communication Policy.
Medibank’s full year financial reports are audited, and our half
year financial reports reviewed, by our external auditor. For
other periodic corporate reports, such as the annual report
and sustainability report, relevant subject matter experts
confirm the factual accuracy of relevant statements; final
reports are also reviewed by senior executives who have the
knowledge and skills to verify the accuracy of the information.
Periodic corporate reports are reviewed and where
appropriate, approved by the Board prior to publication.
Information about Medibank and its governance
Our website provides information about Medibank and
its corporate governance, and an investor centre that
provides information specifically for prospective and existing
Medibank shareholders which links to Medibank’s results,
investor presentations, annual reports, share price, ASX
announcements and AGM materials. We also maintain a
shareholder calendar of upcoming events within the investor
centre, along with information to assist investors in managing
their shareholdings. Medibank’s share register is managed by
Computershare Investor Services Pty Limited (Computershare)
which provides an accessible online platform for shareholders
to access and manage their shareholdings.
Medibank encourages shareholders to receive
communications securely by email for reasons of speed,
security, environmental friendliness and cost reductions.
Unless a shareholder elects to receive information by post,
Medibank and through its share registry, Computershare,
communicate with shareholders via email and other electronic
channels, including providing notices of meetings and
facilitating online voting on the AGM resolutions.
Investor engagement
We conduct briefings, meetings, telephone calls and webcasts
for institutional and retail investors, analysts and proxy
advisors to provide a greater understanding of the business
and results. Investor briefings and ad hoc meetings with
institutional and retail investors, analysts and proxy advisors
provide a forum for two-way communications between
Medibank and the investment community. During the year, we
participated and presented at a number of conferences and
investor events, including the Citi Australia and New Zealand
Annual Investment Conference and the Credit Suisse Asia
Pacific ESG Conference in October 2021, the Morgan Stanley
Private Healthcare Forum in April 2022 and the Macquarie
Australia Conference in May 2022.
Annual Report 2022 45
Corporate governance statement
We generally communicate with the investment community
through the CEO, the Group Executive – CFO & Group
Strategy and the Senior Executive – Investor Relations.
We also communicate through the Chair for governance
and remuneration issues and the Company Secretary and
Group Executive – People, Culture & Sustainability for
environmental, social and governance issues. Feedback from
engagement with the investor community is communicated to
the Board at each Board meeting.
meetings. Representatives of management and the Senior
Executive – Internal Audit may attend Audit Committee
meetings by standing invitation, and the Chief Actuary and
external auditors are invited as required.
Financial reporting assurances
The preparation of the full year and half year financial
statements is subject to a detailed process of review and
approval by the Board supported by the Audit Committee.
In all communications with investors, analysts and media,
only publicly available information and information that is
not market sensitive is discussed. In order to ensure that
all shareholders have equal and timely access to material
information concerning Medibank, advance notification
of investor and analyst results briefings is announced
via the ASX. The briefing materials are released first via
the ASX and then on the investor centre section of our
website, together with a recording of the half and full year
results briefing. We also release the materials for new and
substantive investor and analyst presentations to the ASX
before the presentation starts.
Shareholder meetings
The Board encourages shareholders to attend the AGM and
to take the opportunity to ask questions. In 2022 and subject
to any COVID-19 related restrictions at that time, investors
will be able to attend the meeting in person at an accessible
venue in Melbourne, or virtually, with the ability to vote and
ask questions at the venue or online; the meeting will also
be webcast live and made available on our website. All
substantive resolutions at the meeting are decided by a poll
and not by a show of hands.
The external auditor attends the AGM and is available at the
meeting to answer questions relevant to the auditor’s report.
We provide shareholders with a clear and concise notice of
meeting, setting out the business to be considered, including
all material information relevant to the election or re-election
of directors. These materials, together with the presentations
at the AGM and the voting results, are released to the ASX and
then made available on our website.
Integrity of financial reporting
The Board has a strong commitment to the integrity and
quality of its financial reporting and its systems for risk
management, compliance and internal control.
The role of the Audit Committee is to provide an objective, non-
executive review of the effectiveness of Medibank’s internal
control, financial reporting and risk management framework,
to assist the Board in carrying out its accounting, auditing, and
financial reporting responsibilities. Details of the composition
and key roles and responsibilities of the Audit Committee
are set out on page 40. In addition to the members of the
Audit Committee, any director may attend Audit Committee
As required under section 295A of the Corporations Act 2001
(Cth), the Board receives a declaration from the CEO and
the CFO that the financial records of the company have been
properly maintained and that the financial statements and
notes comply with accounting standards and give a true and
fair view of the consolidated entity’s financial position and
performance for the financial period. This includes a written
declaration that their opinion has been formed on the basis
of a sound system of risk management and internal control
which is operating effectively in all material respects.
This declaration was received by the Board prior to approving
the financial statements for the half year ended 31 December
2021 and the full year ended 30 June 2022.
Internal audit
Medibank has an internal audit function that provides the
Board and Audit Committee with an independent evaluation
of the adequacy and the effectiveness of Medibank’s financial
and risk management framework. The Internal Audit Plan,
which is approved by the Audit Committee, is developed using
a risk-based approach and is driven by Medibank’s strategy,
risk profile and assurance priorities.
The Internal Audit Charter provides the internal audit team
unrestricted access to review all activities of the business. The
internal audit function is supplemented by the engagement of
external subject matter experts when required.
The head of the internal audit function is the Senior Executive
– Internal Audit. To ensure the independence of the internal
audit function, the role reports directly to the Audit Committee
Chair, with a direct communication line to the CEO and
administrative reporting line to the CFO. The Senior Executive
– Internal Audit (in addition to their standing invitation to
attend Audit Committee meetings) reports to each Audit
Committee meeting on progress against the Internal Audit
Plan, audit findings and recommendations, business insights
and the status of management actions.
Risk management
Medibank’s risk management framework encompasses the
systems, structures, policies, processes and people that
manage risks across the business. It guides risk management
activities across the business to effectively identify, assess,
manage, monitor and report risks. The framework is
46 Medibank
implemented through the three lines of defence model and
its effectiveness is assessed by the internal audit function
on an annual basis with a full comprehensive review on a
three yearly basis in accordance with the Risk Management
Committee Charter and APRA Prudential Standard CPS
220. The annual review of the framework was completed
in 2022, with the three yearly comprehensive review having
been undertaken in 2021. The Risk Management Committee
reviews the documents comprising the risk management
framework at least yearly and regularly monitors the
framework’s effectiveness.
A key component of the framework is the definition of
Medibank’s risk appetite by the Board which informs
management's decision making process. The annual and
three yearly reviews of the framework consider whether the
framework is sound and Medibank is operating with due
regard to the risk appetite set by the Board.
Medibank continues to operate and strengthen enterprise
risk management practices in alignment with the
requirements outlined in the APRA Prudential Standard
CPS220 – Risk Management.
Material risks
Material business risks are those risks deemed to have
a significant impact on Medibank’s operations, financial
prospects and business objectives. These are discussed in
the operating and financial review on pages 28 to 29 of the
Annual Report 2022. The material risks are strategic, credit,
capital and liquidity, market and investment, insurance,
clinical, operational and regulatory compliance.
Environmental, social and governance risks
Medibank’s risk management framework also applies to the
environment, social and governance (ESG) risks (including
climate risk). Medibank’s material ESG topics, as identified
in our social and governance framework, have been mapped
to our material risks in the operating and financial review on
pages 28 to 29 of the Annual Report 2022.
Medibank commissioned an independent external review to
assess our exposures to climate change risks in line with
the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD). The review did not identify
material exposures at this time for Medibank; however, the
outcomes of the review, and Medibank’s response, have been
reported on pages 53 to 59 of the Sustainability Report 2022.
Further detail on Medibank’s approach to sustainability and
ESG issues can also be found in the Sustainability Report 2022.
Governance
The Board has overall responsibility for Medibank’s risk
management framework including setting the risk appetite
for Medibank. The Board reviews the risk management
framework at least annually and satisfies itself that
management has developed and implemented a sound
system of risk management and internal control to effectively
manage risk across the business in line with regulatory and
statutory requirements.
The Risk Management Committee assists the Board in
overseeing the implementation of the risk management
framework. Information about the committee’s membership
can be found on page 40; committee members are appointed
based on their qualifications and experience to ensure that the
committee can adequately discharge its duties.
Risk management plays an important role in remuneration
outcomes. For an incentive award to be made to any employee,
a risk, compliance and behaviour gateway must be achieved.
Further, all employees have a risk KPI incorporated into their
performance scorecard under the company-wide ‘I Perform
Better’ performance framework. More information on the
relationship between risk and remuneration can be found in
the remuneration report on pages 51 to 72.
The Board is further assisted by the Investment and
Capital Committee, which oversees the implementation
and monitoring of the investment strategy and Capital
Management Policy approved by the Board, including
monitoring the effectiveness of the investment process in
achieving optimum return relative to risk. The Executive Risk
Committee and Divisional Risk Committees are management
committees that assist the CEO with the oversight of risk
management activities across the business to ensure material
risks are managed in line with the approach defined in the risk
management strategy and the risk appetite set by the Board.
Medibank has adopted a three lines of defence approach
to define risk management roles, responsibilities and
accountability:
First line: Management is accountable for identifying,
assessing, monitoring and managing material risks in the
business. They are responsible for decision making and the
execution of business activities, whilst managing risk to ensure
it is in line with the Board’s risk appetite and strategy.
Second line: The enterprise risk and compliance functions
provide objective advice and challenge to the first line on risk
and control activities and provide assurance and guidance
on the design and implementation of appropriate risk
management activities.
Third line: The internal audit function provides independent
assurance to the Audit Committee and the Board on the
adequacy and effectiveness of the risk management
framework, financial reporting processes and internal control
and compliance systems operating in the first and second line.
This corporate governance statement is accurate and up to
date as at 18 August 2022 and has been approved by the Board.
Annual Report 2022 47
Directors’ report
For the financial year ended 30 June 2022
The directors of Medibank Private Limited (Medibank)
present their report on the consolidated entity consisting
of Medibank and the entities it controlled (collectively
referred to as the Group) for the year ended 30 June 2022.
References to 2021 and 2022 are to the financial years
ended on 30 June 2021 and 30 June 2022 respectively
unless otherwise stated.
Directors
The names of directors in office during the year and
up to the date of this directors’ report, unless stated
otherwise, are as follows:
Current:
• Mike Wilkins AO – Chair
• David Koczkar – Chief Executive Officer
• Dr Tracey Batten
• Anna Bligh AC
• Gerard Dalbosco
Significant changes in state of affairs
There were no significant changes in the state of affairs
of the Group during the year.
Events since end of financial year
No matter or circumstance has arisen since the end of
the financial year that has significantly affected, or may
significantly affect, Medibank’s operations, or the results
of those operations, or Medibank’s state of affairs in future
financial years. Details of subsequent events are set out in
Note 20(d).
Future developments
Details of developments in Medibank’s operations in future
financial years and the expected results of those operations
are included in the operating and financial review on pages
25 to 27.
Dividends
• Peter Everingham (appointed effective 31 March 2022)
• David Fagan
• Kathryn Fagg AO (appointed effective 31 March 2022)
Dividends paid or determined by Medibank during and since
the end of the year are set out in Note 6 to the financial
statements and further set out below:
• Linda Bardo Nicholls AO
Former:
• Peter Hodgett (retired effective 18 November 2021)
• Christine O’Reilly (retired effective 18 November 2021)
Principal activities
The principal activities of the Group during the financial
year were as a private health insurer, underwriting and
distributing private health insurance policies under its two
brands, Medibank and ahm. Medibank is also a provider of
health services through the Medibank Health businesses,
which capitalise on Medibank’s experience and expertise,
and support the Health Insurance business. There were no
significant changes in the nature of those activities during
the year.
Operating and financial review
Details of the operating and financial review of the
Group including a review of operations during the year
and results of those operations is included in the
operating and financial review on pages 22 to 29.
• A fully franked final ordinary dividend of 6.90 cents
per share was determined in respect of the six-month
period to 30 June 2021, payable on 30 September 2021
to shareholders registered on 9 September 2021.
• A fully franked interim ordinary dividend of 6.10 cents
per share was determined in respect of the six-month
period to 31 December 2021 and paid on 24 March 2022
to shareholders registered on 7 March 2022.
• A fully franked final ordinary dividend of 7.30 cents per
share has been determined in respect of the six-month
period to 30 June 2022, payable on 29 September 2022
to shareholders registered on 8 September 2022.
Directors’ qualifications, experience
and special responsibilities
Details of the qualifications, experience and special
responsibilities of each director and company secretary in
office as at the date of this report are set out on pages 30
to 32 and form part of the directors’ report.
48 Medibank
Directors’ attendance at meetings
The table below shows the number of Board and committee meetings held and the number of meetings attended by directors
during the year. All directors may attend committee meetings even if they are not a member of the relevant committee. The
table below does not include the attendance of directors at committee meetings where they were not a committee member.
Board
(scheduled)
11
Board
(unscheduled)
2
Audit
Committee
4
Risk
Management
Committee
6
Investment
and Capital
Committee
4
People and
Remuneration
Committee
4
Nomination
Committee
4
A
11
11
11
11
3
11
3
5
11
11
5
B
11
11
11
11
3
11
3
5
11
10
5
A
2
2
2
2
2
2
2
0
2
2
0
B
2
2
2
2
2
2
2
0
2
1
0
A
2
-
-
4
1
3
1
1
-
-
1
B
2
-
-
4
1
3
1
1
-
-
1
A
-
6
1
6
-
6
-
-
-
-
3
B
-
6
1
6
-
6
-
-
-
-
3
A
4
-
4
-
-
4
-
2
-
-
-
B
4
-
4
-
-
4
-
2
-
-
-
A
4
4
3
-
1
-
1
-
-
3
-
B
4
4
3
-
1
-
1
-
-
3
-
A
4
1
-
3
-
4
-
1
-
4
1
B
4
1
-
3
-
4
-
1
-
4
1
Director
Mike Wilkins1
Dr Tracey Batten2
Anna Bligh3
Gerard Dalbosco4
Peter Everingham5
David Fagan6
Kathryn Fagg7
Peter Hodgett8
David Koczkar
Linda Bardo Nicholls9
Christine O’Reilly10
A
Indicates the number of meetings held during the time the director held office or was a member of the committee during the year.
B Indicates the number of meetings attended during the time the director held office or was a member of the committee during the year.
1
2 Tracey Batten was appointed a member of the Nomination Committee effective 31 March 2022.
3 Anna Bligh was appointed a member of the Risk Management Committee effective 31 March 2022 and retired as a member of the People and
Mike Wilkins was appointed a member of the Audit Committee effective 18 November 2021 and retired as a member of that committee effective 31 March 2022.
Remuneration Committee effective 31 March 2022.
4 Gerard Dalbosco was appointed a member of the Nomination Committee effective 18 November 2021.
5 Peter Everingham was appointed as a director and a member of the Audit Committee and People and Remuneration Committee effective 31 March 2022.
6 David Fagan was appointed a member of the Audit Committee effective 18 November 2021 and retired as a member of the Investment and Capital
Committee effective 1 June 2022.
7 Kathryn Fagg was appointed as a director and a member of the Audit Committee and People and Remuneration Committee effective 31 March 2022.
8 Peter Hodgett retired as a director effective 18 November 2021.
9 Linda Bardo Nicholls was appointed a member of the Risk Management Committee and the Investment and Capital Committee effective 1 June 2022,
retired as a member of the People and Remuneration Committee effective 1 June 2022 and retired as a member of the Nomination Committee effective
31 March 2022 and was re-appointed as a member of the Nomination Committee effective 1 June 2022.
10 Christine O’Reilly retired as a director effective 18 November 2021.
In addition, ad-hoc committees were convened for special
purposes, including in relation to financial reporting and
other matters.
Directors’ interests in securities
The relevant interests of directors in Medibank securities
at the date of this directors’ report were:
Options and performance rights
During the financial year, 3,542,600 performance rights
were issued to senior executives pursuant to Medibank’s
Performance Rights Plan. No performance rights have been
issued since the end of the financial year up to the date of this
directors’ report.
During the financial year, 825,420 performance rights became
eligible to vest and were exercised. Further information
regarding performance rights is included in the remuneration
report from page 51.
Director
Mike Wilkins
David Koczkar
Dr Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham
David Fagan
Kathryn Fagg
Peter Hodgett*
Linda Bardo Nicholls
Christine O’Reilly*
Performance
rights
1,208,604
Ordinary
shares
100,000
858,734
50,000
44,623
72,832
40,000
47,016
32,750
67,800
45,000
69,930
* Peter Hodgett and Christine O’Reilly retired from the Board effective
18 November 2021, and their ordinary shareholding information is as
at that date.
Annual Report 2022 49
Directors’ report
For the financial year ended 30 June 2022
Environmental regulation
Non-audit services
The Group’s operations are not subject to any particular
or significant environmental regulation under either
Commonwealth or State law.
Indemnification and insurance of
directors and officers
The Medibank Constitution permits Medibank to indemnify,
to the maximum extent permitted by law, every person who
is or has been a director, secretary, officer or senior manager
of the Group. The indemnity applies to liabilities incurred by a
person in the relevant capacity (except liability for legal costs).
The indemnity may however also apply to certain legal costs
incurred in obtaining advice or defending legal proceedings.
Further, the Medibank Constitution permits Medibank to
maintain and pay insurance premiums for a director and
officer liability insurance covering every person who is or
has been a director, secretary, officer or senior manager
of the Group, to the extent permitted by law.
Consistent with the provisions in Medibank’s Constitution,
Medibank has entered into deeds of indemnity, insurance
and access with current and former directors and secretaries
of the Group. Under these deeds, Medibank:
• Indemnifies current and former directors and secretaries
against liabilities incurred as a director or secretary, as
the case may be, to the maximum extent permitted by law.
• Maintains a directors’ and officers’ insurance policy
covering current and former directors and secretaries
against liabilities incurred in their capacity as directors
or secretaries, as the case may be. Disclosure of the
insurance premium and the nature of the liabilities
covered by the insurance are prohibited by the contract
of insurance.
• Grants current and former directors and secretaries
access to Medibank’s records for the purpose of
defending any relevant action.
Auditor’s independence declaration
A copy of the auditor’s independence declaration given
by PricewaterhouseCoopers (PwC) in relation to its
compliance with independence requirements of section
307C of the Corporations Act is set out on page 121.
During the year, PwC, the Group’s external auditor, performed
certain other services to the Group in addition to its statutory
responsibilities as auditor. Details of the amounts paid or
payable to PwC for non-audit services provided by it during
the year are set out in Note 19 Auditor’s remuneration.
Based on advice provided by the Audit Committee, the directors
are satisfied that the provision of non-audit services during
the year by PwC is compatible with the general standard
of independence for auditors imposed by the Corporations
Act, and that the provision of the non-audit services did not
compromise the auditor independence requirements of the
Corporations Act, for the following reasons:
• All non-audit services provided were approved in
accordance with the process set out in Medibank’s policies,
including being reviewed by the Audit Committee to ensure
that provision of the services did not impact the integrity
and objectivity of the auditor.
• The non-audit services provided do not undermine the
general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional
Accountants issued by the Accounting Professional and
Ethical Standards Board.
Remuneration report
The remuneration report on pages 51 to 72 forms part
of the directors’ report.
Rounding of amounts
The amounts contained in this directors’ report and in the
financial report have been rounded to the nearest hundred
thousand dollars (where rounding is applicable) unless
specifically stated otherwise under the relief available
pursuant to ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191. Medibank is an
entity to which that relief applies.
This report is made in accordance with a resolution
of the directors.
Mike Wilkins AO
Chairman
18 August 2022
Melbourne
David Koczkar
Chief Executive Officer
50 Medibank
Remuneration report
For the financial year ended 30 June 2022
Contents
1.
Key management personnel overview
2.
Summary of remuneration outcomes
3.
Medibank’s remuneration strategy
4.
5.
6.
7.
Remuneration governance
4.1 The role of the Board in remuneration
4.2 Executive remuneration policies
Risk and remuneration
5.1 Risk culture
5.2 Alignment of remuneration with prudent risk-taking
5.3 Consequence management
Executive KMP remuneration components
6.1 2022 target remuneration mix
6.2 Total fixed remuneration (TFR)
6.3 Short-term incentive (STI)
6.4 Long-term incentive (LTI)
Linking remuneration and performance in 2022
7.1 2022 short-term incentive (STI) performance scorecard
7.2 Medibank’s 2022 financial performance
7.3 2022 STI awards
7.4 2020 long-term incentive plan outcomes
8.
2022 actual remuneration (Non-IFRS disclosure)
9.
Statutory remuneration tables
9.1 Statutory remuneration table
9.2 Performance-related remuneration statutory table
10. Executive KMP equity awards
10.1 Executive KMP equity award transactions
10.2 Overview of unvested equity awards and fair value
assumptions
11. Non-executive director remuneration and framework
11.1 Non-executive director remuneration
11.2 Non-executive director superannuation
11.3 Shareholding policy for non-executive directors
12. 2022 non-executive director remuneration statutory
table
13. Non-executive director ordinary shareholdings
14. Medibank’s comparator group
Annual Report 2022 51
Remuneration report
For the financial year ended 30 June 2022
On behalf of the Board, I am pleased to present Medibank’s
remuneration report for 2022 which describes how non-
executive directors and Executive Key Management Personnel
(Executive KMP) are paid. Included in this report are the fixed
and variable remuneration outcomes for Executive KMP,
which were determined after considering the Company’s
results and their individual performance.
Our remuneration strategy has been developed to ensure
remuneration is fair and competitive. During 2022 the
Board continued to focus on a framework that rewards
responsible behaviours, aligns remuneration with
performance outcomes and regulatory requirements,
and has regard for the expectations of our customers,
shareholders and the community.
As a health company working to create Better Health for
Better Lives by providing the best health and wellbeing
experience for people across Australia, the Board is proud
of how Medibank has continued to support our customers,
employees and the broader community.
Despite the challenging environment over the last year,
Medibank has delivered a strong result. As part of the
standing commitment to not profit from COVID-19, the
company continued to support customers and returned
$369.4 million of permanent net claims savings during the
year. Our business performance was driven by continued
policyholder growth, ongoing cost control, momentum in our
Medibank Health businesses and an uplift in contributions
from our healthcare investments, all of which helped deliver
strong growth in Group operating profit.
Changes to key management personnel
As stated last year, following the changes to Medibank’s
Executive Leadership Team (ELT) composition and changes in
ELT operation effective 1 July 2021, the Board assessed which
ELT members had the requisite authority and responsibility
within the Medibank Group to meet the definition of key
management personnel (KMP) as set out in AASB 124 –
Related Party Disclosures for the purposes of our
remuneration reporting obligations. As a result of these
changes, from 1 July 2021, Medibank’s Executive KMP are
the CEO, Group Executive – CFO & Group Strategy, Group
Executive – CEO Amplar Health and Group Executive –
Customer Portfolios.
Changes to the Board
During September 2021 Medibank announced that non-
executive directors Christine O’Reilly and Peter Hodgett
would not stand for re-election and would retire from the
Board at the conclusion of the Annual General Meeting
on the 18 November 2021. Both directors joined prior to
Medibank’s public listing in 2014 and played a critical role
in Medibank’s transformation over the past eight years
into a health company.
Following the retirements of Peter and Christine, Medibank
announced in February 2022 the appointment of Kathryn
Fagg AO and Peter Everingham as non-executive directors
effective 31 March 2022. Kathryn is a highly respected director
and chair with significant, wide-ranging senior commercial
and operational experience. Peter brings deep corporate and
strategy experience, particularly as an executive in the digital
and consumer sectors. As Medibank continues to grow and
increase its focus on delivering for our customers, the Board
is pleased to be able to appoint two new directors with such
extensive experience and proven track records.
Remuneration decisions at a glance
• All Executive KMP met their individual risk, compliance
and behaviour gateways for 2022.
• Discretion was exercised to reduce short-term incentive
(STI) outcomes to Executive KMP members from an average
of 84% to 72% of their maximum opportunity considering
the challenging social and economic environment and
the expectations of our shareholders, customers and the
broader community.
• The final vesting outcome for the FY20 long-term incentive
(LTI) is pending the release of market share data by APRA,
however there will be partial vesting in accordance with
the plan rules against the total shareholder return (TSR)
performance hurdle.
• Fixed remuneration for Executive KMP increased by an
average of 3.7% for 2023.
• Non-executive director aggregate fees have been
increased by 3% for 2023 and remain below the
approved total fee pool of $2,300,000.
52 Medibank
The new APRA regulatory standard on remuneration
(CPS511) comes into effect on 1 July 2023 for private health
insurers. Medibank has begun a conversation with APRA
and determined that changes will be required to increase
incentive deferral, enhance the use of non-financial
performance measures and strengthen our clawback and
malus policy to satisfy the new requirements. The Board will
consider enhancements to the remuneration framework
during 2023 to ensure that it remains competitive whilst
meeting regulatory obligations.
Short-term incentives
Medibank delivered another strong result driven by continued
policyholder growth, double-digit growth in Medibank Health
and remaining disciplined in how we grow and run our
business. Consistent with prior years, the Board adjusted
outcomes to normalise for COVID-19 related impacts (both
negative and positive) to ensure that executives are rewarded
fairly for their efforts. Following this assessment, Group
operating profit exceeded target, whilst Health Insurance
revenue growth and Customer Net Promoter Score (cNPS)
exceeded stretch expectations.
With consideration of the challenging social and economic
environment and the expectations of our shareholders,
customers and the broader community, the Board exercised
its discretion to reduce Executive KMP incentive outcomes
from 84% to 72% of their maximum opportunity.
Long-term incentives
Testing of the performance hurdles associated with
Medibank’s FY20 long-term incentive (LTI) plan is partially
complete and will be finalised following the release of market
share data.
Following the three-year performance period which
concluded on 30 June 2022 both the earnings per share
(EPS) and total shareholder return (TSR) hurdles were tested,
with no vesting against the EPS measure and partial vesting
against the TSR measure with a performance rank at the
53rd percentile against our comparator group. Performance
against the market share hurdle will be tested following the
release of June market share data by APRA in late August
2022. Final FY20 LTI vesting results will be mentioned at the
2022 Annual General Meeting (AGM) and included in the 2023
remuneration report.
Executive KMP remuneration and non-executive
director fees
Following a review of fixed remuneration levels of Executive
KMP members against the median of Medibank’s market
comparator group, the fixed remuneration of Executive KMP
was increased by an average of 3.7%, effective 1 July 2022.
This includes a remuneration increase for the Chief Executive
Officer (CEO), David Koczkar of 3.3%.
Board and committee fees were also reviewed against the
median of Medibank’s market comparator group with a 3%
increase in Board and Committee fees agreed. These changes
are the first in three years, and the aggregate fee spend for
non-executive directors remains below the total fee pool of
$2,300,000 approved by shareholders in the annual general
meeting in 2018.
Shareholders are encouraged to vote to adopt the report
at our annual general meeting in November.
Yours sincerely,
Dr Tracey Batten
Chair, People and Remuneration Committee
Annual Report 2022 53
Remuneration report
For the financial year ended 30 June 2022
1. Key management personnel overview
Medibank’s key management personnel (KMP) includes all non-executive directors and executives
who have authority and responsibility for planning, directing and controlling the activities of Medibank.
In 2022, KMP were as follows:
Key management personnel
David Koczkar
Chief Executive Officer
Full-year
Mark Rogers
Group Executive – Chief Financial
Officer & Group Strategy
Full-year
Non-executive directors
Mike Wilkins
Chair
Full-year
Tracey Batten
Non-executive director
Full-year
Anna Bligh
Non-executive director
Full-year
Gerard Dalbosco
Non-executive director
Full-year
Milosh Milisavljevic
Group Executive
– Customer Portfolios
Full-year
Andrew Wilson
Group Executive –
CEO Amplar Health
Full-year
Peter Everingham
Non-executive director
From 31 March 2022
David Fagan
Non-executive director
Full-year
Kathryn Fagg
Non-executive director
From 31 March 2022
Linda Bardo Nicholls
Non-executive director
Full-year
Peter Hodgett
Non-executive director
Retired 18 November 2021
Christine O'Reilly
Non-executive director
Retired 18 November 2021
Former KMP
54 Medibank
2. Summary of remuneration outcomes
Key remuneration outcomes for Executive KMP and non-executive directors during the year are summarised below, with
more detailed information contained throughout the report.
Executive key management personnel
Fixed
remuneration
• Fixed remuneration for Executive KMP including the CEO increased by an average of 3.7% effective
1 July 2022.
• Fixed remuneration of the Chief Executive Officer (CEO), David Koczkar was increased by 3.3%
to $1,550,000, effective 1 July 2022.
Short-term
incentive
(STI)
• STI awards for Executive KMP reflected Group operating profit exceeding target expectations and
both Health Insurance revenue growth and Customer Net Promoter Score (cNPS) performance
exceeding stretch expectations.
• Discretion was exercised by the Board to reduce the 2022 STI outcomes for Executive KMP from
an average of 84% of their maximum opportunity to 72%.
• 50% of STI awards for Executive KMP are deferred for 12 months in the form of performance rights.
• STI target percentages for Executive KMP members, including the CEO, have been maintained at
current levels.
Long-term
incentive
(LTI)
• Testing of the performance hurdles associated with Medibank’s FY20 long-term incentive (LTI) Plan
is partially complete and will be finalised following the release of market share data by APRA in late
August 2022.
• There was no vesting against the EPS CAGR measure and partial vesting against the relative TSR
measure, with a performance rank at the 53rd percentile against our comparator group.
• Performance against the market share hurdle will be tested following the release of June market
share data by APRA in late August 2022.
• LTI opportunity percentages for Executive KMP members, including the CEO, have been maintained
at current levels.
Non-executive directors
Non-executive
director fees
• The annual base fee for the Chair was increased by 3% to $458,500, and the annual base fee for other
non-executive directors was increased by 3% to $170,000, both effective 1 July 2022.
• Committee chair fees and committee membership fees were increased by 3% effective 1 July 2022
to $41,200 and $20,600 respectively.
• The aggregate non-executive director fee spend remains below the approved total fee pool of
$2,300,000.
Annual Report 2022 55
Remuneration report
For the financial year ended 30 June 2022
3. Medibank’s remuneration strategy
At Medibank, we believe that remuneration has a key
influence on behaviour and is a valuable tool to reinforce our
culture. Our people are guided by our strong set of values
which are anchored to the core pillars of our culture – our
purpose, our people and customers and our performance.
We focus on our values every day to ensure we do the right
thing by our customers, our people and the community.
Our remuneration strategy has been developed to focus
our people on responsibly executing Medibank’s strategy,
role-modelling behaviours that strengthen our values-based
culture and achieving business objectives that increase value
for our customers and shareholders. Supporting this strategy,
our remuneration framework is designed to link reward to
business outcomes, individual performance and behaviour,
and to support Medibank’s long-term financial soundness
and risk management framework.
The diagram below illustrates the relationship between
Medibank’s remuneration strategy, reward framework
and the timeline of when 2022 remuneration is delivered.
Medibank’s remuneration strategy
Focus employees on responsibly executing Group strategy to increase customer and shareholder value
with behaviours aligned to Medibank’s values and purpose
Attract and retain
key talent through
competitive and fair
fixed remuneration
Incentivise
high performance
through variable,
at risk payments
Reward employees for the
achievement of business
outcomes aligned with
Medibank’s culture
Align the interests of
executives with increasing
long-term customer and
shareholder value
Medibank’s total target reward framework
Total fixed
remuneration
(TFR)
• Determined with reference to capability, experience, the complexity of the role, as well as median pay levels of
Medibank’s comparator group
• Paid on a fortnightly basis in base salary and superannuation
Gateways
Performance measures
Delivery
Short-term
incentive
(STI)
Long-term
incentive
(LTI)
• Individuals must pass a risk,
compliance and behaviour
gateway to be eligible for
an STI or LTI award
• Financial Gateway (STI only)
– Medibank must achieve
a baseline Group operating
profit target for an STI to
be awarded
• Group operating profit
• Health Insurance revenue growth
• Customer Net Promoter Score (cNPS)
• Role-specific metrics
• Earnings per share compound annual growth rate
• Relative total shareholder return
• Growth of Medibank’s private health insurance
market share
• 50% cash
• 50% performance
rights deferred
for 12 months
• Three-year deferred
performance rights
2022 remuneration timeline
FY22
FY23
FY24
TFR
Base salary + super
STI
Cash
Deferred
Relative total shareholder return
LTI
Earnings per share compound annual growth rate
Private Health Insurance market share growth
50%
50%
35%
35%
30%
date earned
date granted
eligible for payment or vesting
56 Medibank
4. Remuneration governance
4.2 Executive remuneration policies
Medibank has a robust governance framework in place to
ensure that our remuneration and performance practices are
fair, reasonable and aligned with the requirements outlined in
our risk management framework. Our governance framework
also considers regulatory compliance, customer outcomes,
community expectations and the delivery of sustainable
shareholder value.
4.1 The role of the Board in remuneration
The People and Remuneration Committee (P&RC) is a
committee of the Board. The diagram below outlines the role
of the P&RC in assisting and advising the Board on people
and culture policies and practices, including remuneration.
While there are four permanent members of the P&RC,
a standing invitation exists to all non-executive directors
to attend meetings. The Chief Executive Officer (CEO)
and Group Executive – People, Culture & Sustainability
are also invited to attend P&RC meetings, except where
matters associated with their own performance or
remuneration are considered. Specific governance activities
with respect to the P&RC include regular reviews of
the P&RC Charter to ensure consideration of changing
regulations, guidelines and best practice and an annual
audit of committee minutes against the P&RC Charter.
For P&RC meeting attendance information, refer to the
table on page 49 of the directors’ report.
4.2.1 Performance evaluation of Executive KMP members
At the outset of each performance year, the Board determines
the measures against which Executive KMP will be assessed.
The measures are a combination of Medibank (Company)
and role-specific (individual) performance measures that
are aligned to the achievement of Medibank’s customer
and financial milestones set out in the Annual Report 2022.
Aligned with Medibank’s Group-wide performance framework ‘I
Perform Better’, the role-specific measures for Executive KMP
are known as ‘Big Goals’ (an acronym for Bold, Impactful Goals).
Big Goals are designed to be ambitious, aspirational and shift
expectations from delivering at a base level against core job
requirements to driving strong, impactful performance. The
Big Goals adopted by each Executive KMP then form the basis
for the Big Goals adopted by their leadership team members
and respective teams to ensure all employees across the
Group are working towards a shared and consistent strategy.
At the completion of the performance year, Executive KMP
are individually assessed against the risk, compliance and
behaviour gateway which is outlined in section 6.3. KMP are
then attributed an individual performance outcome against
a 5-point rating scale (with a minimum rating of 3 required
to receive a short-term incentive (STI) award) that assesses
Executive KMP performance and behaviours against business
outcomes and achievement of role-specific performance
measures. The individual performance ratings of Executive
KMP are then combined with performance against Company
measures to determine STI outcomes.
With respect to fixed remuneration adjustments, consideration
is given to role-specific performance, experience, the complexity
of the role and Medibank’s market comparator group.
Additional detail on STI performance measures are included in
sections 6 and 7 of this report and further information on fixed
remuneration levels for Executive KMP is outlined in section 6.2.
Reviewing and overseeing
Medibank’s key people and
culture strategies, including
employee engagement,
values, behaviours and
diversity and inclusion
Ensuring that Medibank’s
performance and
remuneration practices
are consistent with the
risk management
framework and drive
appropriate behaviours
and a values-based
culture
P&RC
Reviewing employee
remuneration
arrangements with
consideration for
behaviours, regulatory
compliance, customer
outcomes, community
expectations and
shareholder value
Reviewing and monitoring
Medibank’s strategies for
executive succession, talent
acquisition and retention
Reviewing and monitoring
Medibank’s health, safety
and wellbeing strategy,
workplace relations and
payroll integrity
Independent remuneration
consultant
• Ernst & Young provides
information to assist the P&RC
in making remuneration
decisions and
recommendations to the Board
• The work undertaken by Ernst
& Young in 2022 did not
constitute a remuneration
recommendation
Annual Report 2022 57
Remuneration report
For the financial year ended 30 June 2022
The CEO provides his performance assessment of each
Executive KMP, and other ELT members, to the Board for
consideration. The Chair, in consultation with the Board,
assesses the performance, behaviour and conduct of
the CEO. The Board has ultimate discretion over final
individual performance outcomes for all ELT members to
ensure alignment with Medibank's performance, customer
outcomes, community and shareholder expectations.
4.2.2 Clawback and malus of executive performance-
based remuneration
Medibank has an Executive Remuneration Clawback Policy
that provides discretion to the Board to reduce, cancel, or
recover (clawback) any performance-based awards made to
a senior executive employee in certain circumstances and
subject to applicable laws, including the following:
• Serious misconduct, fraud or dishonesty by the employee.
• Any behaviour, act or omission by the employee that impacts
on the Group’s reputation or long-term financial soundness.
• A material misstatement of the Group’s financial
statements.
• The Board becomes aware of any other action or behaviour
that it determines (acting in good faith) has resulted in the
employee receiving an inappropriate benefit.
The Executive Remuneration Clawback Policy provides
that if any of these events have occurred in the previous
five financial years the Board may, in its absolute
discretion, withhold an employee’s performance-based
payments, require the repayment of all, or part of, previous
performance-based awards, lapse previously deferred and
unvested performance-based rewards, or otherwise alter
an employee’s remuneration subject to applicable laws. In
addition to a stand-alone policy, Medibank’s remuneration
clawback provisions are outlined in executive employment
contracts and employee equity offer documentation.
While clawback provisions allow an organisation to recover a
performance-based award after it has been paid out (or share
awards vested), malus provisions allow the organisation to
reduce or cancel the award before it has been paid out.
4.2.3 Executive shareholding requirements
Executive KMP are subject to a Minimum Shareholding
Policy that is designed to strengthen their alignment with
customers and shareholders by requiring them to hold
Medibank shares with a value equivalent to 100% of their
annual fixed remuneration within five years of appointment to
the Executive Leadership Team. The policy does not require a
person to purchase shares, however they are restricted from
selling their vested employee equity holdings (other than to
satisfy income tax obligations) until they meet the minimum
shareholding requirement.
All Medibank shares and unvested performance rights that
are subject to a tenure-based hurdle held by, or on behalf
of, the person (for example within a family trust or self-
managed superannuation fund where they are the beneficial
owner) will count towards satisfaction of the minimum
shareholding requirement.
As at 30 June 2022, progress towards the minimum
shareholding requirement for each Executive KMP is
provided below:
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
Minimum
shareholding
requirement $1
Value of eligible
shareholdings as
at 30 June 2022 $2
1,500,000
780,000
1,000,000
1,000,000
2,790,886
78,384
1,275,154
3,234,137
Minimum
shareholding
requirement timeline
Requirement satisfied
22 June 2026
Requirement satisfied
Requirement satisfied
1. Minimum shareholding requirement based on each persons’ total fixed remuneration (TFR) as at 30 June 2022.
2. Holding value is calculated with reference to the total number of eligible shares or performance rights held by each person, multiplied by the closing
price of Medibank’s shares on 30 June 2022 ($3.25).
4.2.4 Share Trading Policy
We have a Share Trading Policy to ensure that all employees
understand their obligations in relation to dealing in
Medibank shares. The Share Trading Policy describes
restrictions on buying and selling Medibank shares.
In addition, non-executive directors, all senior executives
and employees with potential access to inside information are
deemed to be ‘Restricted Employees.’ They are required to
seek approval before dealing in Medibank shares and are
subject to share trading blackouts prior to financial result
announcements and other times, as required. The policy
also prohibits employees from entering into transactions
relating to Medibank shares which limit their economic
risks, including in relation to the long-term incentive (LTI)
Plan and equity-based component of the STI Plan.
Our Share Trading Policy can be found within the
corporate governance section on our website.
58 Medibank
4.2.5 Termination provisions in Executive KMP
contracts
All current Executive KMP are employed under ongoing
contracts with notice periods set at 3 months (employee) and
6 months (employer), or in the case of the CEO, 6 months
(both employee and employer). Termination provisions
included in Executive KMP contracts are limited to 6 months
payment of fixed remuneration, in lieu of notice.
If an Executive KMP is assessed by the Board as a ‘good
leaver’ (meaning they cease employment by reason
of death, serious disability, permanent incapacity,
retirement,redundancy or with Board approval), the cash
STI award in respect of the performance year in which they
leave would be paid on a pro rata basis at the end of the STI
performance period. The deferred component of the STI
award will be paid in cash (rather than performance rights)
on a pro rata basis with payment deferred until 12 months
following the payment of the cash component. Any previously
deferred STI remains restricted until the applicable
vesting date, unless determined otherwise by the Board.
Performance rights issued as LTI are retained on a pro rata
basis by a ‘good leaver’. Retained performance rights remain
unvested and subject to the same vesting conditions that will
be assessed at the end of the performance period. Further
details of the termination provisions that relate to the STI
and LTI plans are detailed in section 6 of this report.
Medibank risk culture framework
Decision making
and challenge
Communication
and escalation
Leadership
e
Risk b
h a v iours in a
c
t
i
o
Alignment
with purpose
and values
R
i
s
k
a
r
c
hitecture a n d f o
Performance
management
and incentives
n
n
u ndatio
Knowledge
and capabilities
Risk appetite
and strategy
5. Risk and remuneration
A key focus for Medibank’s Board and the P&RC is ensuring
our remuneration policies and practices are consistent with
our risk management framework, aligned with prudent risk
taking and support the effective management of financial
and non-financial risks.
5.1 Risk culture
An engaged culture is contingent on alignment between
purpose, values, behaviours and strategic direction. With a focus
on ensuring we do the right thing for our people, customers and
community, Medibank’s purpose and values provide guidance
for the behaviours we expect of our employees. We recently
updated our risk culture framework, and our current suite of
measurements (behavioural metrics and survey responses)
fully align with the framework elements and risk behaviours to
ensure they provide the right insights and conditions for positive
action. The risk culture framework, outlined below, articulates
the key elements that influence and shape our risk culture in
terms of behaviours and practices.
Our risk culture framework builds on Medibank’s Code of
Conduct which sets out the way we work at Medibank and
outlines practical principles and standards of behaviour and
conduct which are expected of all Medibank employees. As
an organisation, we are committed to not only complying with
legal obligations, but also acting ethically and responsibly in
relation to our people, customers and the community.
The behaviours that support our risk culture include:
We actively challenge risk
decisions to ensure benefit
for our customers, our
employees, our brand
and our shareholders
We escalate risk issues
without fear or favour
We all own risk issues
We expect that all our risk
and reward discussions are
viewed through our values
and business goals
We learn from our
experiences and mistakes
to ensure we do better
Responsibility
and accountability
Risk governance
and oversight
Annual Report 2022 59
Remuneration report
For the financial year ended 30 June 2022
5.2 Alignment of remuneration with prudent
risk taking
We believe that the effective alignment of remuneration
with the risk appetite set by the Board is critical to our
remuneration strategy and framework. Under Medibank’s
Group-wide performance framework ‘I Perform Better’, at the
end of each financial year all employees are assessed against
their personal scorecard, which is a combination of financial
and non-financial measures, including performance against
their risk, compliance and behaviour obligations. Through the
performance assessment process, both positive and negative
risk, compliance and behaviour outcomes are considered
as part of a holistic performance assessment. Employees
are then attributed an outcome against a five-point rating
scale (with a minimum rating of three required to receive a
short-term incentive (STI) award) that focuses on behaviours,
business outcomes and achievement of role-specific
performance measures. This then informs remuneration and
performance-based incentive outcomes for the period.
The management of financial and non-financial risks by
senior executives is reviewed by the Risk Management
Committee (RMC). As part of this review the RMC considers
the effective operation of divisional risk committees, incident
identification, audit findings, remediation actions, health
and safety, and feedback on risk culture from employees.
In addition, the Chief Risk Officer, Group Executive – People,
Culture & Sustainability and Group Executive – Legal,
Governance & Compliance are specifically tasked with
notifying the Board of any relevant risk and compliance
outcomes and/or conduct which may impact performance
and remuneration outcomes for Executive KMP (including
the CEO) and other senior executives.
Further, as outlined throughout this report, Medibank’s
executive reward framework includes long-term deferral
across both our STI Plan and LTI Plan to ensure risk
outcomes are considered over extended periods.
5.3 Consequence management
A well understood and consistently applied consequence
management process is a key part of our risk culture and
ensures risk, compliance and behaviour outcomes are aligned
with remuneration outcomes. Consequences of employees
breaching Medibank’s Code of Conduct are clearly articulated
and may include an employee attending further training or
counselling, a formal written warning being applied, or in
certain circumstances, termination of employment.
The issue of a final written warning automatically results in
the employee being given an ‘unsatisfactory’ performance
rating for the relevant performance period, meaning the
individual is ineligible for any performance-based reward
outcome or fixed remuneration increase. Medibank’s
individual incentive plan rules also clearly articulate that
failure to meet the risk, compliance and behaviour gateway
in any given performance period will consequently lead to
ineligibility for an incentive award for the performance period
and potential termination.
In 2022, 5 employees were issued with final written warnings
following a breach of Medibank’s Code of Conduct, or
another Medibank Group policy. In all cases, each employee
received a performance rating of ‘unsatisfactory’ and was
ineligible for any applicable performance-based incentive or
fixed remuneration increase. A further 4 individuals in 2022
had their employment terminated following an incident of
misconduct. Further details on consequence management
can be found in our Sustainability Report 2022.
6. Executive KMP remuneration components
Target remuneration for Executive KMP is designed to reward
sustained business performance with behaviours aligned with
Medibank’s values and purpose that benefits both customers
and shareholders. The Board aims to find a balance between:
• Fixed and at-risk remuneration.
• Short-term and long-term remuneration.
• Remuneration delivered in cash and deferred equity.
6.1 2022 target remuneration mix
The 2022 target remuneration mix for Medibank’s KMP is
shown below.
David
Koczkar
Milosh
Milisavljevic
Mark
Rogers
Andrew
Wilson
28.6%
14.3% 14.3%
42.9%
43.5%
14.1% 14.1%
28.3%
43.5%
14.1% 14.1%
28.3%
43.5%
14.1% 14.1%
28.3%
Fixed
STI cash
Deferred
STI (equity)
LTI
(equity)
60 Medibank
6.2 Total fixed remuneration (TFR)
• Ensure that the risks in respect of their position are well
Total fixed remuneration (TFR) is the fixed portion of
remuneration and includes base salary and employer
superannuation contributions. Fixed remuneration is
determined with reference to the executive’s capabilities,
experience, the complexity of the role, as well as median
pay levels for similar roles at companies in the ASX 11-100
(excluding mining and energy companies). This ensures
that fixed remuneration is set at competitive levels and
enables Medibank to attract and retain high quality
executives. Further details of Medibank’s comparator group
of companies is outlined in section 14 of this report. The table
below outlines the current TFR settings for Executive KMP.
6.2.1 Total fixed remuneration
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
30 June 2022 $
1,500,000
780,000
1,000,000
1,000,000
1 July 2022 $
1,550,000
825,000
1,035,000
1,020,000
6.3 Short-term incentive (STI)
STI is an at-risk element of remuneration, which is designed
to reward executives for the creation of customer and
shareholder value during the financial year. Executives must
pass two separate gateways to participate in the plan. Once
both gateways are achieved, executives have the opportunity
to earn a percentage of their fixed remuneration as an
incentive, based on company and individual performance.
6.3.1 STI gateways
For an STI award to be made to an executive, the following
gateways must be achieved:
Risk, compliance and behaviour gateway
Individually assessed, the risk, compliance and behaviour
gateway requires executives to:
• Adhere to Medibank’s Code of Conduct which covers
standards of behaviour and conduct which includes anti-
harassment, anti-discrimination and anti-bribery and
corruption obligations. Our Code of Conduct requires all
employees to not only comply with our legal obligations,
but also to act ethically and responsibly in relation to our
customers, colleagues and the community.
• Complete all mandatory compliance training which
includes privacy, cyber-security, health and safety,
bullying and harassment, bribery and corruption and
meeting our legal, ethical and governance requirements.
managed. Multiple factors are considered when assessing
risk management (including environment, social and
corporate governance and climate risks where relevant),
which differ based on an executive’s role. Common
elements include the effective operation of divisional
risk committees, incident identification, audit findings,
remediation actions, health and safety, and feedback on
risk culture from employees.
Assessment of the risk, compliance and behaviour gateway
is also subject to feedback provided by the Chief Risk Officer,
Group Executive – People, Culture & Sustainability and Group
Executive – Legal, Governance & Compliance as outlined in
section 5.2.
Financial gateway
• Assessed at the Group level, Medibank must achieve
a baseline Group operating profit target for an STI to
be awarded.
6.3.2 STI performance measurement
The Board determines challenging levels of performance for
each Medibank and role-specific STI performance measure.
When setting performance expectations, the Board considers
numerous factors, including Medibank’s strategic objectives,
prior year performance, the external environment, customer
outcomes and shareholder expectations. The Board also
ensures that performance levels are set for the current year
in the context of achieving longer term customer and financial
strategic goals. Further detail on each performance measure
is outlined in section 7.1.
At the completion of the performance year, an assessment
is first made on the achievement of the STI gateways. If
achieved, executives are then assessed against the company
and role-specific performance measures to determine STI
award outcomes. There is a threshold level of performance for
each Medibank and role-specific measure as set by the Board
that needs to be achieved for an STI award to be paid (for that
element of the award). For an executive to achieve a target
STI award, performance against Medibank and role-specific
measures must be at the target level of performance as set by
the Board (for that element of the award) and delivered with
behaviours aligned with Medibank’s purpose and values.
For an executive to achieve a stretch STI award (therefore,
award at maximum), performance against all Medibank
and role-specific measures must be at or above stretch
performance as set by the Board (for that element of the
award) and delivered with behaviours aligned with Medibank’s
values and purpose. This would represent exceptional
performance, well above that of Medibank’s strategic plan.
Annual Report 2022 61
Remuneration report
For the financial year ended 30 June 2022
6.3.3 Key features of the STI plan
Over what period is
performance assessed?
How are STI payments
delivered?
The STI performance period is the financial year 1 July to 30 June.
50% of STI awarded to Executive KMP is paid as cash, with the remaining 50% deferred
for 12 months (deferred STI). Deferred STI is provided in the form of 12-month deferred
performance rights.
When are STI payments
made?
The cash component of STI is paid following the release of audited financial results,
with performance rights for the deferred STI component granted shortly thereafter.
What method is used to
determine the number of
performance rights granted
to each participant as part
of the deferred STI?
Performance rights under the STI plan are granted at face value. The deferred STI value
for each Executive KMP is divided by the volume weighted average share price (VWAP) of
Medibank shares to determine the number of units granted.
For the 2022 deferred STI component the VWAP will be calculated on the 10 trading days
up to and including 15 September 2022.
Are deferred STI
performance rights entitled
to receive a dividend
payment?
Deferred STI performance rights do not attract dividends during the deferral period.
To align participant outcomes with shareholders, on vesting of these performance rights
additional Medibank shares are granted to ensure each participant receives a benefit
equivalent to any dividends paid during the deferral period.
What gateways apply to the
STI plan?
For an STI award to be made to Executive KMP, both the risk, compliance and behaviour
gateway, and the financial gateway must be achieved. Further detail on these gateways is
outlined in section 6.3.1.
What are the performance
measures under the
STI plan?
Performance measures under the STI plan are determined by the Board at the
commencement of each performance period. For 2022, the performance measures were:
• Group operating profit (excluding investment income).
• Health Insurance premium revenue growth.
• Customer Net Promoter Score (cNPS).
• Role-specific metrics.
Section 7.1 of this report provides a detailed description of Medibank’s STI performance
measures and a description of how the organisation has performed against each measure
in 2022. Actual target values are not disclosed as this is considered commercially sensitive
information.
Does Medibank have a
clawback policy that applies
to the STI plan?
Medibank has an Executive Remuneration Clawback Policy that provides discretion to
the Board to reduce, cancel, or recover (clawback) any award made under the STI plan to
Executive KMP in certain circumstances subject to applicable laws. Further detail on this
policy is outlined in section 4.2.2.
What happens to STI
entitlements if an executive
leaves Medibank?
If an executive is a ‘good leaver’ (meaning they cease employment by reason of death,
serious disability, permanent incapacity, retirement, redundancy, or with Board approval),
pro rata payment of STI applies.
In what circumstances are
STI entitlements forfeited?
Section 4.2.5 provides additional information on the treatment of STI for people deemed
as ‘good leavers’ by the Board.
In the event an ELT member is not considered a ‘good leaver’ (meaning they cease
employment for any reason other than death, serious disability, permanent incapacity,
retirement, redundancy or with Board approval), the ELT member will forfeit any payment
under the STI plan, including any unvested deferred STI grants, unless otherwise
determined by the Board.
62 Medibank
6.3.4 Annual STI opportunity
The target and maximum annual STI opportunity as a percentage of total fixed
remuneration for each Executive KMP is outlined in the table below.
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
2022 & 2023
Target
Maximum
100%
65%
65%
65%
150%
100%
120%
120%
6.4 Long-term incentive (LTI)
LTI is an at-risk element of remuneration designed to reward executives for delivering sustainable business performance
over the long term. Given the nature of the private health insurance industry and the fact that it is highly regulated, the Board
considers it appropriate to measure long term performance over a three-year period. Each year executives are eligible to
receive an LTI which is calculated as a percentage of their fixed remuneration. This incentive is subject to performance hurdles
that will be tested at the end of the three-year performance period. Based on performance against these hurdles a percentage
of the incentive will be retained by the executive with the remainder being forfeited.
6.4.1 Key features of the LTI plan
What is the aim of the
LTI plan?
The Medibank LTI plan is designed to:
• Align the interests of executives more closely with the interests of customers and
shareholders, by providing an opportunity for those executives to receive an equity interest
in Medibank through the granting of performance rights.
• Assist in the motivation, retention and reward of executives over the three-year deferral
period.
What is the performance
period for 2022 LTI plan?
The performance period for the 2022 LTI plan is three financial years commencing 1 July
2021. A three-year performance period strikes a balance between providing a reasonable
period to align reward with shareholder return and the LTI acting as a vehicle for executive
motivation and retention.
What are performance
rights?
Performance rights issued to executives under the LTI plan are conditional rights for the
participant to subscribe for fully paid ordinary shares in Medibank.
What method is used to
determine the number of
performance rights granted
to each participant?
Each performance right entitles the executive to subscribe for one ordinary share if the
performance hurdles are met at the conclusion of the performance period. No amount is
payable by the participant upon exercise of the performance rights once they have vested.
Performance rights under the LTI plan are granted at face value. Each participant receives a
percentage of their fixed remuneration in LTI (refer to section 6.4.2 for details). This amount
is then divided by the face value of Medibank shares.
For the 2022 LTI plan, the number of performance rights granted to each participant was
determined using the volume weighted average price of Medibank shares on the ASX during
the 10 trading days up to and including, 30 June 2021. This average price was $3.13.
What gateways apply to the
LTI plan?
Each participant must meet the risk, compliance and behaviour gateway prior to being
granted LTI. Further detail on this gateway is outlined in section 6.3.1.
Annual Report 2022 63
Remuneration report
For the financial year ended 30 June 2022
What are the performance
hurdles under the 2022
LTI plan?
Performance rights issued under the 2022 LTI plan are subject to three separate
performance hurdles:
• 35% of the performance rights are subject to a performance hurdle based on Medibank’s
earnings per share compound annual growth rate (EPS CAGR) over the performance
period. The starting point for EPS will be calculated using Medibank’s underlying profit as
at 30 June 2021 and the performance period for the EPS performance hurdle will run for
3 years from 1 July 2021 through to 30 June 2024. Further detail on the profit measure
used in the calculation of EPS is provided in section 6.4.3.
• 35% of the performance rights are subject to a relative total shareholder return (TSR)
performance hurdle, measured over the performance period. Medibank’s relative TSR will
be compared to a comparator group comprising companies with a market capitalisation
positioned within the ASX 11-100 (excluding mining and energy companies).
• 30% of the performance rights are subject to a performance hurdle based on the growth
of Medibank’s private health insurance market share (as reported by APRA) over the
performance period.
These performance hurdles were chosen by the Board as they are aligned with the interests
of our customers and shareholders and represent well understood and transparent
mechanisms to measure performance and provide a strong link between executive reward
and shareholder wealth creation.
The performance hurdles under the 2022 LTI plan have threshold levels which need to be
achieved before vesting commences. Details of these thresholds are outlined in the vesting
schedule in section 6.4.3.
When do the performance
rights vest?
Performance hurdles are assessed as soon as practicable after the completion of the
relevant performance period. The number of performance rights that vest (if any) will be
relative to the achievement against the performance hurdles. See section 6.4.3 for the
vesting schedule associated with each performance hurdle.
Are the performance
hurdles re-tested?
No. Performance hurdles are only tested once at the end of the performance period.
Any performance rights that remain unvested at the end of the performance period are
immediately forfeited.
Are LTI performance
rights entitled to receive a
dividend payment?
LTI performance rights do not attract a dividend during the performance period, as they
are still subject to performance hurdles that will determine the number of rights that
convert to ordinary Medibank shares.
Does Medibank have a
clawback policy that applies
to the LTI plan?
Medibank has an Executive Remuneration Clawback Policy that provides discretion to the
Board to reduce, cancel, or recover (clawback) any award made under the LTI Plan to an
executive in certain circumstances subject to applicable laws. Further detail on this policy
is outlined in section 4.2.2.
What happens to LTI
entitlements if a participant
leaves Medibank?
If a participant is a ‘good leaver’ (meaning they cease employment by reason of death,
serious disability, permanent incapacity, retirement, redundancy, or with Board approval),
a portion of the performance rights held (granted, but not vested) by that participant on
cessation of employment will be forfeited on a pro rata basis according to a formula which
takes into account the length of time the participant has held the performance rights
relative to the performance period for the grant. The retained performance rights will
remain unvested and will be tested at the end of the performance period against the existing
performance hurdles.
In what circumstances
are LTI entitlements
forfeited?
LTI entitlements are forfeited if performance hurdles are not met. In the event a participant
is not considered a ‘good leaver’ (meaning they cease employment for any reason other
than death, serious disability, permanent incapacity, retirement, redundancy or with Board
approval), the performance rights held (granted, but not vested) by that participant on
cessation of employment will be automatically forfeited.
64 Medibank
The annual LTI allocation value as a percentage of TFR for
each Executive KMP is outlined in the table below.
at the end of the performance period, as set out in the
following vesting schedule:
6.4.2 Annual LTI allocation
Executive KMP
LTI allocation value as % of TFR
2022 & 2023
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
150%
65%
65%
65%
6.4.3 LTI hurdles explained
Each year, the Board reviews the LTI targets and vesting
conditions in the context of Medibank’s operating
environment. The Board is committed to setting targets
which are appropriately challenging for management to
meet while not being unattainable and which ultimately
support the delivery of strong outcomes for our customers
and shareholders. For the 2022 LTI offer, the Board also
considered the uncertainty surrounding the economic
and social impact of COVID-19 on Medibank’s operating
environment and the PHI landscape more broadly.
2022 EPS performance rights (35% of award)
In this context, the Board approved maintaining a threshold
EPS CAGR target of 3% for the 2022 LTI grant and
maintaining the vesting schedule that applied to the 2021
LTI offer. Details of the vesting schedule are outlined in the
table below:
Medibank’s EPS CAGR over
the performance period
Percentage of EPS
performance rights that vest
Less than 3% EPS CAGR
Between 3% and 7% EPS
CAGR
7% EPS CAGR or greater
Nil
Straight-line pro rata vesting
between 50% and 100%
100%
Medibank’s performance against the EPS hurdle is
calculated based on the compound annual growth rate
(CAGR) of Medibank’s EPS over the performance period.
EPS is based on underlying profit, which adjusts statutory
net profit after tax (NPAT) where appropriate, for short-term
outcomes that are expected to normalise over the medium
to longer term, most notably in relation to the level of gains
or losses from investments, due to the limited control that
management has over these outcomes.
2022 TSR performance rights (35% of award)
Medibank’s TSR will be compared against companies within
the ASX 11-100 (excluding mining and energy companies),
which is the same comparator group used for executive
and non-executive remuneration benchmarking. For any of
the 2022 TSR performance rights to vest, Medibank must
achieve the threshold TSR ranking over the performance
period. The percentage of the 2022 TSR performance rights
that vest, if any, will be based on Medibank’s TSR ranking
Medibank’s TSR rank in the
2022 comparator group
Percentage of TSR
performance rights that vest
Less than 50th percentile
Between the 50th and 75th
percentile
At or above 75th percentile
Nil
Straight-line pro rata vesting
between 50% and 100%
100%
The TSR of Medibank and other companies within the
comparator group, expressed as a compound annual rate
of return, will be comprised of:
a) The change in share price of each company over the
performance period. The change in share price is
calculated using the volume weighted average price
(VWAP) of each entity over the 20 trading days leading up
to and including the performance period start and end
dates. The VWAP at the end of the performance period
will be adjusted for any stock splits that occur during the
performance period.
b) The value of all dividends and other shareholder benefits
paid by each company during the performance period
assuming that:
i.
The dividends and shareholder benefits are reinvested
in the relevant company at the closing price of the
securities on the date the dividend or shareholder
benefit was paid.
ii. Franking credits are disregarded.
The entities comprising the 2022 comparator group are
determined at the commencement of the performance
period. If the ordinary shares or stock of a member of the
2022 comparator group is not quoted on the ASX at the
end of the performance period (for example if the member
has been delisted for any reason), then it will be excluded
from calculations of the TSR calculation, unless the Board,
acting in good faith and in its absolute discretion, determine
otherwise. In exercising its discretion, the Board may have
regard to such matters it deems relevant including (but not
limited to) the length of time that the member was quoted on
the ASX during the performance period.
2022 market share performance rights (30% of award)
The Board approved maintaining a threshold private health
insurance (PHI) market share growth target of 25 basis
points. Details of the vesting schedule are set out below:
Medibank’s PHI market
share growth
Percentage of market share
performance rights that vest
Less than 25 basis points
Between 25 basis points 75
basis points
At or above 75 basis points
Nil
Straight-line pro rata vesting
between 50% and 100%
100%
Annual Report 2022 65
Remuneration report
For the financial year ended 30 June 2022
7. Linking remuneration and performance in 2022
7.1 2022 short-term incentive (STI) performance scorecard
The following table details the 2022 STI performance scorecard measures, weightings and assessment.
Measure
Description
Individually assessed, Executive KMP must adhere to
Medibank’s Code of Conduct, ensure that the risks in
respect of their position are well managed and complete all
mandatory compliance training.
Medibank’s Code of Conduct requires all employees to
not only comply with our legal obligations, but also to act
ethically and responsibly in relation to our customers,
colleagues and the community.
The management of risks (including environment, social and
corporate governance and climate risks where relevant) is
reviewed by the Risk Management Committee and considers
the effective operation of divisional risk committees, incident
identification, audit findings, remediation actions, health
and safety, feedback on risk culture from employees, and
feedback provided by the Chief Risk Officer, Group Executive
– People, Culture & Sustainability and Group Executive –
Legal, Governance & Compliance as outlined in section 5.2.
Medibank must achieve a baseline of financial performance,
as determined by the Board for the performance period.
In 2022, this baseline financial performance was a Group
operating profit target.
Group operating profit represents the core financial
measure for the annual STI Plan and reflects the Board’s
belief that it is the best measure of underlying business
performance and value created for customers and
shareholders over the performance period.
Risk,
compliance
and behaviour
gateway
Financial
gateway
Group
operating
profit
Weighting
GE-CEO
Amplar
Health
Other
Executive
KMP
2022
Outcomes
CEO
Gateway Gateway Gateway All achieved
Gateway Gateway Gateway
Met
45%
22.5%
35%
Above target
Health
Insurance
premium
revenue growth
Measured alongside the core metric of Group operating
profit, the focus of this measure is sustainable and profitable
revenue growth to ensure optimal value creation for
customers and shareholders.
Customer Net
Promoter
Score (cNPS)
cNPS is a key customer advocacy metric that measures the
likelihood of people recommending Medibank or ahm to their
families and friends.
20%
15%
25%
20%
12.5%
20%
Above
stretch
Above
stretch
Aligned to one or more of the following milestones:
1. Deliver leading experiences – Continue to achieve a high
level of advocacy by delivering exceptional experiences
for our customers and employees.
2. Differentiate our insurance business – we aim to
increase market share, achieve net policyholder growth of
3.1% to 3.3% (including continued growth in the Medibank
brand) and to deliver FY22 productivity target of $15
million (plus an additional $25 million during FY23-FY24)
3. Expand in health – replace the reported FY18 $30
million operating profit of Garrison and achieve 480,000
customers engaged with Live Better
Role-specific
big goals
66 Medibank
15%
50%
20%
Ranging
between
‘on-target’
to ‘ahead
of target’
7.2 Medibank’s 2022 financial performance
Medibank’s 2022 annual financial performance is provided in the table below in addition to the average 2022 STI award achieved
by Executive KMP, as a percentage of maximum opportunity. This table illustrates the relationship between the key indicators of
shareholder wealth creation and STI outcomes for Executive KMP.
Measure
Health Insurance premium revenue growth
Group operating profit1
Group net profit after tax (NPAT)
Dividend
Share price as at 1 July
Share price as at 30 June
Average Executive KMP STI as a percentage
of maximum opportunity
2022
2.7%
$594.1m
$393.9m
13.4 cents p/s
$3.16
$3.25
2021
2.1%
$528.3m
$441.3m
12.7 cents p/s
$2.99
$3.16
2020
1.3%
$461.0m
$315.0m
12.0 cents p/s
$3.49
$2.99
2019
2.4%
$558.7m
$458.7m
13.1 cents p/s
$2.92
$3.49
2018
1.2%
$548.8m
$445.1m
12.7 cents p/s
$2.80
$2.92
72%
70%
0%
56%
58%
1. 2019 Group operating profit of $558.7 million includes $30.2 million of operating profit attributable to discontinued operations.
7.3 2022 STI awards
The table below provides a summary of STI awards for the 2022 performance year.
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
Total STI
achieved $
1,722,456
604,826
844,084
769,912
STI cash
(50%) $
861,228
302,413
422,042
384,956
STI deferred
(50%) $
861,228
302,413
422,042
384,956
Total STI
achieved as
% of target
115%
119%
130%
118%
Total STI
achieved as % of
max opportunity
77%
78%
70%
64%
7.4 2020 Long-term incentive plan outcomes
The performance period for the 2020 LTI plan concluded on 30 June 2022. The table below outlines the final outcome against
the EPS CAGR and Relative TSR (expressed as a compound annual rate of return) performance hurdles and associated vesting
percentage for each. Testing of the market share performance hurdle will be completed following the release of market share
information by APRA.
Performance hurdle
EPS CAGR
Relative TSR
Market Share
Total 2020 LTI vesting percentage
Weighting
35%
35%
30%
Outcome
0.2%
53rd percentile
Pending1
Vesting percentage
0%
56%
Pending
Pending
1. To be confirmed following the release of APRA market share data in late August 2022
Medibank’s 2020 LTI was tested following the completion of the performance period on 30 June 2022. EPS CAGR and Relative
TSR hurdles were assessed in line with the terms of the plan and the Board did not exercise discretion in determining the
outcome. The total number of rights vesting will be confirmed once testing against the market share hurdle is completed. The
performance rights under the 2020 LTI Plan that do not vest as a result of the performance hurdle outcomes not being met will
lapse immediately.
The 2021 and 2022 LTI plans remain in restriction and will be assessed against their performance hurdles at the completion of
the 2023 and 2024 financial years respectively.
Annual Report 2022 67
Remuneration report
For the financial year ended 30 June 2022
8. 2022 actual remuneration (Non-IFRS disclosure)
The table below represents the 2022 ‘actual’ remuneration for Executive KMP and includes all cash payments made in relation
to 2022, in addition to deferred short-term incentive (STI) awards that vested in 2022.
Statutory remuneration disclosures prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards
differ to the numbers presented below, as they include (among other benefits) expensing for equity grants that are yet to realise
or may never be realised. The statutory remuneration table for Executive KMP is presented in section 9.
Base
salary and
superannuation
$
1,500,000
778,825
1,000,000
999,846
Cash STI for
performance
to 30 June
2022
$
861,228
302,413
422,042
384,956
Total cash
payments
in relation
to 2022
$
2,361,228
1,081,238
1,422,042
1,384,802
Deferred
equity awards
that vested in
20221
$
229,609
34,065
172,352
242,225
Total
2022 actual
remuneration
$
2,590,837
1,115,303
1,594,394
1,627,027
Equity awards
that lapsed in
20222
$
487,913
72,379
366,241
514,720
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
1. Deferred equity awards that vested in 2022 relate to the 2019 LTI performance rights that vested during the year.
2. Equity awards that lapsed in 2022 relate to the portion of the 2019 long-term incentive (LTI) performance rights that lapsed following the testing
of the performance hurdles in July 2021.
9. Statutory remuneration tables
9.1 Statutory remuneration table
The following table has been prepared in accordance with Section 300A of the Corporations Act 2001 and details the statutory
accounting expense of all remuneration-related items for Executive KMP. In contrast to the table in section 8 that details 2022
actual remuneration, the table below includes accrual amounts for equity awards being expensed throughout 2022 that are yet
to, and may never, be realised.
Short-term
benefits
Post-employment
benefits
Long-term
benefits
Equity-based
benefits
Other
Short-term
incentive
(STI) $ Other $
Non-monetary
benefits
$2
Superannuation
$
Leave
$3
Deferred
STI
$
Performance
rights
$4
Termination
benefits
$
Total
remuneration
$
Executive
KMP
Financial
year
Salary
$1
David
Koczkar
Milosh
Milisavljevic5
Mark
Rogers
Andrew
Wilson
2022
2021
2022
2021
2022
2021
2022
2021
1,523,622
1,027,440
754,326
21,818
980,097
882,649
971,537
963,798
Former Executive KMP
861,228
364,896
302,413
4,772
422,042
335,405
384,956
331,296
Craig
Drummond
Total
Executive
KMP6
2021
2022
1,555,477
871,312
4,229,582
1,970,639
2021
4,451,182
1,907,681
-
-
-
-
-
-
-
-
-
-
-
21,838
18,895
14,833
212
15,836
17,457
20,614
22,936
15,364
73,121
74,864
27,500
47,627
22,650
174,791
27,500
40,033
740
8
23,749
64,362
21,802
146,945
25,000
60,576
25,096
33,501
-
-
-
-
-
-
-
-
1,279,338
512,839
299,655
1,762
649,377
458,958
626,895
498,587
25,096
51,868
871,312
1,227,715
103,749
212,598
-
2,855,265
95,384
407,113
871,312
2,699,861
-
-
-
-
-
-
-
-
-
-
-
3,761,153
2,121,511
1,438,760
29,312
2,155,463
1,863,216
2,089,578
1,875,214
4,618,144
9,444,954
10,507,397
1. Salary includes annual base salary paid on a fortnightly basis and annual leave entitlements accrued, but not taken, during the year which are
expected to be taken in the next 12 months.
2. Non-monetary benefits may include death, total and permanent disablement insurance, salary continuance insurance, subsidised Medibank health
insurance and fringe benefits that are on the same terms and conditions that are available to all employees of the Group.
3. Long-term leave comprises an accrual for long service leave and annual leave entitlements accrued, but not taken, during the year which are not
expected to be taken in the next 12 months. Comparatives have been revised to represent the movement in annual leave entitlements accruals.
4. Performance rights include equity-based remuneration incurred during the relevant financial year. The values are based on the grant date fair
value amortised on a straight-line basis over the performance period and any reversals required by AASB 2 Share-based Payments.
5. The remuneration figures disclosed for Milosh Milisavljevic for 2021 reflect the period from his commencement as a KMP on 22 June 2021.
6. Total remuneration for FY2021 is $3.16 million less than that disclosed in the 2021 Remuneration Report as it does not include the Total Remuneration
amounts of $1.09m for Kylie Bishop, $1.04m for John Goodall and $1.03m for Mei Ramsay who were KMP in 2021. Effective 1 July 2021, following
changes to ELT operation effective 1 July 2021, they are no longer deemed KMP.
68 Medibank
9.2 Performance-related remuneration statutory table
The following table provides an analysis of the non-performance-related (fixed remuneration) and performance-related (short-
term incentive (STI) and long-term incentive (LTI) components of the 2022 remuneration mix for Medibank’s Executive KMP as
detailed in the ‘statutory remuneration table’.
Non-performance-related
Performance-related
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
Financial
year
Fixed
remuneration1
2022
2022
2022
2022
43.1%
58.2%
50.3%
51.6%
Cash
STI
22.9%
21.0%
19.6%
18.4%
Deferred
STI2
16.3%
10.5%
17.6%
17.1%
LTI3
17.7%
10.3%
12.5%
12.9%
Total
performance-related
remuneration
56.9%
41.8%
49.7%
48.4%
1. Fixed remuneration includes the accounting expense from all columns of the ‘statutory remuneration table’ other than ‘cash STI’, ‘performance rights’
and ‘deferred STI’.
2. Deferred STI includes the 2022 accounting expense of the 2022 deferred STI components within the ‘performance rights’ and ‘deferred STI’ columns
of the ‘statutory remuneration table’.
3. LTI includes the 2022 accounting expense of the 2020, 2021 and 2022 LTI component within the ‘performance rights’ column of the ‘statutory remuneration table’.
10. Executive KMP equity awards
10.1 Executive KMP equity award transactions
Details of 2022 Executive KMP equity award transactions and outstanding holdings granted in previous years are set out below.
Executive
KMP1
David
Koczkar
Award type2
Balance
1 July 2021
Units
Value
Units
Value
Units
Value
Units
Value
Acquired
during 20223
Vested
during 20224
Lapsed
during 20225
Other
changes Balance 30 June 20226
Long-term incentive
590,232
718,849
1,674,918
65,045
229,609
138,219
487,913
Short-term incentive
-
102,787
364,894
Ordinary shares
Milosh
Milisavljevic
Long-term incentive
Short-term incentive
Ordinary shares
793,689
109,948
-
14,468
Mark
Rogers
Long-term incentive
501,952
207,667
Short-term incentive
-
94,480
Andrew
Wilson
Ordinary shares
Long-term incentive
Short-term incentive
343,530
601,400
-
Ordinary shares
926,500
-
207,667
93,322
-
-
-
161,980
377,413
-
-
-
-
483,864
335,404
-
483,864
331,293
-
65,045
9,650
-
9,650
48,825
-
48,825
68,619
-
-
229,609
34,065
-
34,065
-
-
-
-
20,504
72,379
-
-
-
-
172,352
103,751
366,241
-
172,352
242,225
-
-
-
-
-
145,813
514,720
-
-
-
-
-
68,619
242,225
-
-
-
-
-
-
-
-
-
-
-
-
1,105,817
2,532,485
102,787
364,894
858,734
2,790,886
241,774
554,237
-
-
24,118
78,384
557,043
1,257,796
94,480
335,404
392,355
1,275,154
594,635
1,341,431
93,322
331,293
995,119
3,234,137
1. Effective 1 July 2021, Kylie Bishop, John Goodall and Mei Ramsey were no longer deemed KMP and a such their equity award transactions are not
reported in the 2022 period.
2. Long-term incentive corresponds to performance rights awarded under the LTI plan that are subject to performance hurdles. Short-term incentive
represents performance rights awarded under the STI Plan. Ordinary shares include all Medibank shares held by the executive or related parties.
3. Represents the maximum number of equity awards that may vest to each Executive in respect to their time as KMP during 2022. The minimum potential
outcome for the equity awards is 0. The values are calculated using the fair value as at grant date. The fair value at grant has been based on a valuation
by independent external consultants in accordance with accounting standard AASB 2 Share Based Payments. The fair values for the 2020, 2021 and 2022
long-term incentive (LTI) grants are used for accounting purposes only as all LTI grants are made using the face value, as outlined in section 6.4. Unit
prices have been rounded to the nearest cent.
4. Awards that vested in 2022 relate to the 32% vesting of 2019 LTI award (granted 6 December 2018) following the assessment of performance hurdles.
Performance rights that vested were automatically exercised and no payment was required from participants. Executives received one ordinary share for
each performance right that vested during the financial year. The value of vested awards is calculated using the closing share price on vesting date.
5. Awards that lapsed in 2022 relate to the 68% of the 2019 LTI award that did not meet the performance hurdle and subsequently lapsed.
6. The value of unvested STI is determined by the number of units at 30 June 2022 multiplied by the unit price at grant. The value of unvested LTI is
determined by the number of units at 30 June 2022 multiplied by the fair value at grant. The value of ordinary shares is determined by multiplying the
number of ordinary shares at 30 June 2022 by the closing price of Medibank shares on the same date.
Annual Report 2022 69
Remuneration report
For the financial year ended 30 June 2022
10.2 Overview of unvested equity awards and fair value assumptions
All awards are subject to continued employment, malus and clawback provisions.
Award
2022 LTI
performance rights
2021 Deferred STI
performance rights
2021 LTI
performance rights
2020 LTI
performance rights
2019 LTI
performance rights
Award
type
LTI
Performance
start date
1/07/2021
Performance
Performance
end date1 Grant date
3/12/2021
30/06/2024
measure Weighting
35%
30%
35%
EPS
Market share
TSR
Unit price
at grant
3.13
3.13
3.13
Fair value
at grant2
2.72
2.72
1.62
STI
LTI
1/07/2021
1/07/2020
3/12/2021
15/09/2022
30/06/2023 26/11/2020
LTI
1/07/2019
30/06/2022 28/11/2019
LTI
1/07/2018
30/06/2021
6/12/2018
Service
EPS
Market share
TSR
EPS
Market share
TSR
EPS
TSR
100%
35%
30%
35%
35%
30%
35%
50%
50%
3.55
3.02
3.02
3.02
3.46
3.46
3.46
2.91
2.91
3.55
2.54
2.54
1.58
2.80
2.80
1.09
2.44
1.37
1. The performance end date represents the earliest possible date the performance rights may vest, being the end of the performance period. The actual vesting
and exercise date will be at a time and manner determined by the Board, with Medibank to notify the holder at that time. Performance rights that vest are
automatically exercised and no payment is required from participants. Any performance rights that don’t vest at this point will immediately expire.
2. Fair value of LTI performance rights has been calculated as at the start of the performance period.
11. Non-executive director remuneration and framework
Non-executive director fees are determined by the Board and
reflect the role, market benchmarks and Medibank’s objective
to attract highly skilled and experienced independent non-
executive directors. All non-executive directors are required
to hold a minimum number of shares in Medibank to align
with shareholder interests.
11.1 Non-executive director remuneration
Component Delivered
Description
Base fee
Cash and
superannuation
Committee
fees
Cash and
superannuation
The base fee represents
remuneration for service
on the Medibank Board.
The base fee for the Chair
represents the entire
remuneration for that role.
Committee fees represent
remuneration for chairing,
or membership of, Board
committees.
11.1.1 Non-executive director fee cap
Under Medibank’s Constitution, the total fees paid in
any financial year to all non-executive directors for their
services (excluding, for these purposes, the salary of any
executive director) must not exceed, in aggregate, the
amount fixed at Medibank’s annual general meeting in
2018 at $2,300,000 per annum (fee cap).
11.1.2 Non-executive director remuneration
Under Medibank’s Constitution, the Board is responsible
for determining the total amount paid to each non-executive
director as remuneration for their services. In making this
determination, the Board has taken into account the level of work
required for the role and has regard to the median remuneration
paid to non-executive directors of companies positioned within
the ASX 11-100 (excluding mining and energy companies).
Following the annual benchmarking exercise and the
position of non-executive directors against the median of
the benchmark group, non-executive director base and
committee fees have been increased for 2023. Based on
the composition of the Board, non-executive director fee
spend for 2023 will be $2,019,300 against the approved
cap of $2,300,000. Non-executive director fees applicable
throughout 2022 and 2023 are set out in the table below:
Position
Chair
Non-executive directors
Committee chair fees
Audit Committee
Risk Management Committee
2022 $ 2023 $
445,000 458,500
165,000 170,000
40,000
41,200
40,000
41,200
People and Remuneration Committee
40,000
41,200
Investment and Capital Committee
40,000
41,200
Committee membership fees
Audit Committee
Risk Management Committee
20,000
20,600
20,000
20,600
People and Remuneration Committee
20,000
20,600
Investment and Capital Committee
20,000
20,600
70 Medibank
11.2 Non-executive director superannuation
11.3 Shareholding policy for non-executive directors
Medibank meets its obligations under the Superannuation
Guarantee legislation by paying superannuation contributions
in respect of non-executive directors to their nominated
complying superannuation funds up to the concessional
contribution limits. Superannuation contributions for non-
executive directors are drawn from the overall fees paid to
non-executive directors.
Medibank has a Minimum Shareholding Policy that requires
non-executive directors to acquire shares with a value equal
to one year’s base fee after tax over a period of five years.
Non-executive directors do not participate in, or receive, any
performance-based remuneration as part of their role and
do not participate in any equity plans that operate within
Medibank.
As permitted under the Superannuation Guarantee legislation,
people with multiple employers can elect to be exempt from
the superannuation guarantee where contributions are likely
to take them over the annual concessional contribution cap.
If a non-executive director applies and receives an exemption
from superannuation guarantee payments, Medibank will
make those payments in cash.
As at 30 June 2022, all non-executive directors have met
the minimum shareholding requirement. Further details of
current non-executive director shareholdings are provided in
section 13.
12. 2022 non-executive director remuneration statutory table
Non-executive director
Mike Wilkins
Tracey Batten
Anna Bligh
Gerard Dalbosco2
Peter Everingham5
David Fagan
Kathryn Fagg5
Linda Bardo Nicholls
Former non-executive directors
Elizabeth Alexander3
Peter Hodgett4
Christine O’Reilly4
Total non-executive director
remuneration
Short-term
benefits
Post-employment
benefits
Financial
year
Cash salary and fees
$
Non-monetary1
$
Superannuation
$
Total
$
2022
2021
2022
2021
2022
2021
2022
2021
2022
2022
2021
2022
2022
2021
2021
2022
2021
2022
2021
2022
2021
446,711
377,228
191,670
187,935
187,054
187,934
213,703
20,882
47,308
215,023
206,270
47,308
204,643
187,456
107,435
79,846
206,270
87,863
225,865
1,721,129
1,707,275
4,414
3,954
2,703
2,581
3,532
3,296
1,248
-
593
3,019
2,736
-
3,026
3,014
9,434
6,070
3,849
5,355
2,765
29,960
31,629
-
9,352
19,196
17,854
18,734
17,854
4,470
1,984
4,731
21,534
19,596
4,731
-
18,127
6,112
8,053
19,596
-
-
81,449
110,475
451,125
390,534
213,569
208,370
209,320
209,084
219,421
22,866
52,632
239,576
228,602
52,039
207,669
208,597
122,981
93,969
229,715
93,218
228,630
1,832,538
1,849,379
1. Non-monetary benefits may include death, total and permanent disablement insurance, salary continuance insurance, subsidised Medibank health
insurance and fringe benefits that are on the same terms and conditions that are available to all Medibank employees.
2. Gerard Dalbosco’s 2021 remuneration reflects his commencement date as a non-executive director of 21 May 2021.
3. Elizabeth Alexander’s 2021 remuneration reflects her retirement date from the Medibank Board of 1 October 2020.
4. Peter Hodgett’s and Christine O’Reilly’s 2022 remuneration reflects their retirement date from the Medibank Board of 18 November 2021.
5. Kathryn Fagg’s and Peter Everingham’s 2022 remuneration reflects their commencement date as non-executive directors of 31 March 2022.
Annual Report 2022 71
Remuneration report
For the financial year ended 30 June 2022
13. Non-executive director ordinary shareholdings
Balance
30 June
2021
Acquired
during the
year
Other
changes
Non-executive director
Mike Wilkins
Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham4
David Fagan
Kathryn Fagg4
100,000
50,000
44,623
24,432
-
47,016
-
Linda Bardo Nicholls
45,000
Former non-executive director
Peter Hodgett3
Christine O’Reilly3
67,800
69,930
-
-
-
48,400
-
-
-
-
-
-
-
-
-
-
40,000
-
32,750
-
(67,800)
(69,930)
Balance
30 June
2022
100,000
50,000
44,623
72,832
40,000
47,016
32,750
45,000
-
-
Minimum
shareholding
requirement
$1
Shareholding
Value
at 30 June 2022
$2
Minimum
shareholding
requirement timeline
222,500
82,500
82,500
82,500
82,500
82,500
82,500
82,500
-
-
325,000 Requirement satisfied
162,500 Requirement satisfied
145,025 Requirement satisfied
236,704 Requirement satisfied
130,000 Requirement satisfied
152,802 Requirement satisfied
106,438 Requirement satisfied
146,250 Requirement satisfied
-
-
Not applicable
Not applicable
1. Minimum shareholding requirement based on annual non-executive director base fees for 2022 and an assumed tax rate of 50%.
2. Value has been calculated with reference to the total number of eligible shares held by each non-executive director, multiplied by the closing price
of Medibank’s shares on 30 June 2022 ($3.25).
3. Peter Hodgett and Christine O’Reilly ceased to be a KMP on 18 November 2021 and therefore their balance at 30 June 2022 has been adjusted to
reflect no further holdings as a KMP.
4. Peter Everingham and Kathryn Fagg commenced as non-executive directors on 31 March 2022, and therefore their balance at 30 June 2021 was zero.
Both Peter and Kathryn held Medibank shares prior to becoming non-executive directors of Medibank.
14. Medibank’s comparator group
As outlined throughout this report, Medibank uses a
comparator group for the purposes of benchmarking
executive and non-executive director remuneration and for the
assessment of Medibank’s relative total shareholder return
(TSR) performance under its long-term incentive (LTI) plan.
Medibank’s comparator group is the ASX 11-100, excluding
mining and energy companies. In any given year, there may
be changes in the mining and energy companies excluded
from Medibank’s comparator group due to companies either
falling outside the ASX 11-100 or companies no longer being
considered exclusively as a mining or energy company.
72 Medibank
Financial report
Consolidated financial
statements
Notes to the
financial statements
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
page 74
page 75
page 76
page 77
Section 1
Basis of
preparation
page 78
1. Basis of
preparation
Section 2
Operating
performance
page 79
2. Segment
information
3. Insurance
underwriting
result
4. Deferred
acquisition costs
5. Unearned premium
liability
6. Shareholder
returns
Section 3
Investment portfolio
and capital
page 91
Section 4
Other assets
and liabilities
page 102
Section 5
Other
page 110
7. Investment
portfolio
8. Financial risk
management
9. Working capital
10. Contributed equity
and reserves
11. Property, plant
and equipment
12. Intangible assets
13. Provisions
and employee
entitlements
14. Leases
15. Income tax
16. Group structure
17. Related party
transactions
18. Share-based
payments
19. Auditor’s
remuneration
20. Other
Signed reports
Directors’ declaration
Auditor’s independence declaration
Independent auditor’s report
page 120
page 121
page 122
Annual Report 2022 73
Consolidated statement of comprehensive income
For the financial year ended 30 June 2022
Revenue
Health Insurance premium revenue
Medibank Health revenue
Other income
Expenses
Claims expense
Medical services expense
Employee benefits expense
Office and administration expense
Marketing expense
Information technology expense
Depreciation and amortisation expense
Finance expense
Share of net profit/(loss) from equity accounted investments
Note
2022
$m
2021
$m
2(b) 3(a)
3(a)
13(a)(ii)
16(b)
6,881.2
247.3
7,128.5
6,691.1
219.3
6,910.4
1.0
1.8
(5,679.8)
(34.7)
(467.5)
(90.1)
(85.9)
(73.8)
(115.0)
(2.4)
4.5
(6,544.7)
(5,557.9)
(34.0)
(439.9)
(88.6)
(81.4)
(72.3)
(122.0)
(2.8)
(1.0)
(6,399.9)
Profit before net investment income and income tax
584.8
512.3
Net investment income/(expense)
7(a)
(24.8)
120.0
Profit for the year before income tax
560.0
632.3
Income tax expense
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gain/(loss) on retirement benefit obligation, net of tax
Total comprehensive income for the year, net of tax, attributable to equity holders
of the parent
Earnings per share attributable to ordinary equity holders of the Parent - basic
and diluted (cents)
The above statement should be read in conjunction with the accompanying notes.
15(a)
(166.1)
393.9
(191.1)
441.2
0.2
0.4
394.1
441.6
6(b)
14.3
16.0
74 Medibank
Consolidated statement of financial position
As at 30 June 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value
Deferred acquisition costs
Tax receivable
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred acquisition costs
Deferred tax assets
Equity accounted investments
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Claims liabilities
Unearned premium liability
Tax liability
Customer give back provision
Provisions and employee entitlements
Total current liabilities
Non-current liabilities
Trade and other payables
Claims liabilities
Unearned premium liability
Provisions and employee entitlements
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
The above statement should be read in conjunction with the accompanying notes.
Note
9(b)
7(b)
4
11
12
4
15(c)
16(b)
9(c)
3(b)
5
13(c)
13
9(c)
3(b)
5
13
2022
$m
596.7
225.4
2,854.5
35.4
-
19.3
3,731.3
88.4
332.3
47.5
243.6
103.7
6.0
821.5
2021
$m
671.7
215.9
2,311.9
33.6
6.2
18.8
3,258.1
101.7
345.3
47.5
85.9
77.1
8.2
665.7
4,552.8
3,923.8
361.4
860.9
817.5
117.0
178.6
104.6
2,440.0
56.6
10.2
77.3
23.1
167.2
338.2
622.4
697.0
-
103.0
94.7
1,855.3
70.2
9.1
60.4
22.7
162.4
2,607.2
2,017.7
1,945.6
1,906.1
10(a)
10(b)
85.0
25.7
1,834.9
1,945.6
85.0
22.3
1,798.8
1,906.1
Annual Report 2022 75
Consolidated statement of changes in equity
For the financial year ended 30 June 2022
Contributed
equity
$m
85.0
Note
Reserves
$m
22.4
Retained
earnings
$m
1,690.4
Total
equity
$m
1,797.8
441.2
0.4
441.6
(333.2)
(5.3)
5.2
1,906.1
393.9
0.2
394.1
(358.0)
(2.5)
5.9
1,945.6
-
-
-
-
-
-
85.0
-
-
-
-
-
-
85.0
-
-
-
-
(5.3)
5.2
22.3
-
-
-
-
(2.5)
5.9
25.7
441.2
0.4
441.6
(333.2)
-
-
1,798.8
393.9
0.2
394.1
(358.0)
-
-
1,834.9
Balance at 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends paid
Acquisition and settlement of share-based payment, net of tax
Share-based payment transactions
Balance at 30 June 2021
6(a)(i)
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends paid
Acquisition and settlement of share-based payment, net of tax
Share-based payment transactions
Balance at 30 June 2022
6(a)(i)
The above statement should be read in conjunction with the accompanying notes.
76 Medibank
Consolidated statement of cash flows
For the financial year ended 30 June 2022
Cash flows from operating activities
Premium receipts
Medibank Health receipts
Other receipts
Payments for claims and levies
Payments to suppliers and employees
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Investment expenses
Proceeds from sale of financial assets
Purchase of financial assets
Purchase of equity accounted investments
Loan to associate
Purchase of plant and equipment
Purchase of intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Purchase of shares to settle share-based payment
Lease principal and interest payments
Dividends paid
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
The above statement should be read in conjunction with the accompanying notes.
Note
2022
$m
2021
$m
9(d)
16(b)
16(b)
14
6(a)(i)
7,089.4
274.6
3.3
(5,422.6)
(795.9)
(200.3)
948.5
14.2
(5.0)
1,349.6
(1,926.2)
(21.1)
-
(7.0)
(28.1)
(623.6)
6,798.8
234.9
3.8
(5,542.7)
(762.5)
(250.1)
482.2
16.0
(4.6)
1,081.1
(1,289.6)
(71.0)
(2.9)
(10.9)
(24.2)
(306.1)
(3.1)
(38.8)
(358.0)
(399.9)
(5.6)
(37.0)
(333.2)
(375.8)
(75.0)
(199.7)
671.7
871.4
596.7
671.7
Annual Report 2022 77
Notes to the consolidated financial statements
30 June 2022
Section 1. Basis of preparation
Overview
This section outlines the basis on which the Group’s financial statements are prepared. Specific accounting policies are
described in the note to which they relate.
Note 1: Basis of preparation
(a) Corporate information
Medibank Private Limited (“Medibank”) is a for-profit
company incorporated in Australia, whose shares are publicly
traded on the Australian Securities Exchange (ASX).
The financial statements of Medibank for the financial year
ended 30 June 2022 were authorised for issue in accordance
with a resolution of the directors on 18 August 2022. The
directors have the power to amend and reissue the financial
statements.
(b) Basis of preparation
The financial statements are general purpose financial
statements which:
• Are for the consolidated entity (“the Group”) consisting of
Medibank (“parent entity”) and its subsidiaries. Refer to
Note 16(a) for the full group structure.
• Have been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board (AASB),
International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board
(IASB) and the Corporations Act 2001.
• Have been prepared under the historical cost convention,
with the exception of financial assets measured at fair
value, claims liabilities and lease liabilities which are
measured at the present value of expected future payments.
• Are presented in Australian dollars, which is Medibank’s
functional and presentation currency.
• Have been rounded in accordance with ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument
2016/191 to the nearest hundred thousand dollars unless
otherwise stated.
• Adopt all new and amended accounting standards that are
mandatory for 30 June 2022 reporting periods. Refer to
Note 20(a) for further information.
• Do not apply any pronouncements before their operative
date. Refer to Note 20(b) for further information on the new
standards and interpretations which have been issued but
are not effective for 30 June 2022 reporting periods.
• Include, where necessary, updates to prior year
comparatives for changes in classification of amounts in
the current reporting period.
(c) Critical accounting estimates and judgements
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise judgement in the process of
applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements, are disclosed in the following notes:
• Note 3: Insurance underwriting result.
• Note 4: Deferred acquisition costs.
• Note 12: Intangible assets.
• Note 15: Income tax.
78 Medibank
Section 2. Operating performance
Overview
This section explains the operating results of the Group for the year, and provides insights into the Group’s result
by reference to key areas, including:
• Results by operating segment.
• Insurance underwriting result.
• Shareholder returns.
Note 2: Segment information
Segment Reporting Accounting Policy
Operating segments are identified based on the separate financial information that is regularly reviewed by the Chief
Operating Decision Maker (CODM). The term CODM refers to the function performed by the Chief Executive Officer (CEO)
in assessing performance and determining the allocation of resources across the Group.
(a) Description of segments
Segment information is reported on the same basis as
the Group’s internal management reporting structure
at the reporting date. Transactions between segments
are carried out on an arm’s length basis and are
eliminated on consolidation.
The Group is not reliant on any one major customer.
For the financial year ended 30 June 2022, the Group
was organised for internal management reporting purposes
into two reportable segments, Health Insurance and
Medibank Health.
Health Insurance
Offers private health insurance products including
hospital cover and ancillary cover, as stand-alone
products or packaged products that combine the
two. Hospital cover provides members with health
cover for hospital treatments, whereas ancillary
cover provides members with health cover for
healthcare services such as dental, optical and
physiotherapy. The segment also offers health
insurance products to overseas visitors and
overseas students.
Medibank Health
Derives its revenue from a range of activities
including contracting with government
and corporate customers to provide health
management and in-home care services, as well
as providing a range of telehealth services in
Australia. In addition, the Group distributes travel,
life and pet insurance products on behalf of other
insurers as part of a broader strategy to retain
members and leverage its distribution network.
Private Health Insurance Premium Revenue Recognition
Accounting Policy
Premium revenue is measured at the fair value of the
consideration received or receivable and is recognised on a
straight-line basis between the date Medibank accepts the
insurance risk and the date the premium has been paid up to.
Premium revenue is classified as an unearned premium liability
in the consolidated statement of financial position when it relates
to future financial periods.
Medibank Health Revenue Recognition Accounting Policy
Medibank Health revenue is recognised when services are
provided to the customer and at an amount the Group will be
entitled to receive in relation to providing the services. A contract
liability is recognised within trade and other payables in the
consolidated statement of financial position when the Group has
an obligation to transfer services to a customer for which it has
already received consideration from the customer (or an amount
of consideration is receivable). Contract liabilities are recognised
as Medibank Health revenue when the services are provided.
Annual Report 2022 79
(b) Segment information provided to the CEO
The CEO measures the performance of the Group's reportable segments based on the operating profit of the segments.
The segment information provided to the CEO for the year ended 30 June 2022 is as follows.
Health Insurance
Medibank Health
$45.5m
$538.6m
$6,680.3m
$592.6m
$6,859.8m
$31.4m
$283.8m
$321.8m
2021
2022
2021
2022
Revenue
Operating profit
Revenue
Operating profit
30 June 2022
Revenue
Total segment revenue
Inter-segment revenue
Health
Insurance
$m
Medibank
Health
$m
Note
Total
$m
2(c)(iii)
6,859.8
-
321.8
(53.1)
7,181.6
(53.1)
Revenue from external customers
6,859.8
268.7
7,128.5
Operating profit
592.6
45.5
638.1
Items included in segment operating profit:
Depreciation and amortisation
Interest income from loans to associates
Share of profit/(loss) from equity accounted investments
16(b)
(101.6)
-
-
(7.3)
0.2
4.5
(108.9)
0.2
4.5
30 June 2021
Revenue
Total segment revenue
Inter-segment revenue
Health
Insurance
$m
Medibank
Health
$m
Note
Total
$m
2(c)(iii)
6,680.3
-
283.8
(53.7)
6,964.1
(53.7)
Revenue from external customers
6,680.3
230.1
6,910.4
Operating profit
538.6
31.4
570.0
Items included in segment operating profit:
Depreciation and amortisation
Interest income from loans to associates
Share of profit/(loss) from equity accounted investments
16(b)
(104.8)
-
-
(8.3)
0.2
(1.0)
(113.1)
0.2
(1.0)
80 Medibank
Notes to the consolidated financial statements30 June 2022
(c) Other segment information
(i) Segment operating profit or loss
A reconciliation of segment operating profit to the profit for the year before income tax of the Group is as follows:
Total segment operating profit
Unallocated to operating segments:
Corporate operating expenses
Group operating profit
Net investment income/(expense)
Acquisition intangible amortisation
Mergers and acquisitions expenses
Other income/(expenses)
Profit for the year before income tax
Note
2022
$m
638.1
2021
$m
570.0
(44.0)
(41.7)
594.1
528.3
7(a)
(24.8)
120.0
(2.0)
(1.7)
(5.6)
(4.6)
(5.5)
(5.9)
560.0
632.3
(ii) Other items
(iii) Loyalty program
Segment operating profit excludes the following:
• Corporate operating expenses of $44.0 million (2021:
$41.7 million) relating to the Group's corporate function.
Segment private health insurance premium revenue is
after $21.4 million (2021: $10.8 million) of transfers between
the Group’s other operating segments in relation to the
loyalty program.
• Net investment income/(expense), which comprises:
(iv) Segment assets and segment liabilities
– Interest and distribution income and related investment
management expenses (refer to Note 7(a)), as this arises
from investments which are managed by a central
treasury function.
No information regarding segment assets and segment
liabilities has been disclosed, as these amounts are
not reported to the CEO for the purpose of making
strategic decisions.
(v) Geographic information
Segment revenue based on the geographical location of
customers has not been disclosed, as the Group derives
all of its revenues from its Australian operations.
– Net gains and losses on disposals of and fair value
movements on financial assets and liabilities (refer
to Note 7(a)), as they are not indicative of the Group's
long-term performance.
• Acquisition intangible amortisation of $2.0 million
(2021: $4.6 million) not allocated to segments.
• Expenses in relation to mergers and acquisitions of
$1.7 million (2021: $5.5 million) which are not allocated
to the operating activities of the Group’s segments.
• Other income/(expenses) of $5.6 million (2021:
$5.9 million) which do not relate to the current
period’s trading activities of the Group’s segments,
comprising primarily net sublease rent.
Annual Report 2022 81
Note 3: Insurance underwriting result
This note presents the Group’s insurance underwriting result and provides information on the Group’s claims liabilities,
which comprise the outstanding claims liability, the COVID-19 claims liability and the provision for bonus entitlements.
$6,859.8m
2022 underwriting result after expenses
$(5,731.6)m
$(535.6)m
$592.6m
Private health insurance premium revenue
Net claims incurred
Underwriting expenses
Underwriting result after expenses
Insurance Contracts Accounting Policy
An insurance contract arises when the Group accepts
significant insurance risk from another party by agreeing
to compensate them from the adverse effects of a specified
uncertain future event. The significance of insurance risk
depends on both the probability and magnitude of an
insurance event.
Once insurance cover has been classified as an
insurance contract, it remains an insurance contract for
the remainder of its lifetime, even if the insurance risk
significantly reduces during the period. With the exception
of travel, life and pet insurance, for which the Group does
not act as an underwriter, all other types of insurance
cover are insurance contracts.
A COVID-19 claims liability has been recorded for deferred
claims that were a result of surgeries and other health
services which were inaccessible to policyholders due
to COVID-19 restrictions. Medibank has an obligation to
settle these claims when they occur in future periods.
(a) Insurance underwriting result
Private health insurance premium revenue
Claims expense
Claims incurred
(Increase)/decrease in COVID-19 claims liability
State levies
Net Risk Equalisation Special Account payments
Net claims incurred excluding claims handling costs
Movement in claims handling costs on outstanding claims liabilities
Net claims incurred
Underwriting expenses
Underwriting result after expenses
Note
(i)
(ii)
(iv)
(iii)
2022
$m
2021
$m
6,859.8
6,680.3
(5,415.0)
(224.5)
(55.5)
(36.1)
(5,731.1)
(0.5)
(5,731.6)
(5,606.2)
73.3
(53.3)
(24.6)
(5,610.8)
0.2
(5,610.6)
(535.6)
(531.1)
592.6
538.6
(i) Private health insurance premium revenue is after
(iii) Net claims incurred consists of amounts paid and
$21.4 million (2021: $10.8 million) of transfers between the
Group’s other operating segments in relation to the loyalty
program and $369.4 million (2021: $103.0 million) in
relation to the recognition of customer give backs publicly
announced by the Group during the period to return
permanent net COVID-19 savings to eligible policyholders
(refer to Note 5 and Note 13(c) for further information).
payable to hospital, medical and ancillary providers
which consists of claims paid and payable, changes
in claims liabilities, change in amounts receivable
from and payable to the Risk Equalisation Special
Account, applicable state levies, costs incurred in health
management services and the COVID-19 claims liability.
(iv) This balance relates to the COVID-19 claims liability.
(ii) Claims incurred are prior to elimination of transactions
Refer to Note 3(b) for further information.
with the Group’s other operating segments of
$51.8 million (2021: $52.7 million).
82 Medibank
Notes to the consolidated financial statements30 June 2022
Health Insurance Premium Revenue Recognition
Accounting Policy
Premium revenue is recognised in the consolidated
statement of comprehensive income when it is earned.
Premium revenue is measured at the fair value of the
consideration received or receivable and is recognised on a
straight-line basis between the date Medibank accepts the
risk from the insured under the insurance contract and the
date the premium has been paid up to. Adjustments made
to past premiums are recognised as a reduction in premium
revenue. See Note 5 and Note 13(c) for further information.
Premium revenue includes the movement in the premiums
in arrears which is assessed based on past experience of
the likelihood of collection. Premium revenue is classified
as an unearned premium liability in the consolidated
statement of financial position when it relates to future
financial periods.
The Australian Government contributes a rebate towards
eligible policyholder’s premium and pays this directly to
the Group.
This rebate is recognised within premium revenue in the
consolidated statement of comprehensive income. Rebates
due from the government but not received at balance
date are recognised as trade and other receivables in the
consolidated statement of financial position.
Net Risk Equalisation Special Account Levies
and Rebates Accounting Policy
Under legislation, all private health insurers must
participate in the Risk Equalisation Special Account in
which all private health insurers share the cost of the
eligible claims of members aged 55 years and over, and
claims meeting the high cost claim criteria.
The Australian Prudential Regulation Authority (APRA)
determines the amount payable to or receivable from the
Risk Equalisation Special Account after the end of each
quarter. Estimates of amounts payable or receivable are
provided for periods where determinations have not yet
been made. This includes an estimate of risk equalisation
for unpresented and outstanding claims.
(b) Gross claims liability
Current
Outstanding claims liability - central estimate
COVID-19 claims liability
Risk margin
Claims handling costs
Claims liability - provision for bonus entitlements
Gross claims liabilities
Non-current
Outstanding claims liability - central estimate
Risk margin
Claims handling costs
Claims liability - provision for bonus entitlements
Gross claims liabilities
Note
(i,ii)
(vi)
(i,iii)
(iv)
(v)
(c)
(i,ii)
(i,iii)
(iv)
(v)
(c)
2022
$m
359.3
448.3
35.1
8.9
851.6
9.3
860.9
3.1
0.3
0.1
3.5
6.7
10.2
2021
$m
347.2
223.8
33.2
8.5
612.7
9.7
622.4
1.8
0.2
-
2.0
7.1
9.1
Annual Report 2022 83
Claims Liability Accounting Policy
The outstanding claims liability provides for claims received
but not assessed and claims incurred but not received. It is
based on an actuarial assessment that considers historical
patterns of claim incidence and processing. It is measured
as the central estimate of the present value of expected
future payments arising from claims incurred at the end
of each reporting period under insurance cover issued by
the Medibank health fund, plus a risk margin reflecting the
inherent uncertainty in the central estimate. The expected
future payments are discounted to present value using a
risk-free rate.
The liability also allows for an estimate of claims handling
costs, which comprises all direct expenses of the claims
department and general administrative costs directly
attributable to the claims function. These include internal
and external costs incurred from the negotiation and
settlement of claims.
COVID-19 Claims Liability
The COVID-19 claims liability is based on the best estimate,
taking into account relevant risks and uncertainties,
of expenditure required to settle claims deferred as a
result of surgeries and other health services restricted
for policyholders as a result of the COVID-19 pandemic.
Medibank has an obligation to settle these claims when
they occur in future periods. The liability is calculated by
comparing the difference between the actual and expected
claims since the commencement of COVID-19 restrictions
from March 2020. The expected claims level is based on the
estimated underlying claims growth per Single Equivalent
Unit per policy (PSEU) that would have occurred if the
COVID-19 pandemic did not eventuate, taking into account
changes in the customer base. The key judgements and
inputs to determine the expected claims level are detailed
in Note 3(b)(vi).
Key estimate
The outstanding claims liability estimate is based on the hospital, ancillary and overseas claim categories.
Hospital and overseas
Calculated using statistical methods adopted for all service months but with service levels
for the most recent service month (hospital) or two service months (overseas) being based
on the latest forecast adjusted for any observed changes in payment patterns.
Ancillary
Calculated using statistical methods adopted for all service months.
The critical assumption in determining the outstanding claims liability is the extent to which claim incidence and
development patterns are consistent with past experience. Adjustments are then applied to reflect any unusual or abnormal
events that may affect the estimate of claims levels such as major variability to claims processing volumes.
The process for establishing the outstanding claims liability involves consultation with internal actuaries (including the Chief
Actuary), claims managers and other senior management. The process includes monthly internal claims review meetings
attended by senior management.
(i) Outstanding
The central estimate is an estimate of the level of the outstanding claims liability.
claims liability
– central
estimate
Key estimate
The central estimate is based on statistical analysis of historical experience which assumes an
underlying pattern of claims development and payment. The final selected central estimate is
based on a judgemental consideration of this analysis and other qualitative information, such
as claims processing delays and pre-admission hospital eligibility check volumes. The central
estimate excludes the impact of the Risk Equalisation Special Account. A separate estimate is
made of levies payable to and recoveries from the Risk Equalisation Special Account.
(ii) Discounting
The outstanding claims liability central estimate is discounted to present value using the
three-month risk-free rate of 1.81% per annum which equates to a reduction in the central
estimate of $0.9 million (2021: 0.03%, less than $0.1 million).
84 Medibank
Notes to the consolidated financial statements30 June 2022 (iii) Risk margin
An overall risk margin considers the uncertainty surrounding the outstanding claims liability.
The risk margin applied to the Group’s outstanding claims central estimate (net of risk equalisation)
at 30 June 2022 is 9.4% (2021: 9.4%).
Key estimate
The risk margin is based on an analysis of past experience, including comparing the volatility of
past payments to the adopted central estimate. The risk margin has been estimated to equate to
the Group’s objective of achieving a probability of adequacy of at least 95% (2021: 95%). This risk
margin is only applied to the outstanding claims liability, however relevant risks and uncertainties
have been taken into account in key assumptions used to estimate the COVID-19 claims liability.
(iv) Claims
handling costs
The allowance for claims handling costs at 30 June 2022 is 2.5% of the outstanding claims liability
(2021: 2.5%).
(v) Claims liability
– provision
for bonus
entitlements
Certain private health insurance products (Package Bonus, Ultra Bonus and Membership Bonus)
include benefits that carry forward. Package Bonus carries forward unused benefit entitlements
in a calendar year for five calendar years. Membership Bonus carries forward unused benefit
entitlements in a calendar year for 10 calendar years. Ultra Bonus carries forward unused benefit
entitlements without limit.
The Group’s claims liabilities include a provision to cover expected future utilisation of these benefit
entitlements of the current membership.
Key estimate
The bonus provision includes the total entitlement available to members under the terms of the
relevant insurance policies, less any amounts utilised, with a probability of utilisation based on past
experience and current claiming patterns applied. The true cost of these entitlements cannot be
known with certainty until any unclaimed entitlements are processed.
(vi) COVID-19
claims
liability
The COVID-19 claims liability represents the continued and prolonged impact of the COVID-19
pandemic during the period on availability and accessibility to surgeries and other health services.
The COVID-19 claims liability includes hospital claims of $405.6 million (2021: $220.2 million), which
includes surgical and non-surgical claims, and ancillary claims of $42.6 million (2021: $3.6 million).
Key estimate – Hospital
The liability is calculated by comparing the difference between the actual and expected volume of
insured surgical, non-surgical and ancillary procedures since the commencement of COVID-19
restrictions from March 2020. Any shortfall is deferred into the liability at the applicable claims
deferral rate. Utilisation of the liability occurs where actual claims exceed expected claims.
The liability has been assessed by geography and modality (claim type) with the deferral of claims
(and any subsequent utilisation) varying based on the extent of COVID-19 restrictions. The ancillary
liability resets for ancillary claims with expired limits.
Risks and uncertainties have been taken into account in the measurement of the liability and are reflected
in the key inputs and judgements. The key judgements and inputs into this liability estimate include:
• The expected claims level at the Single Equivalent Unit per policy (PSEU), which is based
on statistical analysis of the estimated underlying claims growth per PSEU that would have
occurred if the COVID-19 pandemic did not eventuate. It has then been applied to the average
actual number of PSEUs.
• The expected rate at which deferred insured surgical and non-surgical procedures will be caught
up, which is based on the analysis and expert opinion of the Chief Medical Officer and internal
analysis. The expected claims deferral rate is analysed based on modality and is 85% (2021: 85%)
for surgical claims, 40% (2021: 50%) for non-surgical claims and 50% (2021: 50%) for ancillary
claims.
• This liability only includes insured surgeries and other health services that will ultimately be
performed for policyholders of the Group. Given the extended duration of the COVID-19 pandemic,
a policyholder lapse rate has been applied to the surgical and non-surgical claims. This rate is
based on the average lapse rate since the commencement of the COVID-19 pandemic. The ancillary
liability does not include a lapse rate as it resets when limits expire.
Annual Report 2022 85
(c) Reconciliation of movement in claims liabilities
Balance at 1 July
Claims incurred during the period
Increase/(decrease) in COVID-19 claims liability
Claims paid during the period
Amount (over)/under provided on central estimate
Risk margin
Claims handling costs
Movement in discount rate
Balance at 30 June
Note
2022
$m
631.5
2021
$m
639.2
5,369.8
5,496.1
(i)
224.5
(73.3)
(5,348.1)
(5,414.4)
(8.2)
2.0
0.5
(0.9)
(22.0)
6.1
(0.2)
-
871.1
631.5
Note: Movement includes both current and non-current. Claims incurred and claims settled exclude levies and rebates.
(i) Reconciliation of movement in COVID-19 claims liability
The table below provides a reconciliation of the movement in the COVID-19 claims liability during the period.
Balance at 1 July 2021
Change in respect of previous period
Net change in assumptions1
Net deferral/(utilisation) during the period
Balance at 30 June 2022
Hospital
$m
Ancillary
$m
220.2
(8.5)
(42.2)
236.1
405.6
3.6
(0.2)
-
39.3
42.7
Total
$m
223.8
(8.7)
(42.2)
275.4
448.3
1. Includes change in expected deferral rate of $19.2 million and changes in other assumptions, including policyholder lapse rate and price indexation.
(d) Impact of changes in key variables on the
claims liabilities
Outstanding claims liability
The central estimate, discount rate, risk margin and
weighted average term to settlement are the key outstanding
claims variables. A 10% increase/decrease in the central
estimate would result in a $25.4 million decrease/increase
to profit after tax and equity (2021: $24.4 million). A 1%
movement in other key outstanding claims variables,
including discount rate, risk margin and weighted average
term to settlement, would result in an insignificant
decrease/increase to profit after tax and equity.
COVID-19 claims liability
The following describe the individual impacts of changes
in the key estimate on the COVID-19 claims liability:
• A 4% increase/decrease in the expected claims level
would result in a $117.9 million decrease/increase to
profit after tax and equity (2021: $67.0 million).
• An increase/decrease of 10 percentage points in the
adopted deferral rate for COVID-19 hospital claims would
result in a $54.2 million decrease/increase to profit after tax
and equity (2021: $26.8 million). The reasonable possible
range for the hospital deferral assumption is 75-100% for
surgical claims (2021: 75-100%) and 30-70% for non-
surgical and ancillary claims (2021: 30-70%).
(e) Insurance risk management
The Group provides private health insurance products including
hospital cover and ancillary cover, as stand-alone products
or packaged products that combine the two, for Australian
residents, overseas students studying in Australia and overseas
visitors to Australia. These services are categorised as two
types of contracts: hospital and/or ancillary cover.
86 Medibank
Notes to the consolidated financial statements30 June 2022 The table below sets out the key variables upon which the cash flows of the insurance contracts are dependent.
Type of contract
Detail of contract workings
Nature of claims
Key variables that affect
the timing and uncertainty
of future cash flows
Hospital cover
Ancillary cover
Defined benefits paid for hospital
treatment, including accommodation,
medical and prostheses costs.
Hospital benefits defined by
the insurance contract or
relevant deed.
Claims incidence and
claims inflation.
Defined benefits paid for ancillary
treatment, such as dental, optical
and physiotherapy services.
Ancillary benefits defined
by the insurance contract or
relevant deed.
Claims incidence and
claims inflation.
Insurance risks and the holding of capital in excess of prudential requirements are managed through the use of claims
management procedures, close monitoring of experience, the ability to vary premium rates, and risk equalisation.
Mechanisms to manage risk
Claims
management
Strict claims management ensures the timely and correct payment of claims in accordance with policy
conditions and provider contracts. Claims are monitored monthly to track the experience of the portfolios.
Experience
monitoring
Monthly financial and operational results, including portfolio profitability and prudential capital
requirements, are reported to management committees and the Board. Results are also monitored
against industry for insurance risks and experience trends as published by the regulator, APRA.
Monitoring of claims experience since the commencement of the COVID-19 pandemic includes daily and
weekly dashboard reports.
Prudential capital
requirements
All private health insurers must comply with prudential capital requirements to provide a buffer
against certain levels of adverse experience. The Board has a target level of capital which exceeds the
regulatory requirement.
Ability to vary
premium rates
Risk equalisation
The Group can vary future premium rates subject to the approval of the Minister for Health.
Private health insurance legislation requires resident private health insurance contracts to meet
community rating requirements. This prohibits discrimination between people on the basis of their
health status, gender, race, sexual orientation, religious belief, age (except as allowed under Lifetime
Health Cover provisions), increased need for treatment or claims history. To support these restrictions,
all private health insurers must participate in the Risk Equalisation Special Account.
Concentration
of health risk
The Group has health insurance contracts covering hospital and ancillary cover, and private health
insurance for overseas students and visitors to Australia. There is no significant exposure to
concentrations of risk because contracts cover a large volume of people across Australia.
COVID-19 claims
liability
The Group’s Capital Management Policy requires a sufficient level of capital to be held by the Group.
The Group also created a sub-portfolio within the Health Fund Investment Portfolio with the express
purpose of funding the COVID-19 claims liability and customer give backs.
Annual Report 2022 87
Note 4: Deferred acquisition costs
Movements in the deferred acquisition costs are as follows:
Balance at 1 July
Costs deferred during the year
Amortisation expense
Balance at 30 June
Note: Movement includes both current and non-current.
2022
$m
81.1
39.6
(37.8)
82.9
2021
$m
78.1
42.3
(39.3)
81.1
Deferred Acquisition Costs Accounting Policy
Costs incurred in obtaining health insurance contracts
are deferred and recognised as assets where they can be
reliably measured and where it is probable that they will
give rise to premium revenue that will be recognised in
the consolidated statement of comprehensive income in
subsequent reporting periods.
Deferred acquisition costs are amortised systematically
over the average expected retention period of the insurance
contracts to which they relate. This is in accordance with
the expected pattern of the incidence of risk under the
insurance contracts to which they relate and corresponds
to the earning pattern of the corresponding actual and
expected premium revenue. The Group amortises these
costs on a straight-line basis over a period of four years
(2021: four years). The recoverability of deferred acquisition
costs is considered as part of the liability adequacy test
(refer to Note 5). Deferred acquisition costs which are
not included in this test are separately assessed for
recoverability in accordance with the Group’s accounting
policy set out in Note 20(c).
Key judgement and estimate
The amortisation period of four years has been determined
based on the average expected retention period of
members. The actual retention period of a member can be
longer or shorter than four years. The straight-line method
systematically follows the initial period of customer
tenure with some customers remaining with Medibank
over a longer period of time. The Group maintains data
on the retention period of all members, and performs a
retention period analysis of those who are subject to these
acquisition costs to ensure the period of amortisation
remains appropriate.
Note 5: Unearned premium liability
Movement in the unearned premium liability is as follows:
Balance at 1 July
Deferral of premium on contracts written during the year
Earning of premiums deferred in prior years
Movement in provision for premium deferral
Balance at 30 June
Note: Movement includes both current and non-current.
2022
$m
757.4
700.9
(697.0)
133.5
894.8
2021
$m
746.1
682.4
(671.1)
-
757.4
The unearned premium liability balance at 30 June 2022 includes a provision for premium deferral of $133.5 million (2021: nil).
This balance is comprised of an initial recognition of $184.8 million during the period, offset by $51.3 million utilisation. The
provision for premium deferral represents amounts owed at balance date in relation to the announcements made by the Group
during the period to return permanent net COVID-19 savings to eligible policyholders via a 7 month deferral of the 1 April 2022
premium increase.
A separate customer give back provision of $178.6 million (2021: $103.0 million) is recognised in the statement of consolidated
position. Refer to Note 13(c) for further information.
88 Medibank
Notes to the consolidated financial statements30 June 2022
(a) Liability adequacy test
The expected cash outflows and the risk margin in the 30 June 2022 liability adequacy test (LAT) includes the impacts of
COVID-19. The LAT did not result in the identification of any deficiency as at 30 June 2022 and 2021. The LAT is not sensitive
to reasonably plausible changes in key assumptions applied.
Unearned Premium Liability Accounting Policy
The proportion of premium received that has not been
earned at the end of each reporting period is recognised
in the consolidated statement of financial position as an
unearned premium liability. The unearned premium liability
is released to the consolidated statement of comprehensive
income as revenue in accordance with Note 3(a) over the
term of the insurance cover.
Unexpired Risk Liability Accounting Policy
At each balance date, a liability adequacy test is performed
to determine whether the unearned premium liability, net
of related deferred acquisition costs, is adequate to cover
expected future claims arising from current insurance
coverage. An additional risk margin is included in the test to
reflect the inherent uncertainty in the central estimate. The
test is performed at the level of a portfolio of contracts that
are subject to broadly similar risks and that are managed
together as a single portfolio.
The unearned premium liability is deemed to be deficient
where the present value of the expected future claims,
including a risk margin, exceeds the net unearned premium
liability. The entire deficiency is recognised immediately
in the statement of comprehensive income by first writing
down any related intangible assets and then related
deferred acquisition costs, with any excess being recognised
in the consolidated statement of financial position as an
unexpired risk liability.
Deferred acquisition costs which are not included in this
test are separately assessed for recoverability and are
amortised in accordance with the Group’s accounting policy
set out in Note 4.
Note 6: Shareholder returns
(a) Dividends
(i) Dividends paid or payable
2022
2021 final fully franked dividend
2022 interim fully franked dividend
2021
2020 final fully franked dividend
2021 interim fully franked dividend
Cents per fully
paid share
6.90
6.10
6.30
5.80
$m
Payment date
190.0
168.0
30 September 2021
24 March 2022
173.5
159.7
24 September 2020
25 March 2021
Annual Report 2022 89
(ii) Dividends not recognised at the end of the reporting period
On 18 August 2022, the directors determined a final fully franked ordinary dividend for the six months ended 30 June 2022 of
7.30 cents per share. The dividend is expected to be paid on 29 September 2022 and has not been provided for as at 30 June 2022.
(iii) Franking account
Franking credits available at 30 June 2022 for subsequent reporting periods based on a tax rate of 30% are $372.7 million
(2021: $324.2 million).
(iv) Calculation of dividend paid
Medibank’s target dividend payout ratio for the 2022 financial year is 75-85% (2021: 75-85%) of full year normalised net profit
after tax (underlying NPAT). Normalised net profit after tax is calculated based on statutory net profit after tax adjusted for
short-term outcomes that are expected to normalise over the medium to longer term, most notably in relation to the level of
gains or losses from investments and movement in credit spreads, and for one-off items, especially those that are non-cash,
such as impairments.
Profit for the year – after tax
Normalisation for growth asset returns
Normalisation for defensive asset returns – credit spread movement
Underlying NPAT
2022
$m
393.9
22.7
18.5
435.1
2021
$m
441.2
(31.2)
(11.3)
398.7
Dividends Accounting Policy
A liability is recorded for any dividends determined on or before the reporting date, but that have not been distributed
at that date.
(b) Earnings per share
Basic and diluted earnings per share attributable to ordinary equity holders of the
parent (cents)
Profit for the year attributable to ordinary equity holders of the parent ($m)
2022
14.3
393.9
2021
16.0
441.2
Weighted average number of ordinary shares used in calculating basic and diluted
earnings per share
2,754,003,240
2,754,003,240
Basic Earnings Per Share Accounting Policy
Basic earnings per share (EPS) is calculated by dividing
the profit attributable to equity holders of Medibank,
excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares
outstanding during the reporting period, adjusted for bonus
elements in ordinary shares issued during the reporting
period and excluding treasury shares.
Diluted Earnings Per Share Accounting Policy
Diluted EPS adjusts the figures used in the determination
of basic EPS to take into account:
• The after income tax effect of any interest and other
financing costs associated with dilutive potential
ordinary shares.
• The weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
90 Medibank
Notes to the consolidated financial statements30 June 2022
Section 3. Investment portfolio and capital
Overview
This section provides insights into the Group’s exposure to market and financial risks and outlines how these risks are
managed. This section also describes how the Group’s capital is managed.
Note 7: Investment portfolios
This note provides information on the net investment income/
(expense) and the carrying amounts of the financial assets
residing in the two investment portfolios; the Health Fund
Investment Portfolio (including the sub-portfolio) and the
Non-Health Fund Investment Portfolio.
Health Fund Investment Portfolio
The Health Fund Investment Portfolio is managed in
accordance with the requirements of the Board approved
Capital Management Policy, APRA regulatory requirements
and the overall objective of achieving a capital base that is
both stable and liquid. Consequently, the asset allocation
of the Health Fund Investment Portfolio is skewed towards
defensive assets (less risky and generally lower returning)
rather than growth assets (riskier but potentially higher
returning). The Board approved short-term target asset
allocation (TAA) for the Health Fund Investment Portfolio
is 20%/80% for growth and defensive assets, and the long-
term TAA is 25%/75% for growth and defensive assets.
During, and because of, the COVID-19 pandemic, the Short-
term Operational Cash (STOC) sub-portfolio was created with
the purpose of funding the COVID-19 claims liability and the
customer give backs. Given the sub-portfolio’s short-term
nature, it is managed separately from the TAA framework.
This sub-portfolio is permitted to invest in bank deposits,
short-term domestic money market securities with a
minimum credit rating of A-1+ and Fixed Income assets
with a minimum credit rating of AA-.
Non-Health Fund Investment Portfolio
The Non-Health Fund Investment Portfolio is designed to
provide the Group with additional liquidity and financial
flexibility. The portfolio resides outside of the health fund and
is not subject to the same regulatory requirements as the
Health Fund Investment Portfolio. The CFO has delegation
from the Investment and Capital Committee to manage the
portfolio in accordance with the Board approved Investment
Management Policy and investment strategy. The Non-Health
Fund Investment Portfolio is permitted to invest in bank
deposits, short-term domestic money market securities
with a minimum credit rating of A-1+ and Fixed Income
assets with a minimum credit rating of AA-.
Health Fund
Investment
Portfolio1
Short-term
Operational
Cash (STOC)
Non-Health
Fund Investment
Portfolio
Portfolio composition 30 June 2022 ($m)
Cash portfolio
Cash and cash equivalents (as reported in the statement
of financial position)2
Cash investments with longer maturities
Less cash allocated to the Fixed income portfolio
Fixed income portfolio
Fixed income (as reported in the statement of
financial position)
Less cash investments with longer maturities
Cash allocated to the Fixed income portfolio
Growth portfolio
Equities and investment trusts
Total investment portfolio
232.2
322.2
(14.4)
1,769.8
(322.2)
14.4
474.7
2,476.7
Total
572.4
541.4
(14.4)
2,379.8
(541.4)
14.4
474.7
326.6
199.4
-
433.8
(199.4)
-
-
13.6
19.8
-
176.2
(19.8)
-
-
760.4
189.8
3,426.9
Annual Report 2022 91
Health Fund
Investment
Portfolio1
Short-term
Operational
Cash (STOC)
Non-Health
Fund Investment
Portfolio
Portfolio composition 30 June 2021 ($m)
Cash portfolio
Cash and cash equivalents (as reported in the statement
of financial position)2
Cash investments with longer maturities
Less cash allocated to the Fixed income portfolio
Fixed income portfolio
Fixed income (as reported in the statement of financial
position)
Less cash investments with longer maturities
Cash allocated to the Fixed income portfolio
Growth portfolio
Equities and investment trusts
Total investment portfolio
428.8
179.0
(37.3)
1,563.6
(179.0)
37.3
488.5
2,480.9
Total
659.9
179.0
(37.3)
1,823.4
(179.0)
37.3
488.5
178.2
-
-
52.9
-
-
148.6
111.2
-
-
-
-
-
-
326.8
164.1
2,971.8
1. The Health Fund Investment Portfolio excludes the Short-term Operational Cash (STOC) sub-portfolio.
2. Cash and cash equivalents as reported in the statement of financial position also include operational cash of $24.3 million (2021: $11.8 million).
The Health Fund Investment Portfolio excluding the Short-term Operational Cash sub-portfolio comprises the following:
Growth
Australian equities
International equities
Property
Infrastructure
Defensive
Fixed income
Cash
Portfolio
composition
30 June
2022
Portfolio
composition
30 June
2021
Target
asset
allocation
5.4%
4.1%
7.4%
2.3%
19.2%
4.8%
6.0%
6.9%
2.1%
19.8%
6.0%
5.0%
7.0%
2.0%
20.0%
59.0%
21.8%
80.8%
100.0%
57.8%
22.4%
80.2%
100.0%
60.0%
20.0%
80.0%
100.0%
Health Fund Investment Portfolio
International equities
$100.7m
Cash
$540.0m
Infrastructure
$57.2m
Australian equities
$133.9m
Property
$182.9m
Fixed income
$1,462.0m
Financial Assets at Fair Value Accounting Policy
Investments in listed and unlisted equity securities held
by the Health Fund Investment Portfolio are accounted for
at fair value through profit or loss (FVTPL). Fixed income
investments held by the Health Fund Investment Portfolio
are also accounted for at FVTPL, as the Group applies the
fair value option to eliminate an accounting mismatch.
Transaction costs relating to these financial assets are
expensed in the consolidated statement of comprehensive
income. These assets are subsequently carried at fair
value, with gains and losses recognised within net
investment income in the consolidated statement of
comprehensive income.
Non-Health Fund Investment Portfolio
Fixed income assets held by the Non-Health Fund
Investment Portfolio are accounted for at fair value through
other comprehensive income (FVOCI) as the objective of
these assets is to collect contractual cash flows and to
sell the assets if required, and the contractual cash flows
are solely payments of principal and interest. These assets
are measured at fair value, with unrealised gains and
losses recognised within equity in other comprehensive
income. When the assets are derecognised, the cumulative
unrealised gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit
92 Medibank
Notes to the consolidated financial statements30 June 2022 Financial Assets at Fair Value Accounting Policy continued
or loss. Interest income is recognised within net investment
income/(expense) in the consolidated statement of
comprehensive income using the effective interest method.
For financial assets measured at FVOCI, the Group applies
the general impairment approach under AASB 9, which
requires the recognition of a loss allowance based on
either 12-month expected credit losses or lifetime expected
credit losses depending on whether there has been a
significant increase in credit risk since initial recognition.
Expected credit losses do not reduce the carrying amount
of the financial asset in the statement of financial position,
which remains at fair value. Instead, a loss allowance
is recognised in other comprehensive income as the
accumulated impairment amount.
Key judgement and estimate
Fair value measurement may be subjective, and investments
are categorised into a hierarchy depending on the level of
subjectivity involved in the valuation techniques used to
measure fair value. The hierarchy is described in Note 7(b).
The fair value of level 2 financial instruments is determined
using a variety of valuation techniques, which make
assumptions based on market conditions existing at the end
of each reporting period. Valuation methods include quoted
market prices or dealer quotes for similar instruments,
yield curve calculations using the mid yield, vendor or
independent developed models.
The fair value of level 3 financial instruments is determined
using inputs that are not based on observable market data.
(a) Net investment income/(expense)
Net investment income/(expense) is presented net of investment management fees in the consolidated statement of
comprehensive income.
Interest income1
Trust distributions
Net gain/(loss) on fair value movements on financial assets
Net gain/(loss) on disposal of financial assets
Investment management expenses
Net investment income/(expense)
2022
$m
17.9
43.1
(93.0)
12.3
(5.1)
(24.8)
2021
$m
17.7
38.0
47.8
21.2
(4.7)
120.0
1. Includes interest income of $1.0 million (2021: $0.7 million) relating to financial assets at fair value through other comprehensive income
(Non-Health Fund Investments).
Net Investment Income/(Expense) Accounting Policy
Net investment income/(expense) includes:
• Trust distribution income derived from financial assets
at FVTPL, which is recognised when the Group’s right
to receive payments is established.
• Interest income, which is recognised using the
• Gains or losses arising from changes in the fair value
effective interest method.
(b) Fair value hierarchy
of financial assets measured at FVTPL.
• Investment management fees.
The Group’s financial instruments are categorised according to the following fair value measurement hierarchy:
• Level 1: Quoted prices (unadjusted current bid price) in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(as prices) or indirectly (derived from prices).
• Level 3: Inputs for the asset or liability that are not based on observable market data.
Annual Report 2022 93
The following tables present the Group’s financial assets measured and recognised at fair value on a recurring basis.
30 June 2022
Financial assets at fair value through profit or loss
Australian equities1
International equities1
Property1
Infrastructure1
Fixed income
Financial assets at fair value through other
comprehensive income - Fixed income
Balance at 30 June 2022
30 June 2021
Financial assets at fair value through profit or loss
Australian equities1
International equities1
Property1
Infrastructure1
Fixed income
Financial assets at fair value through other
comprehensive income - Fixed income
Balance at 30 June 2021
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
133.9
100.7
-
-
53.0
2,150.6
-
176.2
-
-
182.9
57.2
-
-
133.9
100.7
182.9
57.2
2,203.6
176.2
53.0
2,561.4
240.1
2,854.5
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
119.3
147.4
-
-
82.0
1,630.2
-
111.2
-
-
169.3
52.5
-
-
119.3
147.4
169.3
52.5
1,712.2
111.2
82.0
2,008.1
221.8
2,311.9
1. Australian equities, international equities, property and infrastructure are indirectly held through unit trusts.
The following table presents the changes in level 3
financial instruments during the period.
Balance at 1 July 2021
Acquisitions
Net unrealised gain/(loss)
on fair value movements
Infrastructure
$m
Property
$m
Total
$m
52.5
169.3
221.8
4.3
6.5
10.8
0.4
7.1
7.5
Balance at 30 June 2022
57.2
182.9
240.1
A 10% increase/decrease in the redemption price would
decrease/increase the fair value of the level 3 financial assets
by $24.0 million.
The Group’s other financial instruments, being trade and
other receivables and trade and other payables, are not
measured at fair value. The fair value of these instruments
has not been disclosed, as due to their short-term nature,
their carrying amounts are assumed to approximate their
fair values.
Transfers between fair value hierarchy levels are recognised
from the date of effect of the transfer. There were no
transfers between the fair value hierarchy levels during
the year.
Fair value measurements using significant
unobservable market data (level 3)
The Group’s investments in infrastructure and property
financial assets are classified within level 3 of the fair value
hierarchy. These assets are held in unlisted unit trusts and
are valued at the redemption value per unit as reported by the
managers of such funds. They are classified within level 3 of
the fair value hierarchy as their fair values are not based on
observable market data due to the infrequent trading of these
investments which results in limited price transparency.
94 Medibank
Notes to the consolidated financial statements30 June 2022 Note 8: Financial risk management
This note reflects risk management policies and procedures
associated with financial instruments. The Group’s principal
financial instruments comprise cash and cash equivalents
(short-term money market instruments), fixed income
assets (floating rate notes, asset-backed securities,
syndicated loans, fixed income absolute return funds and
hybrid investments), property assets, infrastructure assets,
Australian equities and international equities.
A strategic asset allocation is set and reviewed at least
annually by the Board, and establishes the maximum and
minimum exposures in each investment class. Transacting
in individual investments is subject to the delegation of
authorities and approval process that is established and
reviewed by the Investment and Capital Committee (ICC).
Trading of derivative instruments for purposes other than
risk management cannot be undertaken, unless explicitly
approved by the ICC. The Group was in compliance with this
policy during the current and prior reporting periods.
The main risks arising from the Group’s financial instruments
are interest rate risk, foreign currency risk, price risk,
credit risk and liquidity risk. Primary responsibility for the
consideration and control of financial risks rests with the
ICC under the authority of the Board. The Board reviews and
agrees policies for managing each of the risks identified,
including the setting of limits for trading in derivatives,
foreign currency contracts and other instruments. Limits
are also set for credit exposure and interest rate risk.
(a) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices.
(i) Interest rate risk
Description
The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in
market interest rates.
Exposure
The Group has exposure to Australian variable and global fixed interest rate risk in respect of its cash and
cash equivalents (2022: $596.7 million, 2021: $671.7 million) and fixed income assets (2022: $2,379.8 million,
2021: $1,823.4 million). Both classes of financial assets have variable interest rates and are therefore
exposed to cash flow movements if these interest rates change. The Group regularly analyses its interest
rate exposure and resets interest rates on longer-term investments every 90 days on average. At balance
date, the Group’s fixed income assets had a modified duration of 0.3 years (2021: 0.5 years).
Sensitivity
A 50bps increase/decrease in interest rates for the entire reporting period, with all other variables remaining
constant, would have resulted in a $6.9 million increase/decrease to profit after tax and equity (2021: $4.4
million). The sensitivity analysis has been conducted using assumptions from published economic data.
(ii) Foreign currency risk
Description
The risk that the fair value of a financial instrument will fluctuate because of changes in foreign exchange
rates.
Exposure
All of the Group’s financial assets with a non-AUD currency exposure are fully economically hedged, except
for International equities which are unhedged.
At balance date, international equities financial assets (2022: $100.7 million, 2021: $147.4 million) had net
exposure to foreign currency movements.
Sensitivity
A 10% increase/decrease in foreign exchange rates, with all other variables remaining constant, would have
resulted in a $7.8 million decrease/increase to profit after tax and equity (2021: $11.5 million) in the AUD
valuation of international equities financial assets. Balance date risk exposures represent the risk exposure
inherent in the financial instruments.
Annual Report 2022 95
(iii) Price risk
Description
The risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices, whether those changes are caused by factors specific to the individual financial
instrument or its issuer, or factors affecting all similar financial instruments traded in the market.
Exposure
The Group is exposed to price risk in respect of its fixed income assets primarily due to movements in credit
spreads. This risk is managed through active management of credit exposures and credit spread duration.
The Group’s equity price risk arises from investments in property, infrastructure, Australian equities and
international equities. It is managed by setting and monitoring objectives and constraints on investments,
diversification plans and limits on investments in each country, sector and market.
Sensitivity
These investments are exposed to short-term fluctuations in price with their fair value movements
being recorded in the consolidated statement of comprehensive income. Price risk is managed by
taking a longer-term view of the investment portfolio.
The following sensitivity analysis is based on the equity price risk exposures on the average monthly
balances during the period and shows the impact on profit after tax and equity if market prices had
moved, with all other variables held constant.
Australian equities
International equities
Property
Infrastructure
2022
$m
2021
$m
+10.0%
-10.0%
+10.0%
-10.0%
9.1
8.3
12.3
3.8
(9.1)
(8.3)
(12.3)
(3.8)
8.7
10.1
11.6
2.1
(8.7)
(10.1)
(11.6)
(2.1)
In relation to fixed income assets, a 25bps increase/decrease in credit spreads, with all other variables
remaining constant, would have resulted in a $5.8 million decrease/increase to profit after tax and equity
(2021: $5.9 million). Balance date risk exposures represent the risk exposure inherent in the financial
instruments.
(b) Credit risk
(i) Cash and cash equivalents and financial assets at fair value through profit or loss
Description
The risk of potential default of a counterparty, with a maximum exposure equal to the carrying amount
of these instruments.
Exposure
Credit risk exposure is measured by reference to exposures by ratings bands, country, industry and
instrument type.
The Investment Management Policy limits the majority of internally managed credit exposure to A- or
higher rated categories for long-term investments, and A2 or higher for short-term investments (as
measured by external rating agencies such as Standard & Poor’s). Departures from this policy and the
appointment of external managers require Board approval.
The Group does not have any financial instruments to mitigate credit risk and all investments are
unsecured (except for covered bonds, asset-backed securities and mortgage-backed securities).
However, the impact of counterparty default is managed through the use of Board approved limits by
counterparty and rating and diversification of counterparties.
Sensitivity
The Group’s cash and fixed income portfolios are subject to counterparty exposure limits. These limits
specify that no more than 50% (2021: 50%) of the cash portfolio can be invested in any one counterparty
bank and no more than 10% (2021: 10%) in any one counterparty corporate entity. In the Group’s fixed
income portfolio, the maximum amounts that can be invested in any one counterparty bank and any
one counterparty corporate entity are 50% (2021: 50%) and 15% (2021: 15%) of the portfolio respectively.
As at 30 June 2022 and 2021, the counterparty exposure of the Group was within these limits.
96 Medibank
Notes to the consolidated financial statements30 June 2022 (ii) Trade and other receivables
Description
Due to the nature of the industry and value of individual policies, the Group does not request any collateral
nor is it the policy to secure its premiums in arrears and trade and other receivables. The Group regularly
monitors its premiums in arrears and trade and other receivables, with the result that exposure to bad
debts is not significant. The credit risk in respect to premiums in arrears, incurred on non-payment of
premiums, will only persist during the grace period of 63 days as specified in the Fund Rules, after which
the policy may be terminated. The Group is not exposed to claims whilst a membership is in arrears,
although a customer can settle their arrears up to the 63 day grace period and a claim for that arrears
period will then be paid. Trade and other receivables are monitored regularly and escalated when they fall
outside of terms. The use of debt collection agencies may be used to obtain settlement.
Exposure
There are no significant concentrations of credit risk on trade and other receivables within the Group.
(iii) Counterparty credit risk ratings
The following tables outline the Group’s credit risk exposure by classifying assets according to the short-term and equivalent
long-term credit ratings (as per published Standard & Poor’s correlations) of the counterparties. Assets that fall outside the
range AAA to BBB are classified as non-investment grade. The Group’s maximum exposure to credit risk at balance date in
relation to each class of recognised financial asset is the carrying amount of those assets in the consolidated statement of
financial position.
Short-term rating
Long-term rating
2022
Cash and cash equivalents
Premiums in arrears
Trade and other receivables
Financial assets
Australian equities
International equities
Property
Infrastructure
Fixed income
Financial assets at fair value through
other comprehensive income
Total
2021
Cash and cash equivalents
Premiums in arrears
Trade and other receivables
Financial assets
Australian equities
International equities
Property
Infrastructure
Fixed income
A-1+
AAA
$m
-
-
-
-
-
-
-
A-1+
AA
$m
596.7
-
-
-
-
-
-
A-1
A
$m
A-2
BBB
$m
B & below
BB & below
$m
Not rated
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
596.7
6.3
-
6.3
219.1
219.1
133.9
100.7
182.9
57.2
133.9
100.7
182.9
57.2
285.5
819.9
378.8
329.2
7.6
382.6
2,203.6
-
176.2
-
-
-
-
176.2
285.5
1,592.8
378.8
329.2
7.6
1,082.7
3,676.6
-
-
-
-
-
-
-
671.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.5
671.7
8.5
207.4
207.4
119.3
147.4
169.3
52.5
119.3
147.4
169.3
52.5
183.2
528.4
293.0
301.3
7.9
398.4
1,712.2
Financial assets at fair value through
other comprehensive income
-
111.2
-
-
-
-
111.2
Total
183.2
1,311.3
293.0
301.3
7.9
1,102.8
3,199.5
The not rated fixed income assets relate to investments in unrated unit trusts. The majority of the underlying securities
held by these unit trusts are investment grade assets and Senior Loans.
Annual Report 2022 97
(c) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty
in raising funds to meet cash commitments associated with
financial instruments. It may result from either the inability
to sell financial assets quickly at their fair values; or a
counterparty failing on repayment of a contractual obligation;
or insurance liability falling due for payment earlier than
expected; or inability to generate cash inflows as anticipated.
In order to maintain appropriate levels of liquidity, the Health
Fund Investment Portfolio’s target asset allocation is to
hold 20% (2021: 20%) of its total investment assets in cash/
bank deposits and highly liquid short-term money market
instruments and fixed income securities. The Non-Health
Fund Investment Portfolio provides the Group with additional
liquidity and financial flexibility over and above the Fund’s
target allocation.
Trade payables and other financial liabilities mainly originate
from the financing of assets used in ongoing operations
such as property, plant and equipment and investments in
working capital. These assets are considered by the Group
in the overall liquidity risk. To monitor existing financial
liabilities as well as to enable an effective overall controlling
of future risks, the Group has established comprehensive
risk reporting that reflects expectations of management of
expected settlement of financial liabilities.
The tables below reflect all contractually fixed pay-offs
for settlement and interest resulting from recognised
financial liabilities as at 30 June 2022, as well as the
respective undiscounted cash flows for the respective
upcoming fiscal years. Cash flows for financial liabilities
without fixed amount or timing are based on the conditions
existing at 30 June 2022.
2022
Other trade and other payables1
Lease liabilities2
Total trade and other payables
Claims liabilities
COVID-19 claims liability3
Total claims liabilities
2021
Other trade and other payables1
Lease liabilities2
Total trade and other payables
Claims liabilities
COVID-19 claims liability3
Total claims liabilities
Under 6
months
$m
6 to 12
months
$m
1 to 2
years
$m
Over 2
years
$m
Total
contractual
cash flows
$m
Carrying
amount
$m
329.8
17.7
347.5
389.8
95.9
485.7
309.4
16.1
325.5
376.7
63.5
440.2
1.4
17.4
18.8
23.8
352.4
376.2
0.7
15.4
16.1
21.9
160.3
182.2
2.5
31.8
34.3
6.8
-
6.8
1.1
29.7
30.8
5.5
-
5.5
7.4
15.9
23.3
3.3
-
3.3
3.8
36.4
40.2
3.6
-
3.6
341.1
82.8
423.9
423.7
448.3
872.0
315.0
97.6
412.6
407.7
223.8
631.5
341.1
76.9
418.0
422.8
448.3
871.1
315.0
93.4
408.4
407.7
223.8
631.5
1. Contractual cash flows greater than 6 months primarily relate to the loyalty program.
2. Refer to Note 14 for further information on lease liabilities.
3. The COVID-19 claims liability is specifically funded by the Short-term Operational Cash (STOC) sub-portfolio (refer to Note 7 for further information).
Refer to Note 3(b) for further information on the COVID-19 claims liability.
It is not possible for a company primarily transacting in
insurance business to predict the requirements of funding
with absolute certainty. The theory of probability is applied
based on past observed practices. The amounts and
maturities in respect of insurance liabilities are therefore
based on management’s best estimate which incorporates
statistical techniques and past experience. It is not possible
for the Group to predict the ongoing restrictions on surgeries
and other health services due to COVID-19 which could
result in the maturity profile of the COVID-19 claims liability
extending beyond 12 months. This liability is specifically
funded by the STOC sub-portfolio.
98 Medibank
Notes to the consolidated financial statements30 June 2022 Note 9: Working capital
The Group’s working capital balances are summarised
in this note.
(a) Capital management
Medibank’s health insurance fund is required to maintain
sufficient capital to comply with APRA’s solvency and capital
adequacy standards. The solvency standard aims to ensure
that the fund has enough cash or liquid assets to meet all
of its liabilities as they become due, even if the cash flow is
‘stressed’. The standard consists of a requirement to hold
a prescribed level of cash, and also mandates a Liquidity
Management Plan.
The capital adequacy standard aims to ensure that
there is sufficient capital within a health insurance fund
(b) Trade and other receivables
to enable the ongoing conduct of the business of the fund.
The standard consists of a requirement to hold a prescribed
level of assets to be able to withstand adverse experience,
and also mandates a Capital Management Policy. The Capital
Management Policy includes target capital levels, capital
trigger points and corrective action plans.
The health insurance fund is required to comply with these
standards on a continuous basis and report results to APRA
on a quarterly basis. The fund has been in compliance with
these standards throughout the year.
The Board has established a Capital Management Policy
for the health insurance fund. Capital is managed against
this policy and performance is reported to the Board on a
monthly basis.
Premiums in arrears
Allowance for impairment loss
Trade receivables
Allowance for impairment loss
Government rebate scheme
Accrued revenue
Other receivables
Note
(i)
(ii)
2022
$m
11.9
(5.6)
6.3
66.7
(2.1)
64.6
137.7
13.4
3.4
154.5
2021
$m
13.2
(4.7)
8.5
59.0
(2.2)
56.8
133.8
13.2
3.6
150.6
Total trade and other receivables
225.4
215.9
Note: Government rebate scheme is non-interest bearing and generally on 15-day terms.
Past due but not considered impaired
(i) Premiums in arrears past due but not impaired
are $6.3 million (2021: $8.5 million).
(ii) Trade receivables past due but not impaired are
$8.0 million (2021: $8.3 million). Each business unit
of the Group has reviewed their individual debtors
and is satisfied that payment will be received in full.
Other balances within trade and other receivables do not
contain impaired assets and are not past due. It is expected
that these other balances will be received when due.
Trade and Other Receivables Accounting Policy
Trade and other receivables are non-interest bearing
and generally due for settlement within 7 - 30 days.
These receivables are initially measured at fair value
and subsequently at amortised cost using the effective
interest method, less a loss allowance for expected credit
losses. The carrying value of trade and other receivables is
considered to approximate fair value, due to the short-term
nature of the receivables. Collectability of trade receivables
is reviewed on an ongoing basis. The Group applies the
simplified impairment approach under AASB 9, where
expected lifetime losses are assessed based on historical
bad and doubtful debt roll rates and adjusted for forward
looking information where required. Uncollectible trade
receivables are written off against the allowance account
when identified. Any impairment loss on trade receivables
is recognised within other expenses in the consolidated
statement of comprehensive income. Any impairment loss
on premiums in arrears is offset against health insurance
premium revenue.
Annual Report 2022 99
(c) Trade and other payables
Current
Trade creditors
Other creditors and accrued expenses
Lease liabilities
Risk Equalisation Special Account
Other payables1
Total current
Non-current
Lease liabilities
Other payables1
Total non-current
Note
2022
$m
2021
$m
14
14
241.4
239.9
66.2
30.2
16.7
6.9
55.6
28.1
7.7
6.9
361.4
338.2
46.7
9.9
56.6
65.3
4.9
70.2
1. Other payables include a contract liability in relation to the loyalty program.
Trade and Other Payables Accounting Policy
Trade and other payables, with the exception of lease liabilities, are non-interest bearing and are initially measured at
fair value and subsequently at amortised cost using the effective interest method. The carrying value of trade and other
payables is considered to approximate fair value, due to the short-term nature of the payables.
Refer to Note 3(a) for the Risk Equalisation Special Account accounting policy.
Refer to Note 14 for the accounting policy for lease liabilities.
Loyalty Program Accounting Policy
Where the amount of health insurance premium revenue includes a loyalty component, revenue is allocated to this
component based on the relative estimated stand-alone selling price. The component of loyalty revenue is initially deferred
as a liability on the consolidated statement of financial position, and subsequently recognised in the consolidated statement
of comprehensive income upon redemption when Medibank is obliged to provide the specified goods or services itself.
(d) Reconciliation of profit after income tax to net cash flow from operating activities
Profit for the year
Non-cash items
Depreciation and amortisation
Non-cash share-based payments expense
Share of (profit)/loss from equity accounted investments
Other non-cash items
Investing and financing items
Net realised loss/(gain) on financial assets
Net unrealised loss/(gain) on financial assets
Interest income
Trust distributions
Investment management expenses
Interest paid – leases
100 Medibank
Note
16(b)
14
2022
$m
393.9
2021
$m
441.2
115.0
122.0
5.9
(4.5)
1.6
(12.3)
93.0
(17.9)
(43.1)
5.1
2.4
5.2
1.0
-
(21.2)
(47.8)
(17.7)
(38.0)
4.7
2.8
Notes to the consolidated financial statements30 June 2022
(Increase)/decrease in operating assets
Trade and other receivables
Deferred acquisition costs
Other assets
Income tax receivable/liability
Net deferred tax assets
Increase/(decrease) in operating liabilities
Trade and other payables
Unearned premium liability
Claims liabilities
Provisions and employee entitlements
Net cash inflow from operating activities
Note
2022
$m
(11.1)
(39.6)
1.7
123.2
(157.1)
34.2
137.4
239.6
81.1
948.5
2021
$m
(8.8)
(42.3)
6.2
(63.9)
4.3
15.7
11.3
(7.7)
115.2
482.2
Cash and Cash Equivalents Accounting Policy
Cash and cash equivalents comprise short-term highly liquid investments that are readily convertible to known amounts
of cash and are subject to an insignificant change in value. These investments have original maturities of three months
or less and include cash on hand, short-term bank bills, term deposits and negotiable certificates of deposit.
Amounts in cash and cash equivalents are the same as those included in the consolidated statement of cash flows.
Note 10: Contributed equity and reserves
(a) Contributed equity
Contributed equity consists of 2,754,003,240 fully paid
ordinary shares at $0.03 per share. Ordinary shares entitle
their holder to one vote, either in person or by proxy on a
poll, at a general meeting of Medibank, and in a reduction
of capital, the right to repayment of the capital paid up on
the shares.
Ordinary shares entitle their holders to receive dividends
and, in the event of winding up Medibank, entitle their
holders to participate in the distribution of the surplus
assets of Medibank.
(b) Reserves
Equity reserve1
Share-based payments reserve2
Total
2022
$m
17.8
7.9
25.7
2021
$m
17.8
4.5
22.3
1. During the 2009 financial year, the parent entity entered into a
restructure of administrative arrangements, which gave rise to an equity
reserve representing the difference between the book value of the net
assets acquired from Medibank Health Solutions Pty Ltd (formerly
Health Services Australia Pty Ltd) and the total purchase consideration.
2. The share-based payments reserve is used to record the cumulative
expense recognised in respect of performance rights issued to
participating employees. Refer to Note 18 for further information.
Annual Report 2022 101
Section 4. Other assets and liabilities
Overview
This section provides insights into the operating assets used and liabilities incurred to generate the Group’s operating result.
Note 11: Property, plant and equipment
(a) Closing net carrying amount
Plant and equipment
Leasehold improvements
Assets under construction
Right-of-use assets
Total property, plant and equipment
(b) Reconciliation of the net carrying amount
2022
Gross carrying amount
Accumulated depreciation and impairment
Net carrying amount
Net carrying amount at 1 July
Additions
Transfers in/(out)
Depreciation expense
Net carrying amount at 30 June
2021
Gross carrying amount
Accumulated depreciation and impairment
Net carrying amount
Net carrying amount at 1 July
Additions
Transfers in/(out)
Depreciation expense
Net carrying amount at 30 June
Note
14
2022
$m
10.0
16.8
7.1
54.5
88.4
Plant and
equipment
$m
Leasehold
improvements
$m
Assets under
construction
$m
23.6
(13.6)
10.0
10.2
-
1.1
(1.3)
10.0
22.9
(12.7)
10.2
6.1
6.2
1.7
(3.8)
10.2
96.0
(79.2)
16.8
23.7
0.4
2.7
(10.0)
16.8
95.0
(71.3)
23.7
31.0
1.0
1.2
(9.5)
23.7
7.1
-
7.1
4.5
6.4
(3.8)
-
7.1
4.5
-
4.5
3.0
4.4
(2.9)
-
4.5
2021
$m
10.2
23.7
4.5
63.3
101.7
Total
$m
126.7
(92.8)
33.9
38.4
6.8
-
(11.3)
33.9
122.4
(84.0)
38.4
40.1
11.6
-
(13.3)
38.4
(c) Property, plant and equipment capital expenditure commitments
Capital expenditure contracted for at the end of the reporting period but not
recognised as liabilities
2022
$m
2021
$m
2.0
0.2
102 Medibank
Notes to the consolidated financial statements30 June 2022
Property, Plant and Equipment Accounting Policy
Refer to Note 14 for the accounting policy for
right-of-use assets.
Depreciation
Property, plant and equipment is depreciated using the
straight-line method over the estimated useful life as follows:
Property, plant and equipment is carried at cost less
accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable
to the acquisition of the item and any subsequent
expenditure eligible for capitalisation. Repairs and
maintenance costs are recognised in the consolidated
statement of comprehensive income during the period
in which they are incurred.
Plant and equipment
Leasehold improvements the lease term
Assets under construction not depreciated until in use
3 - 15 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Disposal
The gain or loss on disposal of property, plant and
equipment is calculated as the difference between the
carrying amount of the asset at the time of disposal and
the net proceeds on disposal (including incidental costs).
These gains or losses are included in the consolidated
statement of comprehensive income.
Note 12: Intangible assets
2022
Gross carrying amount
Accumulated amortisation and impairment
Net carrying amount
Net carrying amount at 1 July
Additions
Transfers in/(out)
Amortisation expense
Net carrying amount at 30 June
2021
Gross carrying amount
Accumulated amortisation and impairment
Net carrying amount
Net carrying amount at 1 July
Additions
Transfers in/(out)
Amortisation expense
Net carrying amount at 30 June
Customer
contracts and
relationships
$m
Goodwill
$m
Software
$m
Assets under
construction
$m
282.9
(78.4)
204.5
204.5
-
-
-
204.5
282.9
(78.4)
204.5
204.5
-
-
-
204.5
89.7
(88.0)
1.7
3.7
-
-
(2.0)
1.7
89.7
(86.0)
3.7
8.3
-
-
(4.6)
3.7
479.4
(379.6)
99.8
111.9
4.5
19.4
(36.0)
99.8
455.5
(343.6)
111.9
124.7
4.1
20.7
(37.6)
111.9
26.3
-
26.3
25.2
20.5
(19.4)
-
26.3
25.2
-
25.2
26.2
19.7
(20.7)
-
25.2
Total
$m
878.3
(546.0)
332.3
345.3
25.0
-
(38.0)
332.3
853.3
(508.0)
345.3
363.7
23.8
-
(42.2)
345.3
Goodwill Accounting Policy
Goodwill is carried at cost less accumulated impairment losses. Goodwill is not amortised and is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired.
Key estimate
Refer to Note 12(a) for further information on the assumptions used in the recoverable amount calculations.
Annual Report 2022 103
Software Accounting Policy
Software is carried at cost less accumulated amortisation and impairment losses. Costs capitalised include external direct
costs of acquiring software, licences and service, and payroll related costs of employees’ time spent on the project. Assets
are capitalised where there is control of the underlying software asset and where they will contribute to future financial
benefits, through revenue generation and/or cost reduction.
Amortisation is calculated on a straight-line basis over the expected useful lives of the software (1.5 to 10 years).
Customer Contracts and Relationships Accounting Policy
Customer contracts and relationships acquired as part of a business combination are carried at their fair value at the
date of acquisition less accumulated amortisation and impairment losses.
Amortisation is calculated on a straight-line basis over the expected useful lives (5 to 12 years).
Customer contracts and relationships are assessed for indicators of impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
(a) Impairment tests for goodwill – key assumptions and judgements
Below is a summary of the Group’s goodwill allocation to cash generating unit (CGU) and the key assumptions made in
determining the recoverable amounts.
Health Insurance
Medibank Health Telehealth
Medibank Health Home Care
Goodwill
allocation
$m
96.2
11.1
97.2
2022
Growth
rate
%
2.5
1.0
2.5
Pre-tax
discount
rate %
Goodwill
allocation
$m
11.6
12.4
12.4
96.2
11.1
97.2
2021
Growth
rate
%
2.5
1.0
2.5
Pre-tax
discount
rate %
10.5
11.3
11.3
The recoverable amounts of the CGUs are based on value in use (VIU) calculations, which use a three-year
cash flow projection per the Group’s Board approved Corporate Plan. A terminal value has been assumed in
all the VIU calculations, except for the Medibank Health Telehealth CGU VIU calculation which is based on
the expected tenure of current contracts.
Estimated future cash flows are discounted using post-tax discount rates which reflect risks specific to each
CGU. The equivalent pre-tax discount rates are disclosed above.
The growth rates do not exceed the long-term average growth rates for the businesses in which the CGUs
operate as per industry forecasts.
The key assumptions underpinning the cash flows are specific to each CGU and the industry in which it
operates. The assumptions applied are based on management’s past experience and knowledge in the market
in which the CGU operates. They include the following:
• Health Insurance CGU: Key assumptions include policyholder growth and future premium revenue rate
rises, along with claims growth and claims inflation.
• Medibank Health Telehealth CGU: The business model of the CGU is contract based by nature and the
forecast cash flows contain key assumptions for key customer contracts, including contract renewals,
new wins and losses.
• Medibank Health Home Care group of CGUs: Comprises acquired and internally developed in-home
care businesses. Goodwill has been allocated to the Home Care CGUs as the Group derives strategic
and operational synergies, and the Group monitors business performance at the combined Home Care
level. The forecast cash flows contain key assumptions around volumes of services performed across
geographic areas, expected contract renewals and new wins and losses.
Forecast
future cash
flows
Discount
rates
Growth rates
Other key
assumptions
104 Medibank
Notes to the consolidated financial statements30 June 2022
There are no reasonably possible changes in key assumptions that could have resulted in an impairment loss for the Health
Insurance CGU, Medibank Health Telehealth CGU or the Medibank Health Home Care group of CGUs in the current or prior
reporting periods.
Impairment Accounting Policy
For the purposes of assessing impairment, goodwill is
allocated to the CGU, or group of CGUs, at which the
goodwill is monitored and where the synergies of the
combination are expected. A CGU is the smallest group of
assets that generate separately identifiable cash inflows.
An impairment loss is recognised if the asset’s or CGU’s
carrying amount exceeds its recoverable amount. The
recoverable amount of an asset or CGU is the higher of its
fair value less costs of disposal and VIU. In assessing VIU,
estimated future cash flows are discounted to their present
value using a discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset or CGU.
(b) Intangible assets capital expenditure commitments
Capital expenditure contracted for at the end of the reporting period
but not recognised as liabilities
Note 13: Provisions and employee entitlements
(a) Employee entitlements
(i) Employee entitlements provision
Current
Non-current
Total employee entitlements
This provision incorporates annual leave, long service leave, bonus plans and termination payments.
(ii) Employee benefits expense
Included in the Group’s employee benefits expense are the following:
Superannuation expense
Other long-term benefits expense
Termination benefits expense
Share-based payment expense
2022
$m
2021
$m
0.7
1.9
2022
$m
72.4
13.8
86.2
2022
$m
31.0
4.9
3.3
5.9
2021
$m
69.7
13.0
82.7
2021
$m
30.4
5.4
3.7
5.2
Annual Report 2022 105
Notes to the consolidated financial statements
30 June 2022
Employee Entitlements Accounting Policy
Short-term
obligations
Liabilities for wages and salaries, including non-monetary benefits, are recognised in respect of
employees’ services up to the end of the reporting period and are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term
employee benefit
obligations
Liabilities for employee entitlements includes long service leave and annual leave which are
not expected to be settled wholly within 12 months after the end of the period. The liabilities are
measured at the present value of expected future payments using the projected unit credit method,
taking into account:
• Expected future wage and salary levels.
• Experience of employee departures.
• Periods of service.
Expected future payments are discounted using market yields at the end of the reporting period,
using corporate bonds with terms to maturity that closely match the estimated future cash outflows.
The obligations are presented as current liabilities in the consolidated statement of financial position
if the Group does not have an unconditional right to defer settlement for at least 12 months after the
reporting date, regardless of when the actual settlement is expected to occur.
Bonus plans
Liabilities for bonuses are based on a formula that takes into consideration the performance of the
employee against targeted and stretch objectives, the profit of the Group and other financial and
non-financial key performance indicators. The Group recognises a provision when it is contractually
obliged or where there is a past practice that has created a constructive obligation.
Termination
benefits
Termination benefits are payable when employment is terminated by the Group before the normal
retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
The Group recognises termination benefits at the earlier of the following dates:
• When the Group can no longer withdraw the offer of those benefits.
• When the Group recognises costs for a restructuring that is within the scope of AASB 137
Provisions, Contingent Liabilities and Contingent Assets and involves the payment of
termination benefits.
In the case of an offer made to encourage voluntary redundancy, the termination benefits are
measured based on the number of employees expected to accept the offer. Benefits falling due more
than 12 months after the end of the reporting period are discounted to present value.
(b) Provisions
Movements in provisions are as follows:
Commissions
$m
Make good
$m
Workers
compensation
$m
Corporate
loyalty benefits
$m
Contingent
consideration
$m
Balance at 1 July 2021
Additional provision
Amounts utilised during the year
Reversal of unused provision
Balance at 30 June 2022
Balance comprised of:
Current
Non-current
8.9
7.2
(7.4)
-
8.7
8.7
-
5.0
-
(0.8)
-
4.2
1.4
2.8
5.3
0.5
(1.3)
-
4.5
0.7
3.8
10.0
4.2
(3.1)
(0.4)
10.7
10.7
-
106 Medibank
Other
$m
Total
$m
2.8
2.8
34.7
20.1
(0.3)
(12.9)
-
5.3
(0.4)
41.5
2.7
5.4
-
-
8.1
5.4
2.7
5.3
32.2
-
9.3
(i) Commissions provision
This provision relates to estimated commissions payable
to third parties in relation to the acquisition of health
insurance contracts.
(ii) Make good provision
In accordance with certain lease agreements, the Group
is obligated to restore leased premises to their original
condition at the end of the lease term. Due to the long-term
nature of the liability, there is uncertainty in estimating the
ultimate amount of these costs. The provision has been
discounted to take into account the time value of money
throughout the remaining term of the lease.
(iii) Workers compensation provision
The parent entity is self-insured for workers’ compensation
claims. Provisions are recognised based on claims reported
and an estimate of claims incurred but not reported. These
provisions are determined on a discounted basis, using
an actuarial valuation performed at each reporting date.
The parent entity has entered into $10.0 million (2021:
$10.0 million) of bank guarantees in relation to its self-
insured workers compensation obligations.
(iv) Corporate loyalty benefits provision
This provision relates to estimated incentives payable to
third parties in relation to the acquisition of corporate health
insurance contracts.
(v) Contingent consideration provision
Contingent consideration relates to the investment in East
Sydney Day Hospital Pty Limited (refer to Note 16(b) for
further information).
(c) Customer give back provision
Movement in the customer give back provision is as follows:
Balance at 1 July 2021
Additional provision
Amounts utilised during the year
Balance at 30 June 2022
Total
$m
103.0
184.6
(109.0)
178.6
During the current and prior periods, the Group has
announced various customer give backs as part of its
commitment to return permanent net COVID-19 savings to
eligible policyholders. These give backs are initially recognised
as a reduction to Health Insurance premium revenue in the
consolidated statement of comprehensive income with the
corresponding liability recognised in either the customer
give back provision or provision for premium deferral in
the unearned premium liability (refer to Note 5) depending
on the mechanism used to provide the give back to eligible
policyholders. One-time cash payments are recognised in
the customer give back provision, and premium deferrals
are recognised within the unearned premium liability.
The 2021 give back of $103.0 million that was recognised
at 30 June 2021 has all been returned to eligible
policyholders during the period. The total amount given
back was $104.6 million, with the additional $1.6 million
recognised in the current period consolidated statement
of comprehensive income.
Further customer give backs totalling $367.8 million were
announced during the current period in relation to a 7 month
deferral of the 1 April 2022 premium increase and a one-time
cash payment. Of this, $183.0 million has been recognised
within the customer give back provision, with $4.4 million
of this being paid during the current period. The remaining
give back amount of $184.8 million has been recognised in
the provision for premium deferral in the unearned premium
liability (refer to Note 5).
Provisions Accounting Policy
Provisions are recognised when:
• The Group has a present legal or constructive
obligation as a result of past events.
• It is probable that an outflow of resources will be
required to settle the obligation.
• The amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as
a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in
the same class of obligations may be small.
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the end of the reporting
period. Expected future payments are discounted using
market yields at the end of the reporting period using
corporate bonds with terms to maturity that match, as
closely as possible, the estimated future cash outflows.
The increase in the provision due to the passage of time
is recognised as interest expense.
Annual Report 2022 107
(d) Contingent liabilities
From time to time, the Group is exposed to contingent
liabilities which arise from the ordinary course of
business, including:
• Losses which might arise from litigation.
• Investigations from internal reviews and by state and
federal regulators such as the ACCC, ASIC, APRA or other
regulatory bodies into past conduct on either industry-wide
or Medibank specific matters.
It is anticipated that the likelihood of any unprovided liabilities
arising is either remote or not material.
The Group has issued $17.6m of bank guarantees to third
parties for various operational and legal purposes, including
$10.0 million (2021: $10.0 million) in relation to its self-
insured workers compensation obligations (refer to Note 13(b)
(iii)) and other guarantees relating to conditions set out in
property agreements.
It is not expected that these guarantees will be called upon.
Note 14. Leases
(a) Group as a lessee
Leases are entered into as a means of acquiring access
to corporate and retail property. Rental payments are
generally fixed, with differing clauses to adjust the rental
to reflect increases in market rates. These clauses include
fixed incremental increases, market reviews and inflation
escalation clauses during a lease on which contingent
rentals are determined. No operating leases contain
restrictions on financing or other leasing activities.
The Group leases unused office space under non-cancellable
leases agreements. The leases have varying terms,
escalation clauses and renewal rights.
As at 30 June 2022, management have determined it
is not reasonably certain that any of its leases will be
extended or terminated.
The table below sets out the carrying amounts of the
right-of-use asset and the movements during the year.
Balance at 1 July
Net additions
Depreciation expense
Balance at 30 June
The table below sets out the carrying amounts of the lease liabilities and the movements during the year.
Balance at 1 July
Additions
Accretion of interest
Lease payments
Balance at 30 June
Balance comprised of:
Current
Non-current
2022
$m
63.3
19.1
(27.9)
54.5
2022
$m
93.4
19.9
2.4
(38.8)
76.9
30.2
46.7
2021
$m
72.1
18.4
(27.2)
63.3
2021
$m
109.2
18.4
2.8
(37.0)
93.4
28.1
65.3
The maturity profile of the Group's lease liabilities based on contractual undiscounted payments is provided in Note 8(c).
108 Medibank
Notes to the consolidated financial statements30 June 2022 Leases Accounting Policy
As a lessee
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease by determining whether::
• The contract involves the use of an identified asset.
• The Group has the right to direct the use of the asset.
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial
amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to restore the
underlying asset less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use
or the end of the lease term. In addition, the right-of-use
is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the Group’s
incremental borrowing rate. In determining the incremental
borrowing rate, the following components are considered:
• Reference rate (incorporating currency, environment, term).
• Financing spread adjustment (incorporating term,
indebtedness, entity, environment).
• Lease specific adjustment (incorporating asset type).
The interest expense recognised on the lease liability is
measured at amortised cost using the effective interest
method. The lease liability is remeasured when there is
a change in future lease payments, with a corresponding
adjustment made to the carrying amount of the right-of-use
asset (or profit or loss if the carrying amount of the right-of-
use asset has been reduced to zero).
The Group has elected not to recognise right-of-use assets
and lease liabilities for leases of low value assets. The Group
recognises the lease payments associated with these leases
as an expense on a straight-line basis over the lease term.
(b) Group as a Lessor
Finance lease receivables of $4.9 million have been
recognised by the Group at 30 June 2022 (2021: $7.0 million).
These are presented within other assets in the consolidated
statement of financial position.
Leases Accounting Policy
As a lessor
The Group acts as an intermediate lessor for two subleases.
The Group’s interest in the head lease and sublease are
accounted for separately. At the sublease commencement,
the Group determines whether it is a finance or operating
lease by assessing whether the lease transfers substantially
all of the risks and rewards of ownership to the lessee, with
reference to the right-of-use asset arising from the head
lease, not with reference to the underlying asset.
Annual Report 2022 109
Section 5. Other
Overview
This section includes additional information that must be disclosed to comply with Australian Accounting Standards, the
Corporations Act 2001 and the Corporations Regulations.
Note 15: Income tax
Tax consolidation legislation
Medibank and its wholly owned Australian controlled
entities are members of a tax consolidated group. As a
consequence, these entities are taxed as a single entity and
the deferred tax assets and liabilities of these entities are
offset in the consolidated financial statements.
The entities in the tax consolidated group entered into a
tax sharing agreement which limits the joint and several
liability of the wholly owned entities in the case of a default
by the head entity, Medibank.
The entities have also entered into a tax funding agreement
under which the wholly owned entities fully compensate
Medibank for any current tax payable and are compensated
by Medibank for any current tax receivable.
(a) Income tax expense
Current tax
Deferred tax1
Adjustment for tax of prior period
Income tax expense
2022
$m
322.0
(156.6)
0.7
166.1
2021
$m
182.2
8.6
0.3
191.1
1. Current period includes deferred tax of $130.2 million in relation to the movements in the COVID-19 claims liability and provision for customer give backs
(including premium deferral). Refer to Note 15(c).
(b) Numerical reconciliation of income tax expense to prima facie tax payable
2022
$m
560.0
2021
$m
632.3
168.0
189.7
0.9
(1.6)
(1.3)
(0.6)
2.8
(1.2)
0.3
(0.8)
165.4
190.8
0.7
166.1
0.3
191.1
Profit for the year before income tax expense
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenses
Tax offset for franked dividends
Share of (profit)/loss from equity accounted investments
Other items
Adjustment for tax of prior period
Income tax expense
110 Medibank
Notes to the consolidated financial statements30 June 2022
(c) Deferred tax assets and liabilities
Deferred tax balances comprise temporary differences attributable to following items.
Recognised in the income statement
Trade and other receivables
Financial assets at fair value through profit or loss
Deferred acquisition costs
Property, plant and equipment
Intangible assets
Trade and other payables
Employee entitlements
Claims liabilities1
Provisions2
Business capital costs
Other (liabilities)/assets
Recognised directly in other comprehensive income
Actuarial loss on retirement benefit obligation
Net deferred tax assets
2022
$m
2.3
(4.2)
(24.9)
(17.2)
(11.1)
26.9
25.8
139.3
104.1
0.1
2.1
243.2
0.4
0.4
243.6
2021
$m
2.0
(28.4)
(24.3)
(19.6)
(13.0)
30.6
24.8
72.2
40.6
0.3
0.3
85.5
0.4
0.4
85.9
1. Includes deferred tax of $134.5 million (2021: $67.1 million) in relation to the COVID-19 claims liability. Refer to Note 3(b) for further information.
2. Includes deferred tax of $53.6 million (2021: $30.9 million) in relation to the customer give back provision and $40.1 million in relation to the provision
for premium deferral recognised in the unearned premium liability. Refer to Note 5 and Note 13(c) for further information.
Income Tax Accounting Policy
Current Taxes Accounting Policy
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the end
of the reporting period. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation
and establishes provisions where appropriate.
Deferred Taxes Accounting Policy
Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted at
the end of each reporting period and are expected to apply
when the related deferred income tax asset is realised, or
the deferred income tax liability is settled. Deferred income
tax is provided on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements, other
than for the following:
• Where they arise from the initial recognition of goodwill.
• Where they arise from the initial recognition of an asset or
liability in a transaction other than a business combination
that at the time of the transaction affects neither
accounting nor taxable profit or loss.
• For temporary differences between the carrying amount
and tax bases of investments in controlled entities where
the parent entity is able to control the timing of the reversal
of temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Current and deferred tax is recognised in the profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Offsetting balances
Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously. Deferred tax assets and
liabilities are offset when there is a legally enforceable right
to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Annual Report 2022 111
Key judgement
The deferred tax asset in relation to the COVID-19 claims liability has been recognised in the consolidated statement
of financial position. Recognition is on the basis that the Group can demonstrate that:
• The temporary difference will reverse when the expected deferred claims are incurred.
• Sufficient profits are forecast to exist to utilise the tax asset in the future.
Note 16: Group structure
(a) Group structure
The consolidated financial statements incorporate the following entities. All entities, unless otherwise stated,
are 100% controlled.
Medibank Private Limited
Medibank Health
Solutions
Pty Ltd
Australian Health
Management Group
Pty Ltd
Medibank Private
Employee Share
Plan Trust1
MHSI
Pty Ltd2
Medibank
Health Solutions
Telehealth
Pty Ltd
MH Investment
Holdings
Pty Ltd
MH Solutions
Investments
Pty Ltd
Live Better
Management
Pty Ltd
Integrated
Care Services
Pty Ltd
MH
Operations
Pty Ltd2
Medi Financial
Services
Pty Ltd
HealthStrong
Pty Ltd
East Sydney Day
Hospital Pty Ltd
(49%)
Adeney Private
Hospital Pty Ltd
(49%)
Medinet Australia
Pty Ltd
(3.85%)
Home Support
Services
Pty Ltd
Adeney Private
Hospital Pty Ltd
(49%)
Calvary
Medibank JV
Pty Ltd
(50%)
Myhealth Medical
Holdings Pty Ltd
(49%)
SydOrtho
Holdings Pty Ltd
(50%)
These subsidiaries are wholly owned by Medibank Health Solutions Pty Ltd and have been granted relief from the necessity
to prepare financial reports in accordance with the ASIC Corporations (Wholly-owned Companies) Instrument 2016/785.
These entities are equity accounted investments. Refer to Note 16(b) for further information.
1. Refer to Note 18(a) for further information on the Employee Share Plan Trust.
2. MHSI Pty Ltd and MH Operations Pty Ltd were registered on 9 May 2022.
112 Medibank
Notes to the consolidated financial statements30 June 2022
Consolidation Accounting Policy
Subsidiaries are all those entities over which the Group has
control. The Group controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through
its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their
fair values at the acquisition date. The excess of the
consideration transferred and the amount of any non-
controlling interest in the acquiree over the fair value of
the Group’s share of the net identifiable assets acquired,
is recorded as goodwill.
The acquisition method of accounting is used to account
for the acquisition of subsidiaries. The consideration
transferred for the acquisition of a subsidiary comprises
the fair value of the assets transferred and the liabilities
incurred. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries are
consistent with the policies adopted by the Group.
(b) Equity accounted investments
As at 30 June 2022 the Group held the following investments in associates and joint ventures:
Name of company
East Sydney Day Hospital Pty Ltd (iii)
Calvary Medibank JV Pty Ltd
Myhealth Medical Holdings Pty Ltd
Adeney Private Hospital Pty Ltd (iii)
Medinet Australia Pty Ltd (i)
SydOrtho Holdings Pty Ltd (ii)
Principal
activity
Place of
incorporation
Type
Australia
Short stay hospital
Australia
Medical services
Australia
Medical services
Short stay hospital
Australia
Digital health services Australia
Australia
Short stay hospital
Associate
Joint Venture
Associate
Associate
Associate
Joint Venture
The following table shows the Group’s aggregated interests in equity accounted investments.
Balance at 1 July
Additions
Share of net profit/(loss) for the year
Balance at 30 June
Ownership interest %
2022
49.00%
50.00%
49.00%
49.00%
3.85%
50.00%
2022
$m
77.1
22.1
4.5
103.7
2021
49.00%
50.00%
49.00%
49.00%
-
-
2021
$m
-
78.1
(1.0)
77.1
(i) Medinet Australia Pty Ltd
(iii) Other
On 15 March 2022, Medi Financial Services Pty Ltd acquired a
3.85% shareholding in Medinet Australia Pty Ltd, a digital health
service provider, for $10.0 million. The Group has significant
influence over Medinet as it has 28.5% of the voting power.
Other additions during the period comprised:
• Non-cash addition of $5.4 million in relation to the
increase in the East Sydney Day Hospital Pty Ltd contingent
consideration provision (refer to Note 13(b)(v)).
• Subscription for an additional $5.2 million of shares in
Adeney Private Hospital Pty Ltd (APH) in line with APH’s
achievement of milestones.
(ii) SydOrtho Holdings Pty Ltd
On 16 March 2022, MH Solutions Investments Pty Ltd acquired
a 50% shareholding in SydOrtho Holdings Pty Ltd (SydOrtho)
for $1.5 million, to develop a hospital in Sydney for short stay
surgical procedures. As part of the purchase agreement, the
Group may make future equity purchases in SydOrtho up to
$13.3 million. These future equity purchases are contingent
on SydOrtho achieving certain milestones in the development
of the hospital and therefore will only be recognised when the
milestones are achieved.
Annual Report 2022 113
Equity Accounted Investments Accounting Policy
The Group’s associates and joint ventures, which are
entities over which the Group has significant influence or
joint control, are accounted for using the equity method.
Under this method, the investment associate or joint
venture is initially recognised at cost and is increased
or decreased to recognise the Group’s share of profit
or loss. Equity accounting of losses is restricted to the
Group’s interest in the associate or joint venture. The
Group’s share of profit or loss for the period is reflected
in the consolidated statement of comprehensive income.
Investments in associates and joint ventures are tested for
impairment if an event occurs that has an impact on the
estimated future cash flows from the net investment.
(c) Parent entity financial information
(i) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders' equity
Issued capital
Reserves
Equity reserve
Share-based payment reserve
Retained earnings
Total shareholders' equity
Profit for the year
Total comprehensive income
2022
$m
2021
$m
3,441.7
3,186.5
4,192.8
3,794.7
2,207.1
1,832.2
2,355.8
1,980.2
85.0
85.0
6.3
7.9
1,737.8
1,837.0
377.1
377.1
6.3
4.5
1,718.7
1,814.5
432.7
432.7
(ii) Guarantees entered into by parent entity
(iii) Contingent liabilities of the parent entity
The parent entity has entered into $10.0 million
(2021: $10.0 million) of bank guarantees in relation
to its self-insured workers compensation obligations.
Refer to Note 13(b)(iii) for further information on the
provision for workers compensation.
Refer to Note 13(d) for details of the contingent liabilities
of the parent entity.
(iv) Parent entity capital expenditure commitments
Capital expenditure contracted for at the end of the reporting period
but not recognised as liabilities
Property, plant and equipment
Intangible assets
2022
$m
2021
$m
2.0
0.4
0.2
1.6
114 Medibank
Notes to the consolidated financial statements30 June 2022
Parent Entity Financial Information Accounting Policy
The financial information for the parent entity, Medibank, has been prepared on the same basis as the consolidated
financial statements, except as set out below:
• Investments in subsidiaries are accounted for at cost less accumulated impairment losses in the financial
statements of Medibank.
• Assets or liabilities arising under tax funding arrangements with the tax consolidated entities are recognised
by Medibank as current assets or current liabilities.
Note 17: Related party transactions
(a) Transactions with equity accounted investments
Transactions with equity accounted investments
Claims incurred
Services provided
Interest received
Outstanding balances with related parties
Amounts payable
Amounts receivable
Loan receivable
2022
$m
(3.8)
26.6
0.2
(0.1)
1.5
2.9
2021
$m
(2.9)
1.7
0.2
-
1.5
2.9
The Group has entered into the following transactions with its equity accounted investments during the year:
• Payment of policyholder claims. These transactions are under normal commercial terms.
• Receipts in relation to services rendered, largely comprised of services provided to Calvary Medibank JV Pty Ltd for the
COVID Care at Home programs.
• Reimbursement of costs incurred.
(b) Key management personnel remuneration
Short-term benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total key management personnel
2022
$
2021
$
8,024,431
185,198
212,598
2,855,265
11,277,492
10,300,436
281,954
1,420,495
3,515,299
15,518,184
Refer to the Remuneration Report for further details of the composition of the key management personnel.
(c) Transactions with other related parties
Certain key management personnel hold director positions in other entities, some of which transacted with the Group during
the current and prior reporting periods. All transactions that occurred were in the normal course of business on terms and
conditions no more favourable than those available on an arm’s length basis.
Annual Report 2022 115
Note 18: Share-based payments
(a) Share-based payments arrangements
Performance rights to acquire shares in Medibank are granted
to members of the Executive Leadership Team (ELT), Senior
Executive Group (SEG) and other selected senior employees as
part of Medibank’s short-term incentive (STI) and long-term
incentive (LTI) plans. These plans are designed to:
• Align the interests of participating employees more closely
with the interests of customers and shareholders by
providing an opportunity for those employees to receive
an equity interest in Medibank through the granting of
performance rights.
• Assist in the motivation, retention and reward of
participating employees.
Each performance hurdle under the LTI plan has a threshold
level of performance which needs to be achieved before
vesting commences. Details of these thresholds are outlined
in the remuneration report. The vesting conditions for
performance rights in grants will be tested over a three-year
performance period commencing on 1 July of the relevant
period. The vesting conditions must be satisfied for the
performance rights to vest. On satisfaction of the vesting
conditions, each performance right will convert into a fully
paid ordinary share on a one-for-one basis.
The number of rights granted in the 2022 grants were
determined based on the monetary value of the LTI award,
divided by the volume-weighted average share price of
Medibank shares on the ASX during the 10 trading days up
to and including 30 June 2021. This average price was $3.13.
Performance rights granted do not carry any voting rights.
(ii) Annual STI offer
Under the Group’s STI plan, 50% of STI awarded to ELT
members is paid in cash after the announcement of financial
results. The remaining 50% is deferred for 12 months in the
form of performance rights granted under the Performance
Rights plan. Vesting of deferred performance rights is
conditional on the participant remaining employed by
Medibank until the end of the 12-month deferral period.
On vesting of the performance rights, each performance
right will convert into a share on a one-for-one basis, subject
to any adjustment required to ensure that the participant
receives a benefit equivalent to any dividends paid by
Medibank during the deferral period.
The number of rights to be granted will be determined
based on the monetary value of the STI award, divided by
the volume-weighted average share price over the 10 trading
days up to and including the payment date of cash STI.
Medibank has an Employee Share Plan Trust to manage its
share-based payments arrangements. Shares allocated by
the trust to the employees are acquired on-market prior
to allocation. The Trust held nil shares at 30 June 2022.
(i) LTI offer
Under the LTI plan, performance rights were granted
to members of the ELT, SEG and other selected senior
employees as part of their remuneration. Performance
rights granted under the LTI plan are subject to the following
performance hurdles:
• 35% of the performance rights will be subject to a vesting
condition based on Medibank’s earnings per share
compound annual growth rate (EPS CAGR) over the
performance period.
• 35% of the performance rights will be subject to a relative
total shareholder return (TSR) vesting condition, measured
over the performance period against a comparator group
of companies.
• 30% of the performance rights will be subject to a
performance hurdle based on the growth of Medibank’s
private health insurance market share (as reported by
APRA) over the performance period.
Share-based Payment Accounting Policy
The fair value of the performance rights is recognised as an
employee benefits expense, with a corresponding increase
in equity. The total amount to be expensed is determined
by reference to the fair value of the performance rights
granted, which includes any market performance conditions
and the impact of any non-vesting conditions, but excludes
the impact of any service and non-market performance
vesting conditions. Non-market vesting conditions are
included in assumptions about the number of performance
rights that are expected to vest.
The total expense is recognised over the period in which the
performance and/or service conditions are fulfilled (the vesting
period), ending on the date on which the relevant employees
become fully entitled to the award (the vesting date).
At the end of each reporting period, the Group revises its
estimates of the number of awards that are expected to vest
based on the non-market vesting conditions. The impact
of the revision to original estimates, if any, is recognised in
profit or loss, with a corresponding adjustment to equity.
116 Medibank
Notes to the consolidated financial statements30 June 2022 (b) Performance rights – Group
Outstanding at 1 July
Granted
Forfeited1
Exercised2
Lapsed3
Outstanding at 30 June
Exercisable at 30 June
Number of equity
instruments
2022
2021
8,079,042
8,938,073
3,542,600
3,168,794
(1,371,837)
(624,784)
(825,420)
(1,980,272)
(1,753,932)
(1,422,769)
7,670,453
8,079,042
-
-
1. Forfeited relates to instruments that lapsed on cessation of employment.
2. Performance rights are exercised as soon as they vest.
3. Lapsed relates to instruments that lapsed on failure to meet the performance hurdles.
(c) Fair value of performance rights granted
Below is a summary of the fair values of the 2021 and 2022
LTI plans and the key assumptions used in determining the
valuation. The fair value was determined in consultation with
the Group’s professional service advisors, KPMG, including
key inputs and the valuation methodology for the performance
rights granted.
The fair value at grant date differs for each grant primarily
due to the Medibank share price on that grant date and for the
TSR performance rights, the Medibank share price relative to
the comparator group.
Grant date
1 July 2021
1 July 2020
1 July 2021
1 July 2020
TSR
performance rights
EPS and market share
performance rights
2022
2021
2022
2021
Date of commencement of
service and performance period
Expected vesting date
Fair value at grant date
Share price at grant date
Dividend yield (per annum effective)
Franking rate
Risk free discount rate (per annum)
Valuation method
Volatility assumptions (per annum)
Medibank
Comparator group average
Correlation between comparator
companies' TSR
1 July 2021
1 July 2020
1 July 2021
1 July 2020
30 June 2024
30 June 2023
30 June 2024
30 June 2023
$1.62
$3.14
3.7%
100.0%
0.2%
$1.58
$2.97
4.0%
100.0%
0.3%
$2.72
$3.14
3.7%
100.0%
n/a
$2.54
$2.97
4.0%
100.0%
n/a
Monte Carlo
simulation model
Monte Carlo
simulation model
Black-Scholes
option pricing
methodology
Black-Scholes
option pricing
methodology
20%
32%
30%
28%
35%
25%
n/a
n/a
n/a
n/a
n/a
n/a
Annual Report 2022 117
Note 19: Auditor's remuneration
During the year the following fees were paid or payable for services provided by the auditor of Medibank, its related practices and
non-related audit firms:
PricewaterhouseCoopers Australia (PwC):
Amounts received or due and receivable by the Company's auditor for:
- An audit or review of the financial report of the Company and any other entity
within the Group
Other assurance services in relation to the Company and any other entity within the Group:
- Audit of regulatory compliance returns
- Accounting and other assurance services
Other services in relation to the Company and any other entity within the Group:
- Health consulting services
Total remuneration of PwC
2022
$
2021
$
1,693,192
1,570,108
281,550
248,280
231,830
15,530
229,780
199,517
2,452,802
2,016,985
Note 20: Other
(a) New and amended standards adopted
Certain new accounting standards and amendments became
effective for the annual reporting period commencing on
1 July 2021 but did not have a material impact on the Group’s
accounting policies or on the consolidated financial report.
(b) New accounting standards and interpretations
not yet adopted
Certain new accounting standards have been published that
are not mandatory for 30 June 2022 reporting periods but will
be applicable to the Group in future reporting periods. The
Group’s assessment of the impact of these new standards is
set out below.
(i) AASB 17: Insurance Contracts
AASB 17 Insurance Contracts is effective for reporting periods
beginning on or after 1 January 2023 and will replace AASB 4
Insurance Contracts, AASB 1023 General Insurance Contracts
and AASB 1038 Life Insurance Contracts. The Group will apply
AASB 17 for the annual period beginning 1 July 2023.
The standard introduces a new general measurement model
for accounting for insurance contracts. However, a simplified
premium allocation approach, similar in nature to the Group’s
existing measurement basis under AASB 1023 is permitted in
certain circumstances (such as for short-duration contracts).
The Group has a comprehensive project underway to assess
the potential impact on its consolidated financial statements.
This includes identifying changes to the Group’s accounting
policies, reporting requirements, systems, processes and
controls and consideration of industry interpretations and
regulatory responses.
The Group expects to apply the simplified premium allocation
approach to all of its insurance contracts. The Group is
considering applying the option provided under AASB 17 for
groups of contracts that apply the simplified approach (and
have a coverage period of less than one year) to recognise
insurance acquisition cash flows as expenses when incurred.
This is different to the current approach of amortising
acquisition costs over the average expected retention period,
however this potential change in treatment is not expected to
result in a significant change to measurement. The impact of
AASB 17 on the recognition, measurement and classification
of the COVID-19 deferred claims liability and customer give
backs is currently being evaluated by the Group.
All other key estimates and judgements in relation to the
measurement of the Group’s claim liabilities are expected to
remain largely the same under the new standard. However, it is
expected that under AASB 17 there will be substantial changes
in presentation of the financial statements and disclosures.
(ii) Other accounting standards or amendments that
will become applicable in future reporting periods
Other accounting standards or amendments that will become
applicable in future reporting periods are not expected to have
a material impact on the Group’s accounting policies or on the
consolidated financial report.
118 Medibank
Notes to the consolidated financial statements30 June 2022 (c) Other accounting policies
Impairment of Tangible and Intangible Assets (other than Goodwill) Accounting Policy
Assets other than goodwill and financial assets classified at fair value through other comprehensive income, are tested
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and its value-in-use. In assessing
value-in-use, the estimated future cash flows are discounted to their present value using a discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups of assets (CGUs).
Financial Assets and Financial Liabilities Accounting Policy
The Group’s financial assets consist of cash and cash equivalents, financial assets at fair value and trade and other
receivables. Management determines the classification of its financial assets at initial recognition based on the business
model test and cash flow characteristics. Purchases and sales of financial assets are recognised on trade-date – the date
on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred. The Group’s financial liabilities comprise trade
and other payables. Financial liabilities are classified and measured at amortised cost and derecognised when the Group’s
contractual obligations are discharged, cancelled or expired.
Goods and Services Tax (GST) Accounting Policy
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(d) Events occurring after the reporting period
There have been no events occurring after the reporting period which would have a material effect on the Group’s financial
statements at 30 June 2022.
Annual Report 2022 119
Directors' declaration
The directors declare that, in the opinion of the directors:
(a) the financial statements and notes set out on pages 73
to 119 are in accordance with the Corporations Regulations
2001, including:
(i)
giving a true and fair view of the Group’s financial
position as at 30 June 2022 and of its performance
for the financial year ended on that date; and
(ii)
complying with Australian Accounting Standards, the
Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
Note 1(b) confirms that the financial statements also comply
with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
This declaration has been made after receiving the
declarations required to be made to the directors by the
Chief Executive Officer and Chief Financial Officer in
accordance with section 295A of the Corporations Regulations
2001 for the year ended 30 June 2022.
This declaration is made in accordance with a resolution
of the directors.
(b) there are reasonable grounds to believe that the
Company will be able to pay its debts as and when
they become due and payable.
On behalf of the Board,
Mike Wilkins AO
Chair
18 August 2022
Melbourne
David Koczkar
Chief Executive Officer
120 Medibank
Auditor's independence declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Medibank Private Limited for the year ended 30 June 2022, I declare
that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Medibank Private Limited and the entities it controlled during the
period.
CJ Heath
Partner
PricewaterhouseCoopers
Melbourne
18 August 2022
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Annual Report 2022 121
Independent auditor’s report
Independent auditor’s report
To the members of Medibank Private Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Medibank Private Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2022 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2022
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999
Liability limited by a scheme approved under Professional Standards Legislation.
122 Medibank
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
For the purpose of our audit we
used overall Group materiality of
$27 million, which represents
approximately 5% of the Group’s
profit before tax.
We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the nature,
timing and extent of our audit
procedures and to evaluate the
effect of misstatements on the
financial report as a whole.
We chose Group profit before tax
because, in our view, it is the
benchmark against which the
performance of the Group is most
commonly measured.
We utilised a 5% threshold based
on our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future events.
We performed:
• an audit of the financially
significant component of the
Group, being the Health
Insurance segment.
• specific audit procedures over
significant risks and financially
significant balances of the
Medibank Health segment.
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit
Committee:
• Continued impact of the
COVID-19 pandemic
• Estimation of the outstanding
claims liability
•
Impairment test of goodwill
allocated to the Home Care
group of Cash Generating Units
(CGUs)
• Reliance on automated
processes and controls
These are further described in the
Key audit matters section of our
report.
Annual Report 2022 123
Independent auditor’s report
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Continued impact of the COVID-19 pandemic
Estimation of the COVID-19 deferred claims liability
(Refer to Note 3: $448.3m)
The COVID-19 claims liability relates to expected
future payments to customers as a result of the
Coronavirus pandemic (COVID-19) preventing access
to surgery and other health services (referred herein
as ‘COVID-19 restrictions’).
The COVID-19 claims liability is calculated by
considering:
•
the difference between actual claims service levels
and estimated underlying claims growth that
would have occurred in the absence of COVID-19
restrictions (expected claims service level)
•
the rate at which deferred surgical and
non-surgical procedures will catch up in future
periods (deferral rate)
• variations in the above key assumptions by
geography and modality (claim type)
• average policyholder lapse rate.
Utilisation of the COVID-19 claims liability is assessed
with reference to claims levels and the extent of
COVID restrictions by geography and modality.
The COVID-19 deferred claims liability is included in
the financial statement line item titled ‘Claims
liabilities’ recognised on the consolidated statement of
financial position but does not form part of the
outstanding claims liability (refer to the Key Audit
Matters titled ‘Estimation of outstanding claims
liability’).
We considered this a key audit matter due to the:
• complexity, significant uncertainties and
subjectivity impacting the Group’s estimate of the
liability, including:
We performed the following audit procedures,
amongst others:
• Evaluated the design of the Group’s relevant key
controls over the COVID-19 provisioning process.
• Evaluated the Group’s accounting policy for the
deferral of claims due to the COVID-19 pandemic
against applicable Australian Accounting
Standard requirements, Private Health Insurance
(PHI) industry practices and publicly available
health services data.
• Assessed, on a sample basis, significant data
inputs used in the Group’s modelling and
estimation of the COVID-19 claims liability
(including relevance and reliability of data,
appropriateness of data in the context of the
applicable financial reporting framework, and
potential indicators of management bias).
• Analysed claims patterns across key claims
attributes (e.g. hospital versus ancillary claims
and surgical versus non-surgical).
• Together with PwC actuarial experts, we:
o Assessed significant assumptions, and any
changes to these assumptions, adopted by
the Group in determining the impact of
continued COVID-19 restrictions on claims
deferred to future periods with reference to
PHI trends, clinical analysis of deferral
expectations and claims patterns with and
without COVID-19 restrictions.
o Considered the appropriateness of the
Group’s methodologies used to determine
claims deferred to future periods with
reference to PHI actuarial practices.
124 Medibank
Key audit matter
How our audit addressed the key audit matter
o
o
o
o
the impact and variability of disruptions to
planned insured surgeries and other insured
procedures arising from COVID-19
restrictions
an absence of historical precedent on which to
analyse data due to the impact of COVID-19
on claims patterns
the determination of the proportion of claims
not incurred that is attributable to COVID-19
restrictions
the estimation of the proportion of deferred
claims expected to be made post balance date.
•
the focus on disclosures that are fundamental to
understanding the impact of COVID-19 on the
Group’s financial report, including the
methodology and key assumptions used to
estimate the COVID-19 deferred claims liability
and the impact of changes in key variables on the
COVID-19 deferred claims liability.
Recognition of COVID-19 customer give backs
(Refer to Note 3: $369.4m, Note 5: $133.5m and
Note 13(c): $178.6m)
The COVID-19 customer give backs represent the
Group’s commitments to return permanent net
COVID-19 savings to eligible customers arising from
COVID-19 restrictions.
COVID-19 customer give backs are recognised with
reference to the Group’s publicly announced customer
initiatives representing a return of past premiums to
eligible policyholders prevented from accessing
insured services during the period.
The Group’s COVID-19 customer give backs
announced during the year are recognised as a
reduction in the financial statement line item ‘Health
Insurance premium revenue’ on the consolidated
statement of comprehensive income. The portion of
COVID-19 customer give backs owed to customers as
at 30 June 2022 is included in the consolidated
statement of financial position as ‘Unearned premium
liability’ (Note 5) or ‘Customer give back provision’
(Note 13(c)), depending on the mechanism used to
give back to customers.
o On a sample basis, performed recalculations
over the mathematical accuracy of the
Group’s COVID-19 claims liability model.
• Assessed the reasonableness of disclosure of the
COVID-19 claims liability in the financial report
against the requirements of the applicable
Australian Accounting Standards.
We performed the following audit procedures,
amongst others:
• Developed an understanding of the Group’s public
announcements and commitments to financial
analysts, shareholders and policyholders during
the year.
• Develop an understanding of the Group’s key
controls relevant to estimating and processing the
COVID-19 customer give backs.
• Assessed the reasonableness of accounting
treatment and disclosure of the COVID-19
customer give backs within the Group’s financial
report against the requirements of the applicable
Australian Accounting Standards, having regard
to the Group’s public announcements, give back
mechanisms and policyholder eligibility.
• Reconciled the amount and nature of customer
give back public announcements made by the
Group during the year with amounts recognised
and disclosed in the Group’s financial report.
Annual Report 2022 125
Independent auditor’s report
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to the
impact of the Group’s public announcements on:
● key recognition criteria under applicable
Australian Accounting Standards with reference to
the nature of commitments made by the Group
and eligibility of policyholders
● the classification and disclosure of customer give
backs with reference to specific characteristics of
the give back mechanisms.
Estimation of the outstanding claims liability
(Refer to Note 3: $406.8m)
The liability for outstanding claims relates to claims
incurred during the financial year or prior periods but
either not assessed or received by the Group at year
end.
The liability for outstanding claims is estimated by the
Group as a central estimate but, as is the case with any
accounting estimate, there is a risk that the ultimate
claims paid will differ from the initial estimates. There
is also additional uncertainty relating to the continued
impact of the COVID-19 pandemic on claims patterns.
A risk margin is applied by the Group to reflect the
uncertainty in the estimate. The central estimate and
risk margin combined, which are estimated based on
judgements and actuarial expertise, are intended to
achieve an actuarially defined probability of adequacy
(PoA) of 95% (2021: 95%).
The estimation of the outstanding claims liability
involves complex and subjective judgements about
future events, both internal and external to the
business. Primarily, judgement is required by the
Group in order to estimate the:
●
●
●
●
type and amount of claims incurred during the
last two months of financial year but not
received or processed by year end
speed of processing claims by providers issuing
claims on behalf of policyholders
claims cost inflation and medical trends
impacting utilisation of benefits by members
impact of the COVID-19 pandemic on claims
patterns.
• Performed analytics over the proportion of
COVID-19 customer give backs recognised as an
unearned premium liability (Note 5) versus a
customer give back provision (Note 13(c)) by
comparing to the give back mechanisms publicly
announced by the Group during the year.
We performed the following audit procedures,
amongst others:
Controls design and operating effectiveness
• We evaluated the design of the Group’s relevant
key controls over the claims reserving process
(including data reconciliation, data inputs, data
quality, and the Group’s review of the estimate)
and assessed, on a sample basis, whether these
controls were operating effectively throughout the
year
Use of actuarial expertise
Together with PwC actuarial experts, we:
• Assessed, on a sample basis, significant data
inputs used in the Group’s modelling and
measurement of the central estimate (including
relevance and reliability of data, appropriateness
of data in the context of the applicable financial
reporting framework, and potential indicators of
management bias).
• Considered whether the Group’s actuarial
methodologies were consistent with actuarial
practices and those used in the PHI industry.
• On a sample basis, performed recalculations over
the mathematical accuracy of the Group’s
actuarial models.
• Considered the impact on the estimate of
reasonably plausible alternative assumptions such
as changes in service levels, payment history,
recent claims trends and COVID-19
environmental factors.
126 Medibank
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter because of the
significant judgement required by the Group in
estimating claims liabilities, including continued
uncertainty on member claiming patterns due to
impact of the COVID-19 pandemic, and because a
small change in assumptions can result in a material
change in the estimated liability and corresponding
charge to profit for the year.
Impairment test of goodwill allocated to the
Home Care group of Cash Generating Units
(CGUs)
(Refer to Note 12: $97.2m)
The Group recognised goodwill of $97.2 million in
respect of a number of in-home care businesses. This
goodwill has been allocated to a group of Cash
Generating Units (CGUs) referred to as the Home
Care CGU (Home Care).
An impairment test of Home Care is performed
annually by the Group by comparing the carrying
value of Home Care to the recoverable amount.
We considered this to be a key audit matter due to
the:
• Assessed the significant actuarial assumptions
used by the Group in forecasting expected claims,
particularly those relating to the two months prior
to the year end. This included comparing the
significant actuarial assumptions to the Group’s
historical experience, observable market trends,
environmental factors, estimated payment
patterns, member claiming patterns, and our
industry knowledge.
• Assessed the Group’s approach to setting the risk
margin in accordance with the requirements of
Australian Accounting Standards, including an
assessment of the reasonableness of the Group’s
actuarial calculation of the PoA.
• Assessed the reasonableness of disclosure of the
outstanding claims liability in the financial report
against the requirements of the applicable
Australian Accounting Standards.
Claims received after the year end
• We considered whether actual claims activity after
year end supported the key assumptions used by
the Group to estimate the outstanding claims
liability at year end.
We performed the following procedures, amongst
others:
• Developed an understanding of the process by
which the projected future cash flows of Home
Care were developed, including consideration of
expected operational, productivity and financial
synergies and realisation of planned strategic
objectives.
• Considered the level of business performance
monitoring by the Group and assessed whether
the monitoring was performed at the Home Care
level.
• Compared the cash flows included in the
impairment assessment with the three-year
business plan presented to and approved by the
Board.
Annual Report 2022 127
Independent auditor’s report
Key audit matter
How our audit addressed the key audit matter
•
•
•
financial significance of the goodwill allocated to
Home Care which accounts for 48% of the
goodwill balance recognised by the Group
fact that the recoverable amount of Home Care is
determined using a value-in-use model that
requires significant judgement by the Group to
estimate future cash flows based on a number of
key assumptions, including revenue forecasts and
expected synergies
judgements and assumptions applied by the
Group in performing the impairment test,
including cash flows forecasts related to the
realisation of planned strategic objectives for
Home Care over the next three years, discount
rates and growth rates.
• Considered whether the cash flow forecasts were
reasonable and were based on supportable
assumptions by comparing the forecasts to actual
cash flows from previous years.
• Considered the impact on the impairment test of
reasonably plausible alternative assumptions,
such as achieving cash flow forecasts and changes
in the discount rate.
• On a sample basis, tested the mathematical
accuracy of the value-in-use model.
• Assessed the reasonableness of disclosure of the
impairment test for Home Care goodwill in the
Group financial report against the requirements
of the applicable Australian Accounting
Standards.
Together with PwC valuation experts, we:
• Developed an understanding of the Group’s
impairment test methodology and key
assumptions.
• Evaluated the valuation methodology supporting
the Group’s impairment analysis against
applicable Australian Accounting Standards.
• Compared the growth rate assumed in the cash
flow projections extrapolated beyond three years
to market data and industry research.
• Evaluated the Group’s discount rate assumptions
against market data, comparable data and
industry research.
Reliance on automated processes and controls
The Group utilises a number of complex and
interdependent Information Technology (IT) systems
to capture, process and report a high volume of
transactions.
We developed an understanding of the Group’s IT
governance framework, as well as performing testing
over the information technology internal controls
designed to mitigate the risk of material errors in the
Group’s financial report:
We considered this a key audit matter because the:
• operations and financial reporting processes of
the Group are heavily reliant on IT systems
• underlying IT controls over business processes are
significant to the financial reporting process
•
•
•
•
•
program development and changes
access to programs and data
computer operations
business process
key automated controls and reports.
128 Medibank
Key audit matter
How our audit addressed the key audit matter
• data migration activities which occurred during
the year impacted the key IT processes, systems
and controls relevant to the financial reporting
process.
Together with PwC IT specialists, we have evaluated
the design and assessed, on a sample basis, the
operating effectiveness of key IT controls relevant to
the Group’s financial reporting processes.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2022, but does not include the
financial report and our auditor’s report thereon. Prior to the date of this auditor's report, the other
information we obtained included the Operating and Financial Review and the Directors' Report. We
expect the remaining other information to be made available to us after the date of this auditor's
report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Annual Report 2022 129
Independent auditor’s report
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 51 to 72 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Medibank Private Limited for the year ended 30 June 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
CJ Heath
Partner
Melbourne
18 August 2022
130 Medibank
Shareholder information
The shareholder information below is current as at 18 August 2022.
Distribution of equity securities
Size of shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 & over
Total
Number of
shareholders
43,965
137,328
14,629
7,169
200
Number of
shares
39,105,916
385,303,765
101,238,523
151,637,443
2,076,717,593
203,291
2,754,003,240
Unmarketable parcels
There were 886 holdings of less than a marketable parcel ($500) of shares (141 shares based on a market price
of $3.55 per share) and such holders held a total of 24,109 shares.
20 largest shareholdings
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
3
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5 BNP PARIBAS NOMS PTY LTD
Number of
shares
904,623,020
494,010,434
294,226,334
116,099,097
93,624,000
6 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
25,673,694
7 BNP PARIBAS NOMINEES PTY LTD
8
CITICORP NOMINEES PTY LIMITED
9 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
10 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
11 AUSTRALIAN EXECUTOR TRUSTEES LIMITED
12 NAVIGATOR AUSTRALIA LTD
13 NETWEALTH INVESTMENTS LIMITED
14 BOND STREET CUSTODIANS LIMITED
15 NETWEALTH INVESTMENTS LIMITED
16 BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
17 SOLIUM NOMINEES (AUSTRALIA) PTY LTD
18 AUSTRALIAN EXECUTOR TRUSTEES LIMITED
19 NAVIGATOR AUSTRALIA LTD
20 NULIS NOMINEES (AUSTRALIA) LIMITED
25,647,778
20,692,879
9,947,321
6,588,819
5,913,816
4,651,553
4,427,034
3,287,129
3,085,762
2,511,692
1,782,571
1,773,399
1,696,936
1,660,511
% of
issued capital
32.85
17.94
10.68
4.22
3.40
0.93
0.93
0.75
0.36
0.24
0.21
0.17
0.16
0.12
0.11
0.09
0.06
0.06
0.06
0.06
Total
2,021,923,779
73.42
Annual Report 2022 131
Shareholder information
Substantial shareholders
As at 18 August 2022 the following holders had provided a substantial shareholding notice:
Number of shares % of issued capital
224,049,642
141,100,861
137,868,557
8.13%
5.12%
5.006%
Name of holder
BlackRock Group
State Street Corporation
The Vanguard Group
Voting rights
At a general meeting of the Company, every shareholder
present (including virtually present) or by proxy, attorney
or representative has one vote on a show of hands and,
on a poll, one vote for each share held.
On-market purchases of shares
During the financial year ended 30 June 2022, 825,420
Medibank ordinary shares were purchased on market
at an average price of $3.53 for the purposes of
Medibank’s employee incentive schemes.
On-market share buy-back
There is no current on-market share buy-back.
132 Medibank
Financial calendar
Key dates
Full year results announcement
18 August 2022
Ex-dividend share trading commences
7 September 2022
Record date for final dividend
8 September 2022
Payment date for final dividend
29 September 2022
Annual general meeting
16 November 2022
Half year results announcement
February 2023
Payment date for interim dividend
March 2023
The above dates and payments are subject to confirmation.
Any change will be notified to the Australian Securities Exchange (ASX).
Corporate directory
Company
Share registry
Medibank Private Limited
Registered Office
Level 6, 720 Bourke Street
Docklands VIC 3008
GPO Box 9999
Melbourne VIC 3001
Telephone:
132 331 (within Australia)
+61 3 8622 5780 (outside Australia)
medibank.com.au
Computershare Investor Services
Pty Limited
GPO Box 2975
Melbourne VIC 3001
Telephone:
1800 998 778 (within Australia)
+61 3 9415 4011 (outside Australia)
computershare.com.au
Annual Report 2022 133
Medibank Private Limited
ABN 47 080 890 259