Annual
Report 2023
Contents
Medibank Group – our story
2023 highlights
Chair’s message
CEO’s message
Delivering value to stakeholders through our strategy
Deliver leading experiences
Differentiate our insurance business
Expand in health
A sustainable future
Operating and financial review
Directors
Executive leadership team
Corporate governance statement
Risk management
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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Sustainability
Report 2023
Annual
Report 2023
Full year results
2023
This report is part of our suite of reporting for the 2023 financial
year. You can find more information about our performance in our
Full Year Results Investor Presentation and Sustainability Report
References to a year are to the financial years ending 30 June in that year. References to COVID are for COVID-19. Reference to Net Zero
or our Net Zero pathway are based on the 2022 business-as-usual operations of Medibank Private Limited (ACN 080 890 259) and its
ultimately wholly owned subsidiaries and are exclusive of our investment portfolio.
Medibank Group – our story
We’re a health company working to deliver the best health and wellbeing
experience for Australia. From our beginnings as a health insurer, we’ve
grown to become more to millions of people across the country.
We’re giving people more control of their own health by working to provide greater choice, better access and
more value. We’re investing more in preventative health and new ways of delivering care, working with other
health innovators, hospitals and governments and we’re building more products and services personalised to
people’s needs. In doing so, we’re changing healthcare for people across Australia – both now and in the future.
Purpose
Vision
Better Health
for Better Lives
The best health and
wellbeing for Australia
Our strategy
Growing as a health company
Customer
obsessed
Show
heart
Brilliance
together
Break
boundaries
Health insurance
Health services
Diversified insurance
Travel
Pet
Life
Car and
home
Health and wellbeing including Live Better program
Preventative health programs
Clinical homecare and virtual care
Investments in primary care, virtual care
and health system navigation support
Investments in no gap programs
Values
Our brands
Sustainability
focus areas
Customer
health
Employee
health
Community
health
Environmental
health
Governance
Annual Report 2023 1
2023 highlights
Delivering results
Customer
Healthcare
People and
community
Financial
4m+
total health
insurance
customers
697k (+34%)
Live Better
Rewards
participants
7.7⁄10
employee
engagement
c. $1.15b
total COVID
financial support
16,493 (+64%)
preventative health
program participants
c. $3m
community
investment
$511.1m
(+29.8%)
Group net profit
after tax
14.6 cps
total ordinary dividend
fully franked
Medibank
40.1 (-5.2)
ahm
42.7 (+0.3)
customer advocacy
(average Service NPS)
+10.9k (+0.6%)
net resident
policyholder growth
+78.4k (+39.9%)
net non-resident
policy unit growth
$6b
total claims paid
2 Medibank
1.6m+
virtual health
interactions
5,129
patients used
My Home Hospital
$15.5m
initial investment in
iMH mental health
joint venture
Place to work
+23
Products and service
+24
employee advocacy
$650.4m (+9.8%)
Health Insurance
operating profit
$138.6m
net investment income
3,640
employees
including around
950
27.08%
market share
c. $7m
health professionals
productivity savings
All data is presented on a statutory basis as at 30 June 2023. Some figures are subject to rounding.
" We are evolving as the
needs of our customers
evolve. We’re helping
our customers both be
better and get better"
David Koczkar, CEO
Annual Report 2023 3
Chair’s message
Committed to
being responsible
and sustainable
Mike Wilkins AO
We have focused on doing what
is right for our customers, our
shareholders, our people and
our community following the
cybercrime event.
The 2023 financial year was a difficult
one for Medibank, characterised by the
cybercrime event which we identified
in October of 2022 and an increasing
difficult economic environment.
Notwithstanding these challenges, the
Company has continued to demonstrate
its resilience and customer focus and
delivered a solid financial result for
the year.
At our 2022 Annual General Meeting, I
said that Medibank would be measured
on how we responded to the cybercrime
and how we supported our customers.
We have continued to focus on our
customers and their needs, and while
there is more work ahead for us, I am
pleased to report that this focus has led
to Medibank now having more than
4 million health insurance customers,
for the first time in our 47-year history.
The cybercrime was a significant event
that has impacted both our customers
and our people. It has been a critical
focus for the Board throughout the
year, particularly as we have overseen
Medibank’s response to the event
and support for those impacted, as
well as the ongoing work to continue
strengthening our IT security
environment.
We recognise the pressure on
household budgets in the current
economic environment, and we are
responding to this by providing greater
value for our customers through the
products and services we offer.
Recognising the expectations of our
customers, our shareholders and our
community for there to be meaningful
consequences as a result of the
cybercrime event, the Board determined
the executive leadership team would
receive zero short-term incentives
for the FY23 year. You can find more
detail on the decisions made in the
remuneration section of this report.
Throughout the 2023 financial year
we have continued working to support
the health and wellbeing of our
customers and of our community.
Australia continues to grapple with
the issue of productivity and the
impact that this has on our economic
settings. The health sector is certainly
not immune to these pressures, and
the role of companies like Medibank
is to continue to drive innovation that
will deliver better outcomes for our
customers, while improving the
overall efficiency of our system.
Our investments in new patient-centric
models of care and focus on prevention
are not only benefiting our customers
and patients, but also helping to
address well-known challenges
within our health system. Through our
collaborative work with governments,
hospitals and health professionals, we
are improving health equity and helping
to create a more sustainable health
system for all people in Australia.
This focus has helped to deliver a
solid result this year, with a 9.8%
increase in Health Insurance operating
profit and 4.2% increase in Medibank
Health segment profit from continuing
business, positioning us for growth.
At a Group level, Net Profit After
Tax was up 29.8% to $511.1 million,
including net investment income of
almost $139 million.
In June, APRA announced an additional
capital adequacy requirement of
$250 million on Medibank from
4 Medibank
Committed to
being responsible
and sustainable
1 July 2023 following a review of the
cybercrime event. This requirement will
apply until Medibank has met agreed
key remediation milestones, which we
will work to address through our IT
security uplift program. The Company
remains well capitalised, and in line
with this we declared a fully franked
final ordinary dividend of 8.3 cents per
share, bringing our full year dividend
to 14.6 cents per share fully franked
– an increase of 9%.
Sustainability remains integral to our
purpose of Better Health for Better
Lives, and we continue to build upon
our environmental, social and
governance initiatives to make a
positive impact on our community.
As part of our journey towards Net
Zero by 2040, this year we developed
a strategy for transitioning to 100%
renewable electricity. We also began
engaging with investment fund
managers to better understand their
emissions reduction commitments
as we consider a Net Zero pathway
for our investment portfolio.
We continued to champion diversity
and inclusion and met a range of
targets set around gender diversity and
the representation and engagement
of employees with disability.
We were also pleased to see
engagement increase among our
Aboriginal and Torres Strait Islander
employees and we remain focused
on increasing their representation
in our business.
To help create healthier communities,
we continue to partner with parkrun
Australia and build on our 10-year
plan to address loneliness in Australia.
As well, the Medibank Better Health
Foundation marked a decade of
supporting health research, investing
around $1 million this year in 22 projects
in areas of high health need in Australia.
2023 has been a challenging year for our
company, and I would like to recognise
the work of my Board colleagues, as
well as the leadership shown by David
and the executive team. The strength of
Medibank has always been its people
and throughout the past 12 months,
they have displayed an unwavering focus
on our customers and supported each
other, for which I thank them.
To our customers and our shareholders,
we thank you for being with us. We will
continue working to deliver the best
health and wellbeing for you and for
everyone in Australia.
Sustainability
Report 2023
" We are committed to making
a positive impact in the
communities we are part of
and our sustainability report
highlights our work to help
build a more sustainable
future for all"
Annual Report 2023 5
CEO's message
Supporting our
customers and
community
David Koczkar
We have worked really hard to
regain the trust of our customers
and while there is more to do, we
are growing again.
To our shareholders, thank you for your
ongoing support. It’s been a challenging
year, but by focusing on our customers
and managing our business well,
momentum has returned following the
cybercrime event.
Despite cost-of-living pressures, people
continue to invest in their health and
wellbeing, particularly younger people
– across the industry we’ve seen the
highest growth of people under 30
taking out hospital cover in a decade. We
grew resident policyholders by almost
11,000, driven by families, younger
people and those taking out cover for the
first time. We also recorded the highest
growth in our non-resident business in
seven years and have delivered a strong
result for our shareholders
Delivering for customers has been and
remains our focus. Value starts with
premiums, and our average resident
premium increase in June 2023 was
our lowest in 22 years and well below
headline inflation. During the year we
provided an additional $469 million in
COVID support to our customers, with
our total support now at more than
$1 billion.
We have also focused on providing
value for money to our customers
when they use their cover. Our
Members’ Choice Advantage network
saved customers more than $25 million
in out-of-pocket costs while customers
having a knee or hip replacement
saved an average of $1,600 through
our growing no gap network.
We continued to evolve our relationship
with customers across both our brands,
with more people turning to us for
additional services and products we
offer as a health company, not just
an insurer. In fact, around 30% of our
Medibank customers engaged with
one of our health offerings this year.
Our Live Better program now has
almost 700,000 members and
enrolments in our preventative health
programs grew 64% this year. Our
Amplar Health team continues to work
alongside governments and others
to deliver health services across
Australia. This team is supporting
more customers alongside its work in
the community, providing more than
1.6 million virtual health interactions
during the year.
With demand for healthcare continuing
to increase, the way the industry
supports the health of our population
needs to change if we are to sustain
patient outcomes, support access and
improve affordability – and ultimately
drive productivity across our health
system. Given the current challenges
across the sector, we simply can’t move
fast enough. Our focus on prevention and
innovating in health is helping drive this
change, enabled by the strength of our
relationships with health professionals,
hospitals and other partners.
This is why we’re investing in a new
mental health model in the private
system that extends care beyond the
hospital walls. It’s behind the virtual
hospital we deliver through a joint
venture with Calvary which is currently
delivering the My Home Hospital service
for the South Australian government – a
service that saved more than 19,000 bed
days in the public system this year. It’s
driving the growth of our preventative
health programs and our work in the
community to improve health and
wellbeing. It’s also why the majority of
our hospital agreements incorporate
new ways to support patients.
Nearly 12 months on from the
cybercrime event, we have continued
6 Medibank
“ Our eyes are firmly
focused on continuing
to play a greater role in
supporting the health
needs of our customers”
to support people impacted by the
event, with mental health and wellbeing,
identity protection and financial hardship
among the support measures available.
We have made good progress on our IT
security uplift program which continues to
enhance IT security across our business
and mature our cybersecurity approach.
We also established a new cross-
divisional customer trust team in July
2023 to continue evolving our approach to
safeguarding the data of our customers.
While it has been a very challenging
year we have listened and learnt, and we
continue to strengthen our organisation.
We are a resilient business and remain
well positioned for the future where we
will continue to play a greater role in
supporting the needs of our customers,
driving our growth as a health company
and improving the way healthcare is
delivered in Australia.
To help us on this path, we are reinventing
the way we work by challenging long-
held workplace traditions to empower
our people to achieve our 2030 vision
to deliver the best health and wellbeing
for Australia. Changes to the executive
leadership team announced in July 2023
will also help us achieve this.
As we look forward, there is much to do,
but I cannot think of a better group of
people to deliver on our potential than the
team across Medibank. They’ve navigated
through a year that’s offered up both
challenges and opportunities in equal
measure – and they have delivered on
both counts. I want to thank them for
their commitment to our customers and
to each other, and also thank Mike and
the Board for their ongoing support as
we continue play a bigger role in the
future of health in Australia.
FY24 outlook
Customer
relief
Resident
policyholder
growth
We continue to assess
claims activity. Any
permanent net claims
savings due to COVID
will be given back to
customers through
additional support in
the future.
We anticipate further
moderation in resident
industry growth in FY24
relative to FY23.
Aiming to achieve
1.5%-2.0% resident
policyholder growth
in FY24.
Resident
claims
Underlying claims per
policy unit growth of 2.6%
for FY24 among resident
policyholders.
PHI
management
expenses
Targeting $20m of
productivity savings
across FY24 and FY25.
Cybercrime
costs
Growth
Expect costs of between
$30m-$35m in FY24 for
further IT security uplift
and legal and other costs
related to regulatory
investigations and litigation.
– Excludes the impacts of
any potential findings or
outcomes from regulatory
investigations or litigation.
Targeted organic and
inorganic growth for
Medibank Health and
Health Insurance remain
areas of focus.
Annual Report 2023 7
Delivering value to stakeholders through our strategy
Our stakeholders
Customers
Employees
Community
Shareholders
The material issues they care most about
Affordable,
innovative and
personalised
healthcare
Engaged, purpose-
led culture, attract
and retain talent
Diverse and
inclusive workforce
Support healthy
communities
Ethical and
sustainable
business
Environmental health and climate change
The megatrends in health
Health providers
and patients
Work together
to build a
stronger and
more sustainable
health system
Consumerisation
of health
The shift to
prevention
The rise of new
care settings
Outcome-based
care
Our strategy – growing as a health company
Deliver leading
experiences
Differentiate our
insurance business
Expand
in health
Create personalised and
connected customer experiences
Deliver more value, choice
and control for customers
Empower our people
Collaborate with our communities
to make a difference
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
How we’re delivering 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
challenges 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 healthcare
innovation to make the
health system more
equitable, affordable and
accessible, investing in
prevention and primary
care and working with
doctors, hospitals and
governments
8 Medibank
Delivering value to stakeholders through our strategy
Growing as a
health company
" By investing in new care models
and preventative health, we’re
changing healthcare in Australia
and creating a more sustainable
system for everyone"
Mike Wilkins, Chair
Annual Report 2023 9
Deliver leading
experiences
Our goals
> Create personalised and connected customer experiences
> Empower our people
> Collaborate with our communities to make a difference
FY23-FY25
milestone
achievements
page 28
85%
of Medibank customers engaged
through digital channels
10 Medibank
We made it simpler for customers to manage their health
and wellbeing and make healthy choices. We’re reinventing
our workplace to empower our people and partnering with
others to create healthier communities.
Supporting our customers
through the cybercrime
This year, our customers were the
victims of a cybercrime and our focus
on supporting them was and continues
to be our priority. To help everyone
impacted, we launched our Cyber
Response Support Program including
mental health and wellbeing support,
identity protection and financial hardship
measures. We extended our contact
centre hours, increased our customer
support team by more than 300 people
and redeployed our people to phone
and messaging channels to support our
customers. We continue to strengthen
our security environment – we launched
additional measures including two-
factor authentication for customers
contacting our contact centre and we
continue to enhance our IT security
processes and security systems so
our customers can have confidence
in the protection of their data.
You can find more information about
our response to the cybercrime
Sustainability Report – page 72
Improving our customer
experience
As we’ve continued to build a more
seamless digital experience that
makes it simpler and easier for our
customers, more people are choosing
to use these channels. We enhanced
the My Medibank app – integrating our
health support programs, adding more
Live Better features and analysing
customer calls to help us identify the
most common information requested
so we can look to build new features
and content in the app. Almost half
of our Medibank service enquiries
were managed through self-service
channels, while our messaging channel
team resolved more than a third of all
assisted support queries.
We initiated a pilot program to equip
our frontline leaders with enhanced
abilities to support and guide their
teams effectively, introduced new tools
to simplify processes and help our
people in assisting customers, and
revitalised our onboarding training for
new employees, including bolstering
the specialised assistance they receive
during their initial months.
Our ahm team were also focused on
making it easier for customers to self-
serve, including redesigning the support
section of the website and introducing a
simple online hospital cost indicator tool
to help customers understand what their
cover includes and any associated costs.
Now around 65% of all ahm queries are
resolved using self-service channels.
To better support our customers and
communities in regional and rural
areas, we brought our services to them,
visiting 140 towns with our Medibank
vans and kiosks this year. Our travelling
teams have helped thousands of people
with their health and wellbeing needs,
assisting them with our products
and services, while the new health
machines we installed in each of our
3 mobile store vans provided free health
checks to around 1,400 people.
We’ve strengthened our ties to local
communities so we can better support
our customers’ health and wellbeing. In
Geelong and throughout South Australia
we’re trialling a new localised approach,
in which customers from the region
are being supported by team members
who live locally, regardless of whether
they visit a store, call us or connect via
our digital channels. The teams are
also deepening relationships with local
health providers and corporate partners
to make it easier for customers to find
the right health support locally. These
teams also have greater autonomy
to implement their own ideas to help
improve the health of their community.
Personalised
and connected
experiences
Medibank
ahm
40.140.1 (-5.2) 42.742.7 (+0.3)
customer advocacy
(average Service NPS)
22%
growth in active users
of My Medibank app
82%
of ahm customers
logged in via app
3,372
people helped by
our Medibank vans
Annual Report 2023 11
Deliver leading experiences
44%
of Board roles held
by women
48%
of senior leadership
roles held by women
Top 3 worldwide
and 2nd
in Australia
Equileap Global Gender
Equality Index
83%
employees have work/life
flexibility
In Brisbane and the Gold Coast,
our Amplar team of allied health
professionals are trialling a similar
localised approach to supporting
patients in the area. This has enabled
them to more effectively pair patients
and practitioners together for a course
of treatment and reduce the time
team members are travelling between
appointments.
Building a workplace reinvented
for our future
The strength of our culture and the
importance of our values were never
more important than throughout the
cybercrime event. They underpinned
our decision-making, drove our
customer-first mindset and were visible
in the care our employees showed for
each other. Despite a challenging year,
our people continued to feel strongly
engaged, inspired by our vision and our
focus on health and wellbeing.
We know that to achieve our vision
and create better experiences for
our customers and community, we
need to transform the way we work.
Our work. reinvented program aims
to foster greater collaboration and
experimentation and earlier this year
more than 2,200 of our people took part
in workshops to reimagine what their
work could look like both now and in the
future. In addition to the many changes
individual teams have made to their
daily processes, we’ve now launched
4 big experiments across the business
focused on empowering self-managing
teams, removing red tape, redesigning
performance management and career
development and challenging the
traditional work week that builds on our
market-leading approach to flexibility.
We continued building a more inclusive
and diverse workplace and community.
Our work to help address gender equality
saw us recognised as top 3 worldwide
and 2nd in Australia in Equileap’s Global
Gender Equality Index. We exceeded
our targeted procurement spend with
Aboriginal and Torres Strait Islander
businesses and implemented new
recruitment processes to help increase
the representation of Aboriginal and
Torres Strait Islander employees.
We also consulted widely with our
people, including Aboriginal and Torres
Strait Islander employees, to build
understanding and awareness around
the Uluru Statement from the Heart.
This consultation informs the way we are
demonstrating support for a First Nations
Voice to Parliament and prioritising the
cultural safety of employees.
Find out more about our approach
to Reconciliation
Sustainability Report – page 50
We partnered with lived experience
employees and stakeholders to design
new learning modules about inclusion,
disability awareness and reconciliation for
our annual mandatory training program
and were recognised by the Australian
Network on Disability as a Top Performer
in the 2022-23 Access and Inclusion Index
for our work in social value procurement
and products and services.
7.7/10
employee
engagement
12 Medibank
$940k
invested in
22 active health
research projects
c. $1.4m
procurement spend with
Aboriginal and Torres Strait
Islander businesses
c. $3m
community investment
Building healthier communities
We’re working to make our
communities healthier so that everyone
can enjoy their best life.
Across Australia, loneliness continues
to be felt by more than half of our
community, with far-reaching impacts
to peoples’ health, relationships,
work and study. We worked to raise
awareness of loneliness and ways to
better manage it by developing a new
season of our We Are Lonely podcast,
continuing our work with Ending
Loneliness Together and establishing
new partnerships with ReachOut and
the University of Technology Sydney.
In support of our ongoing partnership
with parkrun Australia we launched
a road trip to 12 locations across the
country and helped parkrun Australia
reach its goal of 900,000 participants
two years ahead of schedule. Together
we’re now working towards 1 million
people experiencing the joy of crossing
a parkrun finish line by the end of next
financial year.
The Medibank Better Health Foundation
celebrated 10 years of supporting
research that benefits the health of
our customers and all Australians.
This year the foundation supported
22 projects and partnered with the
Royal Australian College of General
Practitioners (RACGP) to launch a
$250,000 grant to fund research into
digital health in primary care.
We’ve committed to achieving Net
Zero by 2040 and have been working
towards our first milestone of
achieving Net Zero against our Scope
1 and 2 emissions by 2025, including
developing our strategy for the move
to 100% renewable electricity. We’ve
looked to reduce our environmental
impact by trialling new options for
employees finishing with the business
to reuse and recycle their IT hardware
in their local community and donating
excess furniture to new businesses.
Find out more about our approach
to diversity and inclusion and Net Zero
Sustainability Report
300k+
people took
part in parkrun
in FY23, inc.
100k
first timers
Annual Report 2023 13
Differentiate our
insurance business
Our goals
> Deliver more value, choice and control for customers
> Offer products and services to meet all customer needs
> Leverage our dual brands and provider networks
FY23-FY25
milestone
achievements
page 28
4m+
health insurance customers
as at 30 June 2023
14 Medibank
We worked to deliver even
greater value and choice
through our Medibank and
ahm brands by enhancing
our products and services
and expanding our provider
and partner networks.
More value, more ways
People continued to prioritise their
health and wellbeing despite financial
pressures increasing for many and
we have responded to the affordability
challenge by doing more for our
customers. The health insurance
industry has now seen 12 consecutive
quarters of growth and our Medibank
and ahm brands together represent
more than 27% of people with private
health insurance.
We returned a further $469 million
to customers this year as part of our
COVID support package and give back
program. At the beginning of the
pandemic we committed to not profit
from COVID and we’ve kept our promise
and our financial support for customers
now totals around $1.15 billion.
We checked in with almost 600,000
customers to talk about their health
cover and if it was the right one for
their needs. We also launched our new
Medibank Silver hospital cover range
designed for people aged between 40
and 60 offering new benefits including
reduced out-of-pocket fees for private
emergency department visits, access
to preventative health programs for
eligible customers and no excess
when using the no gap program.
Around 2,500 customers have saved
thousands of dollars through our
no gap program which expanded
to 34 hospitals across the country
including regional areas such as the
Sunshine Coast and Albury-Wodonga.
Our no gap joint replacement program
can now be accessed by more than
66% of Medibank customers, locally
available at 19 hospitals. We also
launched a new mental health model
through a joint venture with Aurora
Healthcare at Deakin Private Hospital,
incorporating out-of-hospital services
at no additional cost for patients with
eligible health insurance apart from
any excess or co-payment that would
normally apply, with another two
hospitals to follow.
Find out more about our no gap
and short stay programs
Sustainability Report – page 18 and 19
Since we adopted government reforms
to extend the age that young adults
could stay on their parents’ policy from
24 to 30 years old, we saw around
24,200 people remain covered across
Medibank and ahm.
We saw strong growth in the number of
customers taking our travel insurance
this year, while many others took
advantage of the additional benefits
and savings we offered on life, pet, car
and home insurance. We introduced
a complimentary 24/7 online vet
consultation service and gap-only
payments at a wide network of vet
practices as part of our pet insurance
and launched a new suite of life
insurance products.
Better products
and services
34
hospitals in our
no gap network
$1,600
(average saving) no gap
joint replacement program
586,288
customer cover check ins
$469m
in FY23 COVID
financial support
c. $1.15b total
Annual Report 2023 15
Differentiate our insurance business
We continued to build upon our
extensive network of health providers
and partners to broaden the services
and support we offer to our customers.
Through our Members’ Choice
Advantage network we provided our
customers with greater value, more
cost transparency and the widest range
of services of any health insurer and
this year, saved customers more than
$25 million in out-of-pocket costs.
We rewarded more people for making
healthy choices – expanding our Live
Better program to overseas workers
and visitors, launching card linking
to make it easy to shop and earn Live
Better points with existing partners
such as Apple, adidas and Brooks,
and new partners such as The Iconic
and Lite’n’Easy who we added to our
rewards store this year.
We paid $6 billion in claims and
delivered our lowest average premium
increase in 22 years which we then
deferred by two months. We negotiated
new funding agreements with major
hospital partners, collaborating on
initiatives to deliver greater mutual
value; and we continued to manage
our costs, delivering productivity
savings of around $7 million this year.
Our focus on value was again
recognised this year by Canstar which
awarded ahm outstanding value for
overseas student health cover and
Medibank for working visa health
cover, while the value and quality of
both brands’ travel insurance was
recognised by Finder and Mozo.
Supporting our international
customers and corporate teams
As travel restrictions ended and people
began returning to Australia, we had
our highest number of student, visitor
and working visa customer joins
in 7 years. Helping drive this is the
extensive health and wellbeing support
integrated into our health insurance
offerings, such as the online GP service
and student rewards program we’ve
created as part of our Overseas Student
Health Cover (OSHC). We continued
to retain and grow our partnerships
with universities around the country
and contribute to the academic and
professional student experience by
providing mentor programs and student
internships as well as collaborating on
health research.
$25.1m
out-of-pocket savings
through Members’
Choice Advantage
$6b
total claims paid
Services supported
1.1m+
hospital admissions
27.4m+
extras services
500k+
surgical procedures
16 Medibank
An increasing number of our corporate
partners looked to us to deliver health
and wellbeing programs for their
employees. We helped organisations
design and deliver programs to
bring employees back into the office
to collaborate, engage and focus
on their physical health, to create
psychologically safe work environments
and to offer virtual health support.
A healthcare system better for all
We’re advocating for reforms that can
help ensure healthcare is delivered in
the most effective and efficient manner
possible.
As people in Australia continue to
pay some of the highest prices in
the world for medical devices, we
maintained our focus on the urgent
need to reduce these costs. With the
first stage of prostheses reform taking
place in July 2022, we’ve started to see
some impact of these changes which
we expect to flow through over the next
3 years, but we believe more needs to
be done to fully realise the opportunity
to deliver around $900 million in annual
savings to all private health insurance
customers, as anticipated by the
Australian Government. We remain
committed to passing on these savings
to our customers.
We were the first major health insurer
to adopt the Federal Government’s
voluntary age dependent reforms,
extending the age that young adults
could stay on their parents’ policy from
24 years old until their 31st birthday.
We believe primary care is the
foundation of our health system and
GPs are essential to the health of
our community. We’re supportive of
the recommendations made in the
Strengthening Medicare Taskforce Report
which addresses ways to improve
primary care and was handed to the
government this year. We’ve been
exploring ways we can enhance our
health services operations in line with
these recommendations and will share
our findings with the government.
We’ve also engaged regularly with key
medical and health associations about
ways to improve the health system,
particularly in regard to primary and
preventative care and chronic disease
management, including working with
the Australian Patients Association to
advocate for health policy to reflect a
patient-centred view of healthcare.
Find our more about our work to
deliver more affordable healthcare
Sustainability Report
Annual Report 2023 17
+78.4k (+39.9%)
non-resident
policy unit growth
36%
growth of corporate partners
using health services
Medical device prices
in Australia are the
highest in the world
Private Healthcare Australia
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
FY23-FY25
milestone
achievements
page 28
10,638
customers used
Medibank at Home
18 Medibank
People deserve healthcare
that is personalised to their
needs and provides a more
connected experience.
Personalising healthcare
for our customers
We’re targeting some of Australia’s
biggest health concerns through our
preventative health programs and
supporting people to make healthy
choices. Our Live Better program has
grown to almost 700,000 members,
many of whom are engaging more
regularly with the program and with
our health campaigns – such as
the 61,000 redemptions of our flu
vaccination voucher.
We introduced complimentary customer
health checks with our registered
nurses, and more than 16,000 people
enrolled in one of our 9 preventative
health programs. These programs are
not only helping our customers to be
healthier, they’re also taking pressure
off our health system, saving the
equivalent of around 55,000 hospital
bed days.
We also developed customised health
programs for one of our corporate
clients to help address the needs
of their employees and the local
community, including piloting a
menopause program that featured
one-on-one health consultations with
a GP and workplace education and
training, as well as establishing an
orthodontic clinic in a remote area
where no service was accessible.
We made it easier for customers to find
the care they need by connecting our
healthcare offerings through the Home
for Health tab in the My Medibank app,
and saw nearly 800,000 unique daily
views of this content since launch in
January. We supported more than
27% of our customers who required
a hospital stay through our Health
Concierge program, which we expanded
this year to include a post-discharge
service offering tailored support from
nurses to make the transition home
from hospital easier.
Making healthcare
personal
697k
Live Better Reward
participants
27%
of Medibank customers
going to hospital were
supported by Health Concierge
769k
unique daily views of
Home for Health content
16,493 (+64%)
customers enrolled in
preventative health programs
“ One of the best things of this program was the ease and
convenience, particularly with the exercise that I could even do
in my caravan. The virtual side of things made it so convenient
because you didn’t have to make appointments and drive through
peak hour traffic to get to the meetings, they came to you.”
Leanne, Medibank customer and Better Knee, Better Me participant
Find out more on our preventative health approach
Sustainability Report – page 14
Annual Report 2023 19
Healthcare the way people want it
We brought healthcare to our
customers and community in more
accessible, convenient ways. Our
homecare teams helped more people
in their homes than ever before,
delivering hospital in the home, rehab,
chemotherapy, infusion and wound
therapy and palliative care through
more than 250,000 home visits saving
around 115,000 hospital bed days.
The number of Medibank customers
accessing our homecare services
increased by 47% this year, with
around 30% of Medibank patients
who underwent a joint replacement
choosing to have rehab at home.
We continued developing our virtual
health capabilities, strengthening our
healthcare navigation and support and
investing in new technology platforms
to enhance our services. Our Amplar
Health team learnt a lot from the first
pilot of our virtual psychology program
we ran in partnership with Myhealth
GP clinics and Medinet and in April
we relaunched the program across
the clinics, providing hundreds of
consultations in the first 3 months
of the new service.
Our Amplar Health virtual health teams
supported more than 1.6 million calls
and online interactions this year. In
addition to the 24/7 general health
and mental health support lines and
online GP services we provide for our
customers, we continued delivering a
number of health services on behalf of
governments including Nurse Triage for
Healthdirect, After Hours GP and 24/7
GP, NSW Quitline and the Head to Health
service in WA. We also completed two
key health programs through which we
supported over half a million people – the
COVID-19 Support Line for NSW Health
and COVID Care at Home for Western
Sydney Local Health District, delivered
by our joint venture with Calvary.
We can deliver health services to
97.51%
of people across Australia
1.6m+
virtual health
interactions
26.1k
virtual health and
online GP consults for
international students
and corporate customers
30%
of Medibank joint
replacement patients
are having rehab at home
250k+
homecare visits
supporting 31k patients
20 Medibank
Expand in health $15.5m
initial investment
in iMH mental health
joint venture
almost 3m
patient consults across
108 Myhealth GP clinics
Building a better health system
We are driving change in Australia’s
health system, innovating with models
of care that bring together the best
benefits of homecare, virtual care
and hospital care and building a more
connected healthcare experience.
This year, the Calvary Medibank Joint
Venture’s virtual hospital was accredited
as one of the first standalone virtual
hospitals to deliver hospital-level care.
Our virtual hospital delivers My Home
Hospital on behalf of SA Health. More
than 5,000 patients were cared for in
their home through this service which
also expanded to support a broader
range of health conditions and service
a greater number of regions across
Adelaide and its surrounding areas.
To boost access to primary care for
people living in northern NSW, we
worked with Healthy North Coast to
create a free 24/7 health support service
to help residents find and access the
right level of care for their needs.
We worked collaboratively with local
primary care providers and pharmacies
to support improved priority access
to appointments and enable direct
connections to healthcare services.
We’ve also been investing in
strengthening our health system,
building new hospitals, surgical centres
and operating theatres and partnering
in new care models that can take the
pressure off stretched hospital systems.
Our iMH joint venture with leading
specialty mental health provider
Aurora Healthcare offers an innovative
integrated mental health model that
will deliver 153 much needed new
mental health beds across 3 new
private hospitals, alongside additional
out-of-hospital support including
homecare and telehealth. 52 beds are
currently operating at Deakin Private
Hospital in Canberra, with two hospitals
to open in FY24 and FY26.
Building is also underway on Adeney
Private Hospital in Melbourne and
the orthopaedic surgical centre at
Macquarie University Hospital in
Sydney, both of which will open in 2024,
while East Sydney Private Hospital,
which we have invested in, opened a
new orthopaedic theatre to deliver short
stay surgery and support the public
system with around 20% of surgeries
undertaken this year helping to reduce
public wait lists.
Our focus on supporting the broader
healthcare system through innovative
new models of care is not only
benefiting our customers but helping
to make healthcare more equitable
for people across Australia.
Find out more about how we're
changing healthcare in Australia
Sustainability Report
5,129
patients used
My Home Hospital
saving 19k+
hospital bed days
Annual Report 2023 21
A sustainable
future
To deliver on our purpose of Better Health for Better Lives, we need to ensure our actions
positively benefit our society, both now and in the future. Our Sustainability Report 2023 details
how we are working to create healthier communities that are more inclusive, strengthening
our health system so it is more accessible and affordable, helping address climate change by
reducing our impact on the environment, and embedding ethical decision making in all we do.
Our sustainability focus areas
Customer
health
Employee
health
Community
health
Environmental
health
Governance
Better support our
customers to improve
their health and
wellbeing through
personalised advice
and by delivering
greater value, access
choice and control
Build an engaged,
inclusive workforce
that is customer
obsessed, values and
purpose driven and
focused on health
and wellbeing
Make a difference
in our community,
building partnerships
and investing in
preventative health
and research to
address some of
Australia’s biggest
health concerns
Entrench
environmental
sustainability into
our decision making
Embed ethical and
responsible business
practices throughout
Medibank and our
supply chain
Material topics
Affordable,
innovative and
personalised
healthcare
FY23 projects
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
• No gap and short
• Work. reinvented
• We Are Lonely podcast
• Net Zero commitment
• Data Protect program
stay networks
• Health, safety and
• Virtual healthcare
wellbeing
and homecare
• Integrated care models
• Gender equality
• Carers support
• Van visits to regional
program
and rural areas
• Cultural awareness
• Live Better and
programs
preventative health
programs
• Partnerships
with providers
• Cyber Response
Support Program
22 Medibank
• Aboriginal and
Torres Strait Islander
employee recruitment
and engagement
• Diversity and
Inclusion support
networks
and partnerships
• Medibank Better Health
Foundation research
• parkrun and Feel
Good programs
• Reconciliation
Action Plan
• Accessibility and
Inclusion Plan
• Healthcare investments
• Myhealth GP network
• Public health system
support
• Environmental
sustainability
embedded into
new Melbourne
office plans
• Olkola carbon
credits partnership
• IT security uplift
program
• Aboriginal and
Torres Strait Islander
procurement
• Modern slavery
and human rights
Operating and financial review
1. About Medibank
Medibank Private Limited (Medibank) is a health company
providing health insurance to more than 4 million people in
Australia as well as health services. Our core business is
Health Insurance, where 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: 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; we offer a range
of diversified insurance products such as travel, life, home
and pet insurance; and we have a number of non-controlling
investments supporting our strategy to provide greater access,
choice and flexibility in healthcare. 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 2023, we had
3,242 full-time equivalent (FTE) employees, including 723
health professionals (excluding employees in associates and
joint ventures).
2. Financial and operating performance
References to “2022”, “2023” and “2024” are to the financial
years ended on 30 June 2022, 30 June 2023 and 30 June
2024 respectively, unless otherwise stated. The “Group”
refers to the consolidated entity, consisting of Medibank
and its subsidiaries.
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)
Other income/(expenses)
Cybercrime costs
Profit before tax
Income tax expense
Group net profit after tax (NPAT)
Effective tax rate
Earnings per share (EPS) (cents)
Normalisation for growth asset returns
Normalisation for defensive asset returns
Underlying NPAT1
Underlying EPS (cents)1
Dividend per share (cents)
Dividend payout ratio1
2023
7,355.3
650.4
44.2
694.6
(47.1)
647.5
138.6
(12.6)
(46.4)
727.1
(216.0)
511.1
29.7%
18.6
(4.7)
(6.8)
499.6
18.1
14.6
80.5%
2022
7,128.5
592.6
45.5
638.1
(44.0)
594.1
(24.8)
(9.3)
-
560.0
(166.1)
393.9
29.7%
14.3
22.7
18.5
435.1
15.8
13.4
84.8%
Change
3.2%
9.8%
(2.9%)
8.9%
7.0%
9.0%
n.m.
35.5%
n.m.
29.8%
30.0%
29.8%
-
29.8%
n.m.
n.m.
14.8%
14.8%
9.0%
(430bps)
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.
During the year, Medibank and our customers were the subject
of a cybercrime event whereby a criminal accessed Medibank
systems using stolen credentials and stole information relating
to around 9.7 million current and former Medibank and ahm
customers, as well as My Home Hospital patients and healthcare
providers. In response, we took immediate steps to contain the
incident and put in place additional security measures across
the network. We engaged specialised security firms and worked
with the Australian Government’s lead cyber agency and the
Australian Federal Police. We closed down the criminal’s attack
path and can confirm no further activity by the criminal since
12 October 2022 has been detected inside our systems.
Medibank established a Cyber Response Support Program
to support its customers from the impact of the cybercrime
which includes mental health and wellbeing support, identity
protection and financial hardship measures. We have incurred
$46.4 million of non-recurring costs associated with the
cybercrime, largely related to our incident response and the
customer support package. We expect $30 million to
$35 million in 2024 for further IT security uplift, legal costs and
other costs related to regulatory investigations and litigation.
This does not include the impacts of any potential findings or
outcomes from regulatory investigations or litigation.
Annual Report 2023 23
Operating and financial review
Following the cybercrime event, litigation and regulatory
investigations have commenced. Refer to Note 13(d) of the
2023 financial statements for further details.
The 2023 financial results reflect the resilience of our Health
Insurance business, strong underlying profit growth in
Medibank Health and continued strong capital generation.
Group operating profit increased 9.0% to $647.5 million driven by
strong growth in Health Insurance operating profit of 9.8%, partly
offset by a decline in Medibank Health segment profit of 2.9%.
In addition to the increase in Group operating profit, there was
also a significant increase in net investment income of
$163.4 million which resulted in a 29.8% increase in NPAT
to $511.1 million. Underlying NPAT, which adjusts for the
normalisation of investment returns, increased 14.8% to
$499.6 million.
The key reasons for the movements in the Health Insurance
and Medibank Health results, as well as net investment
income, are outlined in this report.
Health Insurance
Year ended 30 June ($m)
Premium revenue
Net claims expense (including risk equalisation)
Gross profit
Management expenses
Operating profit
Gross margin
Management expense ratio
Operating margin
Strong Health Insurance performance was driven by
continued policyholder growth and subdued cover
downgrading more than offsetting claims growth in the
resident business, and strong policy unit growth and margin
recovery in the non-resident business.
Health insurance premium revenue grew 4.2% to $7,148.7 million
on a reported basis, and underlying revenue, which adjusts
for the $451.7 million of COVID-19 give back initiatives in 2023
and $369.4 million in 2022, increased 5.1% to $7,600.4 million.
The resident Health Insurance market remains buoyant with
policyholder growth of 1.9% only modestly below 2022. This is
despite the implementation of the Adult Dependant Reform
(ADR), which allows eligible dependants to remain on their
parents’ policy up to and including 30 years of age. This reform
has increased the number of 25 to 30-year-olds insured
overall, however has reduced growth in single policies.
Industry policyholder and hospital lives insured growth
Industry policyholder and hospital lives insured growth
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0%
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23
Policyholder growth (%)
Hospital lives growth (%)
24 Medibank
2023
7,148.7
(5,925.9)
1,222.8
(572.4)
650.4
17.1%
8.0%
9.1%
2022
6,859.8
(5,731.1)
1,128.7
(536.1)
592.6
16.5%
7.8%
8.6%
Change
4.2%
3.4%
8.3%
6.8%
9.8%
60bps
20bps
50bps
Our reported net resident policyholders increased by almost
11,000 or 0.6% with a modest 0.4% decline in the Medibank
brand and 3.4% growth in ahm, with this growth coming
in the seasonally stronger fourth quarter. With business
operations normalising during the third quarter, retention
has progressively improved despite premium increases
in the second half. Acquisition also improved in line with
additional marketing activity and increased ahm aggregator
sales, however our strategic focus continues to be on more
profitable direct channels which accounted for 79% of total
resident sales this year.
Aided by the ADR, growth in hospital lives insured of 0.9%
was 30 basis points above our policyholder growth and
skewed towards younger customers. We expect further
benefits from ADR over the next five years, and given our
strong position in the family market, we anticipate the
percentage of lives insured that are under 30 years of age to
increase. These customers typically have a lower claiming
profile, and we expect this will positively impact our overall
claims mix. In 2024 we will continue to focus on growing
market share through further capitalising on our dual-brand
strategy, increasing our focus on growing in the corporate
market and investing where it is commercially appropriate.
In the non-resident business we saw continued strong
momentum with policy units increasing 39.9% to 274,900.
Strong policy unit growth continued in July and August,
and we expect ongoing growth in 2024.
Total gross claims expense increased 3.4% and with risk
equalisation having minimal impact on claims growth this
period with the return to more normal resident age claiming
patterns, net claims also increased 3.4%.
Underlying resident claims growth per policy unit increased
10 basis points to 2.4%, largely reflecting more lives insured
per policy unit due to ADR. Hospital claims growth decreased
reflecting the benefit of prosthesis savings and an improved
risk equalisation outcome, with cost inflation having a modest
impact this period. Growth in extras claims was due to
investment in additional product benefits and sales mix.
In 2024 we expect hospital claims headwinds to include
inflation in public and private hospital claims and the
maturing impact of ADR. We expect the tailwinds to be lower
rehab claims, the benefit from our claims management
initiatives and lower extras claims growth.
We expect underlying resident claims growth per policy unit
in 2024 of 2.6%. And while we have not yet seen the economic
environment impacting demand for services, we continue to
closely monitor the mix of hospital admissions and spend
in more discretionary extras services for signs of further
customer behaviour changes.
Gross profit increased 8.3% to $1,222.8 million. Permanent
net claims savings due to COVID-19 of $451.4 million were
returned to customers through $451.7 million of give back
initiatives resulting in COVID-19 having a modest $0.3 million
negative impact on profit. Adjusting for this impact, underlying
gross profit increased 8.3% to $1,223.1 million.
Gross margin increased 60 basis points to 17.1% and
underlying gross margin increased 50 basis points to 16.1%.
This was driven by a 20 basis point increase in the underlying
resident gross margin, and non-resident underlying gross
margin increasing from 25.5% to 33.6%, reflecting a
continuation of the favourable tenure and mix impacts we
have seen since borders re-opened.
The COVID-19 deferred claims liability, which is in recognition of
claims that have likely been deferred since the commencement
of COVID-19 restrictions, decreased $194.5 million to
$253.8 million. Under the new accounting standard AASB17
Insurance Contracts which applied from 1 July 2023, this will
be transferred to an after tax equity reserve and will be used to
offset future customer give backs, recovery of deferred hospital
procedures and other temporary claims impacts.
Management expenses increased 6.8% to $572.4 million with
growth in non-resident sales commissions and inflation,
partially offset by savings from our productivity program. As
a result of significant growth in non-resident policy numbers,
sales commissions, which are expensed upfront, increased
$18.8 million to $32.7 million. Operating expenses were up
3.4% with cost inflation of 4% and modest volume impacts
partially offset by approximately $7 million of productivity
savings. While achieving productivity savings this period has
been impacted by the cybercrime, we are targeting a further
$20 million of savings over the next two years.
The major drivers of expense growth in 2024 will be cost
inflation, which we expect to be modestly higher at 4.5%,
an additional $5 million of ongoing investment in IT security
and $3 million increase in statutory charges.
The underlying management expense ratio remains among
the lowest in the private health insurance market despite a
slight increase of 10 basis points to 7.5%. We will continue to
leverage our productivity program and the benefits of scale to
target modest improvement in this ratio while balancing the
need to invest for growth.
Health Insurance underlying management expense ratio
Health Insurance underlying management expense ratio
2023
2022
2021
2020
2019
2018
7.5%
7.4%
7.7%
8.2%
8.7%
8.8%
0
2
4
6
8
10
Health Insurance operating profit of $650.4 million increased
9.8% this year, or 9.7% on an underlying basis, leading to a 50
basis point improvement in operating margin. On an underlying
basis, operating margin improved 40 basis points to 8.6%.
Medibank Health
While the majority of COVID-19 impacts on Medibank Health
have eased, the business was impacted by the transition out of
1800RESPECT and Beyond Blue contracts in 2H22. Operating
profit increased 8.3% and segment profit, which includes
the contribution from our investment in Myhealth and other
healthcare investments, decreased by 2.9% to $44.2 million.
Excluding the impact of these contract transitions, operating
profit increased 17.2% and segment profit increased 4.2%.
The remaining commentary on Medibank Health excludes
the impact of these two contracts in 2022.
Revenue of $277.1 million was modestly lower with growth in
health and wellbeing and travel sales offset by a reduction in
telehealth revenue.
Gross profit increased 9.2% to $131.8 million and gross
margin improved by 450 basis points to 47.6% with business
mix and improved utilisation and business efficiency, partially
offset by higher labour costs and inflation.
Management expenses increased $4.6 million reflecting
inflationary impacts and investment in future growth, and
with the modest decline in revenue, the management expense
ratio increased 190 basis points to 31.6%.
Annual Report 2023 25
Operating and financial review
The business has good momentum, and we continue to target
on average, organic growth of at least 15% per annum over
the next three years with key areas of focus including further
volume and performance uplift in health services, continuing
to reposition the business to meet the emerging needs of
Medibank Group customers and delivering synergies between
our health businesses.
Net investment income/(expense)
Medibank’s investment portfolio was $3.3 billion as at 30 June
2023. This investment portfolio, which includes $2.7 billion
relating to the health fund and short-term operational cash
(STOC) of $0.4 billion, provides liquidity to cover insurance
liabilities related to the Health Insurance business and
satisfies our obligation to maintain regulatory reserves to
meet health claims and to fund ongoing operations. The
STOC balance includes assets, largely 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.
Investment income was $138.6 million compared to a loss of
$24.8 million in 2022, due to stronger equity markets, higher
interest rates and narrowing credit spreads. The $40.3 million
increase in growth portfolio income was due to significantly
improved returns in both domestic and international equity
markets, partially offset by a lower return in property
investments. The defensive portfolio had a gain of $69.4 million
compared to a loss of $23.5 million in 2022 largely due to
higher RBA cash rates, a $9.7 million benefit from narrowing
credit spreads versus a $26.5 million cost last period, and a
more stable yield curve resulted in an improved but still below
expectation return on international fixed interest holdings.
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 increased by $138.8 million
or 7.1% to $2,084.4 million as at 30 June 2023.
Some of the major movements in the consolidated
statement of financial position include:
• A decrease in claims liabilities largely due to a decrease
in the COVID-19 deferred claims liability, partially offset
by an increase in the outstanding claims liability.
• A decrease in cash and cash equivalents driven by the
timing of tax payments.
• An increase in unearned premium liability due to the
timing of the recent resident premium increase on
1 June 2023 with prepayments usually peaking around
the time of the rate rise, as well as the increase in
overseas student policies.
As at 30 June 2023, Medibank’s consolidated statement
of financial position remained debt-free.
26 Medibank
2.3 Capital management and dividends
Medibank’s capital management objective is to maintain a
strong financial risk profile and capacity to pay all eligible
customer benefits, invest in the growth of our business
to provide a return to shareholders, and to meet financial
commitments.
On 1 July 2023, accounting standard AASB17 Insurance
Contracts and the new APRA capital standards became
effective. The commentary below is based on the 2023
pro forma capital position which reflects the impacts of
these new standards.
The introduction of these new standards has increased our
eligible capital position by $87.0 million. The total capital
benefit increases to $167.0m after reflecting the reduction
in the Health Insurance target required capital ratio to
10%-12% of premium revenue (from 11%-13%).
In June 2023 APRA announced an additional capital adequacy
requirement of $250 million on Medibank, with effect from
1 July 2023, following a review of the cybercrime event. As
a result, we have temporarily increased Health Insurance
business related capital to offset this supervisory adjustment.
After this increase, the Group remains well capitalised with
1.8 times coverage of the health insurance prescribed capital
amount (PCA) after adjusting for the supervisory adjustment,
and unallocated capital of $175.4 million. As a business, we
continue to have strong capital generation, and with the level
of unallocated capital and the ability to issue Tier 2 debt we
remain well placed to fund our M&A aspirations.
• Our total Health Insurance business-related capital was
$1,168.0 million; equivalent to 14.6% of premium revenue
after the allowance for determined but unpaid dividends.
This is above the target range of 10%-12%.
• Non-fund required capital increased $4.5 million to
$191.7 million, reflecting our investment in the integrated
mental health model joint venture with Aurora Healthcare.
We expect to contribute more capital to the joint venture
over the next six to 12 months.
• Unallocated capital increased $27.4 million to $175.4 million.
Dividends paid or payable in respect of profits from the
financial year totalled 14.6 cents per share fully franked,
amounting to $402.1 million comprising:
• An interim ordinary dividend of 6.3 cents per share fully
franked, amounting to $173.5 million paid on 22 March 2023
in respect of the 6-month period ended 31 December 2022, and
• A final ordinary dividend of 8.3 cents per share fully franked,
amounting to $228.6 million to be paid on 5 October 2023 in
respect of the 6-month period ended 30 June 2023.
The full year 2023 ordinary dividend represents an 80.5% payout
ratio of underlying NPAT, normalising for investment market
returns. This is at the mid point of our dividend target payout
ratio range of between 75% and 85% of underlying NPAT.
Annual dividend (cents)
Annual dividend (cents)
2023
2022
2021
2020
14.6
13.4
12.7
12.0
0
3
6
9
12
15
2.4 Management changes
In April 2023, John Goodall, Group Executive – Technology
& Operations, retired from Medibank.
As part of Medibank’s continued focus on delivering on
our strategy and 2030 vision to deliver the best health and
wellbeing for Australia, there have been a number of changes
to the executive leadership team, which came into effect on
31 July 2023.
Group Lead – Chief Financial Officer & Group Strategy:
Mark Rogers continues to hold this role with responsibility for
finance, actuarial, treasury, internal audit, investor relations,
strategy development and M&A. Mark adds procurement to
his portfolio of responsibilities.
Group Lead – Chief Customer Officer: Milosh Milisavljevic
takes on this expanded role. This role brings together the
Medibank and ahm brands including marketing, customer
channels, customer portfolios, Live Better and diversified
insurance.
Group Lead – Chief Executive Amplar Health: Dr Andrew Wilson
continues in this role. Andrew is responsible for Medibank’s
growing role as a health services provider. This includes
responsibility for the health services we deliver on behalf of
business and government, including telehealth, in-homecare,
and our investments in primary care and ambulatory care.
Group Lead – Digital & Ventures: Rob Deeming takes on
a new role to accelerate our growth in health through the
development of digitally-led health products and services
for our customers and the community. Rob maintains his
responsibility for the group digital team supporting our
insurance and health businesses.
Group Lead – Data & Technology: This role has a dedicated
focus on technology, data management and our core
platforms. An internal and external recruitment process
is underway. In the interim Kylie Williamson will continue
to act in this role.
Group Lead – Trust, Legal & Compliance and Company
Secretary: Mei Ramsay continues to hold this role, with
responsibility for customer trust added to her existing
portfolio of legal, governance, compliance and regulatory
affairs. Mei continues as Company Secretary.
Group Lead – People, Spaces & Sustainability: Kylie Bishop
continues to hold this role, with additional responsibility
for spaces (property). Kylie continues to lead the key
people functions, as well as our environmental, social and
governance (ESG) focus areas.
Group Lead – Policy, Advocacy & Reputation: This is a new
role in the executive leadership team. Meaghan Telford
has responsibility for government and industry relations,
health stakeholders, health policy, reputation and external
communications.
3. Strategy and future prospects
Medibank’s purpose is Better Health for Better Lives.
Our vision is the best health and wellbeing for Australia.
Our strategy puts our customers and people at the centre
of everything we do. We connect people to a better quality
of life in every moment. By working to create access, choice
and control for Australia, we seek to sustainably build our
customer base and grow shareholder value.
In the year ahead we will continue to regain momentum
in our health insurance business, prioritise greater value,
progress our IT security uplift program and take further
steps to expand in health, particularly in virtual health.
Our strategy – growing as a health company
Deliver leading
experiences
Differentiate our
insurance business
Expand
in health
Create personalised and
connected customer experiences
Deliver more value, choice
and control for customers
Empower our people
Collaborate with our communities
to make a difference
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 2023 27
Operating and financial review
Our people are our most valuable asset and 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 and 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.
Although we are seeing cost of living concerns, the health
insurance industry remains resilient. Growth continues
to be well above pre-pandemic levels as consumers
continue to prioritise their health and wellbeing, supported
by sustained low premium increases, low levels of
unemployment, and pressure on the public health system.
We will continue to drive differentiation through integrated
propositions, including diversified insurance products,
strengthen value for our customers through new products
and provider networks, optimise our dual brand strategy
to support a broad range of customer segments, and
invest to keep premium increases low.
With the increasing pressure on the public system we will
continue to partner with doctors, hospitals, governments
and other organisations to drive change in the system
and advocate for reform. We will grow, develop and scale
innovative models of care, providing our customers and the
community greater choice and access to the right care, in
the right place, at the right time.
Milestones
Pillars
Milestones
We will support healthcare affordability through expansion
of our no gap program across more clinical modalities and
locations and drive integrated care initiatives that support the
end-to-end patient journey.
We will integrate the Live Better program into preventative
health, acquisition and retention journeys to evolve the way
we support the health and wellbeing of our customers, and
expand our suite of preventative programs with the aim of
50,000 enrolments by FY25.
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. Connection between our various health
assets will be key to delivering a better and more customer/
patient-centric health experience.
Medibank remains positioned for growth with strong customer
advocacy, positive policyholder growth outlook, track record
of health innovation, continued focus on cost discipline, and
strong balance sheet to support our growth ambitions.
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.
4. Material business risks
Please refer to pages 46 to 48 of the risk management
section for an overview of our material business risks
and the APRA new prudential standard.
Deliver leading
experiences
Customer advocacy: Service NPS (average)
Employee advocacy: eNPS
FY23
Medibank 40.1
42.7
ahm
FY24 benchmark1
>35
>35
Place to work
Products and services
FY23
+23
+24
FY24 benchmark2
≥+24
≥+26
Differentiate our
insurance
business
Market share
FY23
27.08%
FY26 aspiration
Up 25-75 bps
on FY23
Health Insurance productivity delivered
FY23
c. $7m
FY23-FY25 target
$30m productivity savings
including $10m in FY23
Expand
in health
Health and wellbeing
Medibank Health profit – updated
Live Better Rewards
participants
Preventative program
participants3
FY23
FY25 target
c. 697k >800k
FY23
$44.2m
c. 16.5k >50k
FY24-FY26 target4
Average at least 15% p.a. organic
profit growth over the next 3 years
Aim to invest $150m-$250m in total
to grow Medibank Health inorganically
as suitable opportunities arise
1. Benchmark reflects sustaining service levels while continuing to digitise the service delivery model
2. FY24 benchmarks for Place to Work eNPS based on the global average benchmark, Products and Services eNPS target based on historical trend
3.
Includes total customers who have engaged with 9 preventative health programs (e.g. Better Knee, Better Me, Heart Health at Home) and any new offerings
developed.
4. Based on continuing businesses – excluding the impacts of Beyond Blue and 1800RESPECT contracts which ceased during February and June 2022 respectively.
28 Medibank
Directors
44%*
are women
11%*
were born
overseas
100%*
identify primarily
as Australian
(non-Aboriginal and
Torres Strait Islander)
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.
As at 24 August 2023
* including CEO
Directors’ qualifications, experience and special responsibilities
Details of the qualifications, experience and special responsibilities of each director in office as at the date of this report
are set out below.
Name and title
Biography
Mike Wilkins AO
Chair and Independent
Non-executive Director
BCom, MBA, FAICD, FCA
Age: 66
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.
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: 50
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 performance of the Medibank and ahm Health Insurance and Diversified
financial portfolios, and led the start-up of the Live Better program. David was also appointed
Acting Chief Executive Officer between April 2016 and June 2016.
Prior to joining Medibank, David was Group Chief Commercial Officer at Jetstar where he was
responsible for growing and sustaining the business and leading its customer facing functions
across Asia Pacific, having joined as part of the start-up team, 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, innovation, commercial and operational experience,
including previous work in the consulting and financial services industries. David is a Member
of the Council of Management for the International Federation of Health Plans.
Annual Report 2023 29
Directors
Name and title
Biography
Dr Tracey Batten
Independent
Non-executive Director
MBBS, MHA, MBA,
FAICD, FRACMA
Age: 57
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.
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 a 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. Anna is also National Ambassador for the
Malaria Vaccine Project at the Institute of Glycomics at Griffith University.
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.
Anna Bligh AC
Independent
Non-executive Director
BA (QLD)
Age: 63
Gerard Dalbosco
Independent
Non-executive Director
M.AppFin, B.Comm,
FCA, GAICD
Age: 60
Peter Everingham
Independent
Non-executive Director
BEc, MBA, GAICD
Age: 54
30 Medibank
Name and title
Biography
David Fagan
Independent
Non-executive Director
LLB, LLM, GAICD
Age: 66
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, and a former director of PayGroup Limited (November 2017
to November 2022), Grocon Funds Management Group, the Hilco Group and UBS Grocon Real
Estate Investment Management Australia Pty Limited. He is also a former member of the advisory
board of Chase Corporate Advisory.
David is currently Chair and member of the Risk Management Committee of BDO Group Holdings
Limited and a member of the ASIC Corporate Governance Consultative Panel.
Kathryn Fagg AO
Independent
Non-executive Director
FTSE, BE (Hons), MCom (Hons),
Hon.DBus, Hon.DChemEng,
GAICD
Age: 62
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
Independent
Non-executive Director
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.
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: 75
She is currently a director of Inghams Group Limited (since November 2016). Linda is also
Chair of the Board of Royal Melbourne Hospital and a member of the Museums Victoria Board.
Linda’s previous directorships include Japara Healthcare Limited as Chair (March 2014 to
November 2021), Healthscope Limited, Fairfax Media Limited and Sigma Pharmaceuticals Limited.
Company Secretary
Name and title
Biography
Mei Ramsay
Group Lead – Trust,
Legal & Compliance
and Company Secretary
BA, LLB, LLM
Mei is responsible for leading the customer trust, legal and governance functions, including
compliance and regulatory affairs. Mei has been the Company Secretary since 2014 and previously
held the position of Group General Counsel from 2011. She has been a member of the executive
leadership team since 2016.
Mei has more than 25 years of experience as a senior in-house legal adviser for multinational
and international companies as well as private practice. Prior to joining Medibank, Mei was the
General Counsel and Company Secretary for the Asia Pacific region at Cummins Inc, and also
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.
Annual Report 2023 31
Executive
leadership
team
44%*
are women
33%*
were born
overseas
89%*
identify primarily
as Australian
(non-Aboriginal and
Torres Strait Islander)
As at 24 August 2023
* including CEO
Top L to R: David Koczkar, Kylie Bishop, Rob Deeming. Middle L to R: Milosh Milisavljevic, Mei Ramsay. Mark Rogers
Bottom L to R: Meaghan Telford, Kylie Williamson, Andrew Wilson.
Name and title
Biography
Kylie Bishop
Group Lead
– People, Spaces
& Sustainability
Kylie is responsible for leading key people functions including culture, talent and capability,
performance and rewards, shared services, diversity and inclusion, workplace relations, health,
safety and wellbeing, employee experience and community as well as sustainability and spaces.
She has been a member of the executive leadership team since 2013.
Kylie is a registered psychologist specialising in organisational psychology. She began her career in
human resource consulting and prior to joining Medibank in 2010, held senior positions with NAB.
Kylie is currently a non-executive director of Royal Melbourne Hospital and Basketball Victoria, and
was previously a director with Rugby Victoria.
Rob Deeming
Group Lead
– Digital & Ventures
Rob is responsible for accelerating our growth in health through the development of digitally-led
health products and services for our customers and the community. Rob also leads the digital team
supporting our insurance and health businesses. He has been a member of the executive leadership
team since June 2021.
Rob was previously accountable for growing and sustaining the Medibank and ahm insurance
businesses, including oversight for our operational and customer-facing teams. Prior to that he
led the ahm business.
Rob has extensive experience in entrepreneurial leadership, as well as high-growth consumer
brands. Before joining Medibank, Rob was the CEO of multi award-winning hardware/software
business, Billy. He has also held commercial leadership roles at Jetstar and Qantas, and was the
CEO of the travel booking engine, Jetsetter, which he sold to Tripadvisor.
Rob is a director of Medinet Australia Pty Ltd.
32 Medibank
Name and title
Biography
Milosh
Milisavljevic
Group Lead
– Chief Customer
Officer
Mark Rogers
Group Lead
– Chief Financial
Officer & Group
Strategy
Milosh is responsible for the Medibank and ahm brands including marketing, customer channels,
customer portfolios, member health programs, Live Better, provider partnerships and diversified
insurance. He has been a member of the executive leadership team since June 2021.
Milosh joined Medibank in 2016 and has held a number of roles leading 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.
Milosh is a director of Private Healthcare Australia Limited.
Mark is responsible for the finance, actuarial, treasury, internal audit, investor relations and
procurement functions across Medibank as well as strategy development and M&A. He has been
a member of the executive leadership team since January 2017.
Mark has more than 20 years of global experience across the healthcare, pharmaceuticals and
financial services sectors. Before joining Medibank, Mark held performance, planning and group
development leadership roles at NAB. Prior to that he was responsible for strategy and development
for Mayne Group. Prior to that role, Mark led Group Investor Relations at Mayne Group.
Mark is Chair of Myhealth Medical Group and a director of Integrated Mental Health, East Sydney
Private Hospital and the Royal Children’s Hospital Melbourne.
Meaghan Telford
Group Lead
– Policy, Advocacy
& Reputation
Meaghan is responsible for government and industry relations, health stakeholders, health policy,
reputation and external communications. Meaghan joined Medibank in 2016 leading the External
Affairs function and previously held the role of Senior Executive – Policy, Advocacy and Reputation.
She has been a member of the executive leadership team since July 2023.
Kylie Williamson
Acting Group Lead
– Data & Technology
Meaghan is a corporate affairs professional with a career spanning more than 20 years in sport,
politics and ASX-listed entities. In these roles, she has been responsible for driving the external
agenda for organisations through media management, government relations, campaign and
stakeholder management, employee engagement and public affairs research.
Prior to Medibank, Meaghan led Group Corporate Communications for NAB, responsible for
communications on mergers and acquisitions, customer pricing strategy, financial reporting and
issues management.
Kylie is responsible for technology, data management and our core platforms. Kylie has been an
acting member of the executive leadership team since April 2023.
Prior to this, Kylie was Senior Executive – Core Medibank Customer Systems with a focus on
strategy and development, and support of core Medibank and Amplar Health systems that support
marketing, CRM, policy management, procurement, payment, human resources, contact centre and
finance processes.
Kylie joined Medibank in September 2015 after more than 20 years in information technology
consulting for a range of industries with PwC and IBM both locally and globally. Her key roles were
as program manager deploying technology to drive business benefits, growth and align to customer
and stakeholder needs.
Dr Andrew Wilson
Group Lead
– Chief Executive
– Amplar Health
Andrew is responsible for Medibank’s growing role as a health services provider. This includes
responsibility for the health services we deliver on behalf of business and government, including
telehealth and virtual care, in-home care and our investments in primary care and ambulatory care.
He has been a member of the executive leadership team since 2010.
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, Adeney Private
Hospital Pty Ltd.
Annual Report 2023 33
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 CPS510 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.
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 Chief Executive Officer (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 38 to 39.
The CEO has responsibility for managing the day-to-day
affairs of Medibank. The CEO, with the support of the
executive leadership team, 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.
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
34 Medibank
Key areas of focus for the Board in 2023
Corporate governance
• Oversight of the cybercrime event and response, including:
People, remuneration and culture
• Oversight of Medibank’s 2030 vision, values,
strategy and culture.
– Supporting our customers including the Cyber Response
• Alignment of executive leadership team (ELT) roles.
Support Program.
– Keeping our stakeholders informed, such as the
government, shareholders and regulators.
– Ensuring the health and wellbeing of our employees.
– Continuing to strengthen our information security
environment.
– Monitoring the financial and other impact of the
cybercrime event.
• Oversight of COVID-19 impacts and response, including:
– 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.
• Continuing to embed 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.
• Continuing to embed our environmental, social and
governance (ESG) strategy, including accelerating our
pathway to Net Zero emissions by 2040.
• Continuing to evolve our approach to data management,
particularly in light of impending reform to the Privacy
Act and changing community expectations.
• Review and approval of Accounting Policies and associated
Financial Statement disclosures in the light of the adoption
of the new AASB17 Insurance Contracts with effect from
1 July 2023.
• Oversight of the Group's capital management policies
and level of capital, including implementation of APRA’s
new capital standards (from 1 July 2023).
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.
• Review of Board composition, including consideration
of succession planning and its continuing education.
• 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
CPS511 Remuneration 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 29 to 31. Details of directors’ attendance at Board
and committee meetings during the year ended 30 June
2023 are on page 52. The non-executive directors' tenure
profile is shown in the table below. The length of service
of the non-executive directors ranges from one year and
four months to ten years and eight months.
Non-executive director tenure profile
• Oversight of investments, partnerships and organic
growth initiatives to support execution of the strategy.
>9 years
(1 director)
• Review and approval of the Corporate Plan, budget
and performance targets and oversight of business
performance against these targets.
• Monitoring the impacts of economic conditions and
cost-of-living pressures.
6-9 years
(2 directors)
<3 years
(3 directors)
3-6 years
(2 directors)
Annual Report 2023 35
Corporate governance statement
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). Shareholders may also nominate
individuals 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. Mike Wilkins
AO and Dr Tracey Batten will retire and offer themselves
for re-election at the upcoming AGM on 22 November 2023.
Further information about these directors is set out on pages
29 to 31, 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.
36 Medibank
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, executive leadership team 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, executive leadership team 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.
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.
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
People and culture
Understanding the link between strategy, culture,
performance, long-term shareholder value creation
and remuneration outcomes
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
Moderate
Strong
Very Strong
Annual Report 2023 37
Corporate governance statement
Skills and experience
Collective strength1
Government relations and public policy
Interacting with government and/or regulators
and/or involvement in public policy decisions
Technology, data and digital innovation
Understanding technology and innovation, including
data management, data privacy and information
security practices. Experience with businesses
that have developed and implemented technology-
based initiatives to enhance productivity and/or
customer experiences
1.
This represents the collective strength of the Board including David Koczkar, CEO.
Moderate
Strong
Very Strong
Moderate
Strong
Very Strong
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 2023, 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, practices and
committees, and behaviours. This included an assessment of
the committees' handling of the issues and challenges that
occurred throughout the year. The internal Board evaluation
in 2023 followed the external Board evaluation that was
undertaken in 2021 and the internal Board evaluation in 2022.
Following the survey, the Board discussed and evaluated the
outcomes and committed to relevant action items.
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 2023 to review their performance and professional
development needs.
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 Board has also formed a Cyber Response Board
Committee as part of its cyber response playbook. More
information on this committee and its role during the recent
cybercrime event can be found on page 49.
The relevant qualifications and experience of the members
of each standing committee can be found in the director
biographies on pages 29 to 31. The number of meetings
of each committee, and the individual attendance of their
members, are provided on page 52.
Committee membership
as at 24 August 2023
Composition
Key roles and responsibilities
Audit Committee
• Gerard Dalbosco
(Chair)
• Peter Everingham
• David Fagan
• Kathryn Fagg
38 Medibank
• At least three members, all of whom
• Overseeing and reviewing the integrity of external
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).
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.
Committee membership
as at 24 August 2023
Composition
Risk Management
Committee
• 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.
• 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).
Key roles and responsibilities
• 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.
• 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 Committee
• At least three members, all of whom
• Assisting and advising the Board on capital and
are non-executive directors.
investment related matters.
• Linda Bardo Nicholls
• The chair must be an independent
• Overseeing the investment strategy and Capital
(Chair)
• Anna Bligh
• Mike Wilkins
non-executive director, appointed by
the Board.
Management Policy.
• Monitoring the effectiveness of the investment
process.
• Authorising delegated investment decisions.
People and
Remuneration
Committee
• 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,
executive leadership team 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.
Annual Report 2023 39
Nomination
Committee
• 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
• Linda Bardo Nicholls
of the committee.
Corporate governance statement
Executive leadership team
The CEO, supported by the executive leadership team (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
32 to 33. 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 54.
The remuneration report from page 59 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 2023 in accordance with
that process for each ELT member in that role at 30 June 2023.
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 2023.
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
Breaches and reporting
Code of
Conduct
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.
Whistleblower
Policy
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.
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).
Anti-Bribery
and
Corruption
Policy
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.
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;
40 Medibank
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,
Spaces & 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 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.
Anti-Bribery
and
Corruption
Policy cont.
Share Trading
Policy
Purpose
Key provisions
Breaches and reporting
• not offer or give anything of value, or
solicit any inducement, that may conflict
with their work or duties to Medibank; and
Breaches of the policy
are reported to the Risk
Management Committee.
The Share Trading Policy
describes restrictions on
buying and selling Medibank
shares for the Board, the
ELT, senior executives and
other Medibank employees.
• 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.
Details the penalties 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. We recognise 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
facilitates an inclusive culture and supports us to deliver an
inclusive health and wellbeing experience for our community.
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 our 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 2023, the actual
representation across the Group and senior executive
population was 48%.
In May 2023, 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 2023, 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)1,2
Senior executives3
Group and senior executive total
Senior managers
Other managers
Non-managers
Overall (including Board)
Women
Men
Other
% Women
4
3
24
27
102
408
2,014
2,555
5
5
24
29
116
334
592
-
-
-
-
1
1
8
1,075
10
44%
38%
50%
48%
47%
55%
77%
70%
1. Group executive positions refer to the CEO and the executive leadership team (ELT) as at 30 June 2023. All of the ELT report directly to the CEO.
2. Kylie Williamson, Acting Group Lead - Data & Technology, has been included in the Group Executive data.
3. Senior executive positions include all roles classified as senior executives as part of Medibank’s broad based banding framework.
Annual Report 2023 41
Corporate governance statement
In 2022 the Board set measurable objectives for achieving diversity at Medibank and committed to reporting progress achieved
against these in the 2023 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 executive
leadership and senior leadership
populations, 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
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.
As at 30 June 2023, women represented 48% of Group and senior executive roles
(up from 44% in FY22). Representation of women on the Medibank Board remains
above target at 44% (including the CEO), aligned with FY22.
Women represented 53% of all manager roles (excluding Group and senior
executives), unchanged from FY22 and 77% of non-manager positions (compared
to 79% in FY22). This is largely driven by our Amplar Health division where women
made up 87% of the non-manager workforce, compared to other Medibank divisions
at 71%.
In FY23, the number of employees identifying as Aboriginal and Torres Strait Islander
in our annual engagement survey increased to 32 people, which equates to 1.2% of
survey respondents1, an increase from 0.9% in FY22. Engagement for this cohort
was 8.3 which is above the Medibank average of 7.7 and above FY22’s result of 8.1.
While our representation of Aboriginal and Torres Strait Islander employees
was 0.4% lower than our target, in 2022 we developed our Aboriginal and Torres
Strait Islander recruitment, engagement and professional development strategy.
This strategy supports our aim to increase meaningful, sustained employment
opportunities for Aboriginal and Torres Strait Islander peoples by facilitating a
tailored recruitment process and regular surveys to better understand the ongoing
experience of Aboriginal and Torres Strait Islander candidates and employees.
In FY23, the number of employees identifying as having a disability in our
annual engagement survey rose to 184 people, which equates to 6.7% of survey
respondents1, an increase from 5.9% in FY22. Engagement for this cohort was 7.6,
which is below the Medibank average of 7.7 and 0.1 lower than FY22’s result of 7.7.
In May 2022, we launched our second Accessibility and Inclusion Plan. In the first year
of the plan, we delivered disability awareness education as part of our annual training
requirements for all employees as part of our goal to foster a disability confident
culture. In FY24, we will focus on developing this further to uplift the capability of
our leaders and ensure an inclusive and accessible recruitment process.
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 (18.2%, as
measured by our employee survey). In FY23, we further invigorated our carers
support proposition by refreshing our Carers Network, promoting our carers
information hub and making our Caregiver Support Program available to all eligible
employees, following a successful pilot in FY22. In FY24, we will continue to share
the support offerings for carers with all employees and prioritise listening to
feedback from our Carers Network to further enhance their experience.
1. Based on employee engagement survey response rate of 80% (2,742) from 3,452 employees invited to participate.
42 Medibank
For 2024, the Board has set the following measurable
objectives for achieving diversity at Medibank and is committed
to reporting progress achieved against these in the 2024
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 49 employees (approx. 1.8%
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 192
employees (approx. 7% of survey respondents) as
self-reported in our annual engagement survey.
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 our results, investor
presentations, annual reports, sustainability 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.
We encourage 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 Morgan
Stanley Private Healthcare Forum in May 2023 and the
Macquarie Australia Conference in May 2023.
We generally communicate with the investment community
through the CEO, the Group Lead – CFO & Group Strategy,
other members of the ELT and the Hub Lead – Investor
Relations. We also communicate through the Chair for
governance and remuneration issues and the Company
Secretary and Group Lead – People, Spaces & Sustainability
for environmental, social and governance issues. Feedback
from engagement with the investor community is
communicated to the Board at each Board meeting.
Annual Report 2023 43
Corporate governance statement
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 2023, 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 38. In addition to the members of the
Audit Committee, any director may attend Audit Committee
meetings. Representatives of management and the Hub Lead
– Internal Audit may attend Audit Committee meetings by
standing invitation, and the Chief Actuary and external auditors
are invited as required.
44 Medibank
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.
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
2022 and the full year ended 30 June 2023.
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 Hub Lead –
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 Hub Lead –
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
Information about Medibank's risk management framework
(page 45), risk governance (page 45) and material business
risks, including environmental, social and governance risks
and emerging risks (page 46), can be found in the following
risk management section.
This corporate governance statement is accurate and up to
date as at 24 August 2023 and has been approved by the Board.
Risk management
Our approach to risk management reflects our commitment
to ethical and responsible business practices and guides the
work we are doing to deliver on our 2030 vision of the best
health and wellbeing for Australia.
Our risk management approach is defined within our risk
management strategy and underpinned by our enterprise risk
management framework, which encompasses the systems,
structures, policies, processes and people that manage risks
across the business. These align with the requirements of the
Australian Prudential Regulation Authority’s (APRA) Consolidated
Prudential Standard 220 Risk Management (CPS220).
We undertake an annual strategic planning process to
establish and agree upon our strategic objectives with the
Board and develop our risk appetite statement, corporate
plan and capital management plan.
Risk 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
strategy and risk appetite statements on an annual basis
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. Committee members are appointed based
on their qualifications and experience to ensure that the
committee can adequately discharge its duties. More
information about the committee and its members can be
found in the corporate governance statement on page 39.
Risk management plays an important role in remuneration
outcomes. For a short-term incentive award to be made
to any employee, a risk, compliance and behaviour
gateway must be met. As well all employees have risk-
related key performance measures 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 page 61.
The Board is further assisted by the Investment and Capital
Committee, which oversees the implementation and
monitoring of the investment strategy and ICAAP Summary
Statement Policy approved by the Board, including monitoring
the effectiveness of the investment process which aims to
achieve optimum return relative to Medibank’s risk appetite.
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. There are seven divisional risk committees
covering key business units — Amplar Health, Customer,
Digital & Ventures, Data & Technology, Finance & Strategy,
Trust, Legal & Compliance and People, Spaces & Sustainability.
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.
Risk management framework
Our risk management framework guides risk management
activities across the business to effectively identify, assess,
manage, monitor and report risks. The framework is
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 CPS220.
A key component of our risk management framework is the
definition of Medibank’s risk appetite by the Board which
informs management's decision-making process. The annual
review of the framework considers whether the framework
is sound, and Medibank is operating with due regard to
the risk appetite set by the Board. The Risk Management
Committee reviews the risk management framework at least
yearly and regularly monitors the framework’s effectiveness.
The annual review of the framework was completed in 2023.
Medibank continues to operate and strengthen enterprise risk
management practices in alignment with the requirements
outlined in the APRA Prudential Standard CPS220 – Risk
Management.
Annual Report 2023 45
Risk management
Medibank Group Board
Group strategy, risk management strategy (Group), risk appetite and profile (Group)
Board Risk
Management
Committee
Board
Investment
and Capital
Committee
Board
Nomination
Committee
Board
People and
Remuneration
Committee
Board
Audit
Committee
Independent
assurance
Internal
audit
Executive Risk Committee
Divisional risk committees
Business unit teams
Material risks
Strategic
Mandatory
Independent
assurance
External
audit
(as required by
the Board to
meet regulatory
obligations)
R
i
s
k
c
u
l
t
u
r
e
Operational
(including
regulatory
compliance)
Credit
Capital &
liquidity
Market &
investment
Insurance
s
r
u
o
i
v
a
h
e
b
k
s
i
R
Strategic including:
• Strategic planning & enablement
• Customer growth
• Information security
• Portfolio management & optimisation
• Healthcare cost and utilisation
• Health growth
• Clinical
• Stakeholder risk
Emerging (including ESG risks)
risks we are monitoring that could have the
potential to become material risks in the future
Climate risk
Heightened cyber risk
associated with the
geopolitical environment
Artificial
intelligence
Macro and
socio-economic /
cost of living
3 lines of defence
1st line – risk ownership 2nd line – oversight and compliance 3rd line – independent assurance
Material business risks
Material business risks are those risks deemed to have
a significant impact on the Group’s operations, financial
prospects and business objectives. Emerging risks are those
we are monitoring that could have the potential to become
material risks in the future. These risks are summarised on
the following page.
The cybercrime event has, and will continue to have, the
potential to impact our material business risks. Building upon
our existing program of work to enhance IT security across
our business, we expanded our work into an IT security uplift
program following the cybercrime event. It aims to continue
maturing our cybersecurity approach and better enable us
to respond to the rapidly evolving cyber threat landscape. We
continue to review our cybersecurity governance arrangements,
recognising the increasing prevalence of cybercrime and the
need to meet the ongoing expectations of our customers.
46 Medibank
Material business risk
Mitigations
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
Credit
The risk of financial loss
due to counterparties failing
to meet all or part of their
contractual obligations
Capital &
liquidity
The risk of not being able to
meet financial commitments
as and when they are due and
in complying with APRA's
prudential standards
Material
sustainability
categories
Customer health
Community health
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 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. 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.
Employeer health
Environmental
health
Governace
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.
Governace
Governace
Medibank has Board-approved policies for capital management
(ICAAP) and liquidity management designed to ensure it meets or
exceeds regulatory capital requirements at all times, and is able to
fund all payments as and when they fall due, as well as under adverse
stress scenarios. Liquidity risk is managed by our treasury function
through daily cash management of cash flows and liquid asset
positions and projected future cash flows under current and adverse
scenarios. The ICAAP (Internal Capital Adequacy Assessment Process)
also includes actions that can be taken to support Medibank’s capital
position under various stress scenarios.
Market &
investment
The risk of adverse financial
impact market factors e.g.
foreign exchange rates,
interest rates and equity prices
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.
Environmental
health
Governace
Customer
health
Employee
health
Community
health
Environmental
health
Governance
Annual Report 2023 47
Risk management
Material business risk
Mitigations
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
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.
Emerging risk
(including ESG risks)
Emerging risks
• Climate risk
• Heightened cyber risk associated with the geopolitical environment
• Artificial Intelligence
• Macro and socio-economic / cost of living
Material
sustainability
categories
Governace
Customer health
Community health
Material
sustainability
categories
Employeer health
Environmental
health
Governace
Customer
health
Employee
health
Community
health
Environmental
health
Governance
Environmental, social and governance risks
Medibank’s risk management framework also applies to the
environmental, social and governance (ESG) risks (including
climate risk). Medibank commissioned an independent
external review in 2021 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 57 to 65
of the Sustainability Report 2023. Further detail on our
approach to sustainability and ESG issues can also be
found in the Sustainability Report 2023.
48 Medibank
Risk management during the cybercrime
This year, Medibank and our customers were the subject of
a cybercrime event. A criminal accessed Medibank systems
using stolen credentials and stole information relating to
around 9.7 million current and former Medibank and ahm
customers, as well as My Home Hospital patients and
healthcare providers. The stolen information included health
claims data for some patients and customers. In response,
we then took immediate steps to contain the incident and put
in place additional security measures across the network.
We engaged specialised security firms and worked with
the Australian Government’s lead cyber agency and the
Australian Federal Police. We closed down the criminal’s
attack path and no further activity by the criminal since
12 October 2022 has been detected inside our systems.
We supported our customers and those impacted by the
cybercrime through our Cyber Response Support Program,
which includes mental health and wellbeing support, identity
protection and financial hardship measures. We implemented
further security controls, bolstered existing monitoring and
added further detection and forensics capability. Building upon
our existing program of work to enhance IT security across
our business, we expanded our work into an IT security uplift
program following the cybercrime event. It aims to continue
maturing our cybersecurity approach and better enable us
to respond to the rapidly evolving cyber threat landscape.
We continue to review our cyber security governance
arrangements, recognising the increasing prevalence of
cybercrime and the need to meet the ongoing expectations
of our customers. The cybercrime has, and will continue to
have, the potential to impact our material business risks.
As part of the Medibank cyber response playbook, the Board
formed the Cyber Response Board Committee, delegating
it with the authority to oversee and make decisions on
behalf of the Board in relation to any cyber incidents. The
committee comprises the Chair of the Board, the Chair of
the Risk Management Committee and the CEO. Following
the identification of the cybercrime event in October 2022, the
Cyber Response Board Committee met regularly to oversee
Medibank’s response to the cybercrime event on behalf of the
Board. More information about meetings of the Cyber Response
Board Committee and the Board in relation to the cybercrime
event can be found in the directors’ report on page 52.
Following the identification of the cybercrime event, the
Crisis Management Team (CMT) was activated, consisting
of executive leadership team members and appropriate
specialists in accordance with our crisis management plan.
The CMT met extensively from October until Medibank
transitioned to an ongoing business operations approach
in December 2022.
Under the direction of the CMT and in accordance with
Medibank’s cyber response playbook, senior management
activated specific workstreams to respond to, and to contain,
the cybercrime event. The workstreams included extensive
resources diverted to our response and consisted of:
• Remediation – rapid closure of the attack pathway,
threat actor eviction and enhanced monitoring
• Data analysis – analysing and assessing data that had,
or potentially had, been compromised
• Customer teams – scaling up customer team resourcing
to support our customers during the cybercrime event
and ongoing
• Customer support – rapid implementation of a customer
support program including mental health and wellbeing
support, identity protection and financial hardship
measures
• Communications – ensuring open and transparent
communications to our stakeholders including customers,
regulators, providers, partners and agencies
• Regulatory – ensuring our key regulators were informed
and consulted early and regularly
• Health – managing communications with health
stakeholders, and ensuring health support programmes
were available to our customers and people as needed
• Employee support – ensuring our people were informed
and supported during the cybercrime event, including
their health and wellbeing
These workstreams continued to operate as needed for
our customers following the standing down of the CMT
in December 2022.
Our Sustainability Report 2023 includes more detail about
our response to the cybercrime event.
APRA new prudential standard
APRA finalised its new prudential standard CPS230 -
Operational Risk Management in July 2023. The standard aims
to ensure resilience to operational risks and disruptions and
comes into effect from 1 July 2025. It defines requirements for
operational risk and absorbs existing standards for business
continuity (CPS231) and outsourcing (CPS232). We have
reviewed our risk maturity roadmap (as aligned to APRA’s
CPS220 Risk Management Standard) and identified the core
operational requirements that need to be accelerated as
part of the CPS230 plan. Beginning with a pilot of critical
processes, we will implement the required changes, with key
requirements of the standard to be embedded as part of our
ongoing business-as-usual activities.
Annual Report 2023 49
Risk management
Risk culture
Medibank is committed to maintaining a strong risk culture.
Our values are integral in the way we consider risk in the
pursuit of our strategic objectives and customer-focused
outcomes. We acknowledge and recognise the importance of
doing the right thing for our customers, our people, and the
community, and this commitment is reflected in our purpose
and values.
Our risk culture framework is an integral part of our approach
to risk management and brings together the key elements
that influence and shape our risk culture in terms of
behaviours and practices. It clearly highlights the behaviours
we expect of our people and the practical application of the
framework. The framework builds upon the foundation of our
Code of Conduct, which sets out the way we work at Medibank
via the establishment of standards of behaviour and conduct
expected from all directors, employees and contractors.
The Code of Conduct not only emphasises the importance of
compliance with legal obligations, it also clearly outlines our
responsibility toward our employees, our customers, and the
wider community. In adhering to these principles, we strive
to create a culture that goes beyond mere compliance, to
one that fosters a genuine commitment to ethical decision-
making and responsible practices.
When it comes to risk culture, we aim to:
• Role model our organisational values and support others
to do the same. This includes positive behaviours around
managing risk to deliver the right outcomes for our
shareholders, employees, customers and the community.
• Encourage transparency and “speaking up” to provide
opportunities to understand where we can improve,
especially for our customers.
• Foster a culture of continuous improvement in managing
risks. Make it part of our DNA to strive for great outcomes,
especially for our customers.
Medibank risk culture framework
The following highlights the behaviours we expect of our people and the practical application of the framework:
Leaders at all levels championing
risk management, setting a clear
tone and role modelling
appropriate risk behaviours
(tone from the top and
tone from the middle)
Leadership
Risk appetite
and strategy
Business and strategic
decisions align with the
risk appetite statement
Openness to consider
diverse viewpoints and
to provide constructive
challenge and feedback
across the organisation
Decision
making and
challenge
in actio n
s
r
u
o
i
v
a
h
e
b
Alignment
with purpose
and values
Risk issues are openly
communicated across the
organisation and supported
by an environment where
people feel safe to speak up
Communication
and
escalation
k
Ris
s
R i
ation
d
n
u
o
f
d
n
a
e
r
u
t
c
k archite
Risk governance
and oversight
There is effective oversight
of risk and risk culture,
and risk management is
supported by appropriate
frameworks, policies,
controls and reporting
Responsibility
and
accountability
Responsibility and
accountabilities of risk are
clearly defined, understood
and discharged across the
organisation (particularly the
three lines of defence)
Level of skills and training, processes,
systems and data across the three lines
of defence to support effective risk
management practices and behaviours
Knowledge
and capabilities
Performance
management
and incentives
Good risk management behaviour
is encouraged and rewarded,
and poor risk behaviour has
proportionate consequences
50 Medibank
Directors’ report
For the financial year ended 30 June 2023
The directors of Medibank Private Limited (Medibank) present
their report on the consolidated entity consisting of Medibank
and its subsidiaries (collectively referred to as the Group) for
the year ended 30 June 2023.
References to 2022 and 2023 are to the financial years
ended on 30 June 2022 and 30 June 2023 respectively unless
otherwise stated.
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, the Group’s operations, or the results
of those operations, or the Group’s state of affairs in future
financial years. Details of subsequent events are set out in
Note 20(d).
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:
• Mike Wilkins AO – Chair
• David Koczkar – Chief Executive Officer
• Dr Tracey Batten
• Anna Bligh AC
• Gerard Dalbosco
• Peter Everingham
• David Fagan
• Kathryn Fagg AO
• Linda Bardo Nicholls AO
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 its Amplar Health Division, which capitalises
on Medibank’s experience and expertise, and supports 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 23 to 28.
Significant changes in state of affairs
There were no significant changes in the state of affairs of the
Group during the year.
Future developments
Details of developments in the Group’s operations in future
financial years and the expected results of those operations
are included in the operating and financial review on pages
23 to 28.
Dividends
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:
• A fully franked final ordinary dividend of 7.30 cents per
share was determined in respect of the six-month period to
30 June 2022, paid on 29 September 2022 to shareholders
registered on 8 September 2022.
• A fully franked interim ordinary dividend of 6.30 cents per
share was determined in respect of the six-month period to
31 December 2022, paid on 22 March 2023 to shareholders
registered on 3 March 2023.
• A fully franked final ordinary dividend of 8.30 cents per
share has been determined in respect of the six-month
period to 30 June 2023, payable on 5 October 2023 to
shareholders registered on 14 September 2023.
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 29
to 31 and form part of the directors’ report.
Annual Report 2023 51
Directors’ report
For the financial year ended 30 June 2023
Directors’ attendance at meetings
The tables below show 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
tables below do not include the attendance of directors at committee meetings where they were not a committee member.
Director
Board (scheduled)
9
Board (unscheduled)1
16
Cyber Response Board Committee
24
Mike Wilkins
Dr Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham
David Fagan
Kathryn Fagg
David Koczkar
Linda Bardo Nicholls
A
9
9
9
9
9
9
9
9
9
B
9
9
8
8
9
9
8
9
9
A
16
16
16
16
16
16
16
16
16
B
16
16
13
16
15
16
15
16
16
A
24
-
-
-
-
24
-
24
-
B
24
-
-
-
-
24
-
24
-
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 With the exception of one meeting, all unscheduled Board meetings were primarily to consider the cybercrime event.
Audit Committee
5
Risk Management
Committee
6
Investment and
Capital Committee
4
People and
Remuneration
Committee
5
Nomination
Committee
2
A
-
-
-
5
5
5
5
-
-
B
-
-
-
5
4
5
4
-
-
A
-
6
6
6
-
6
-
-
6
B
-
6
5
5
-
6
-
-
6
A
4
-
4
-
-
-
-
-
4
B
4
-
4
-
-
-
-
-
4
A
5
5
-
-
5
-
5
-
-
B
5
5
-
-
4
-
5
-
-
A
2
2
-
2
-
2
-
-
2
B
2
2
-
2
-
2
-
-
2
Director
Mike Wilkins
Dr Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham
David Fagan
Kathryn Fagg
David Koczkar
Linda Bardo Nicholls
A Indicates the number of meetings held during the time the director was a member of the committee during the year.
B Indicates the number of meetings attended during the time the director was a member of the committee during the year.
In addition, ad-hoc committees were convened for special
purposes, including in relation to financial reporting and
other matters.
As part of the Medibank cyber response playbook, the Board
formed the Cyber Response Board Committee to oversee
Medibank’s response to, and delegated it authority to make
decisions on behalf of the Board in relation to, any cyber
incidents. The Committee comprises the Chair of the Board,
the Chair of the Risk Management Committee, and the CEO.
Following the identification of the cybercrime event in October
2022, the Cyber Response Board Committee met regularly
to oversee Medibank’s response to the cybercrime event on
behalf of the Board.
Options and performance rights
During the financial year, 4,092,052 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, 1,293,022 performance rights vested
and were exercised.
Further information regarding performance rights is included
in the remuneration report from page 54.
52 Medibank
Directors’ interest in securities
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 122.
Non-audit services
The Group may decide to employ its external auditor, PwC,
on assignments additional to its statutory audit duties, where
the auditor’s expertise and experience with the Group are
important. PwC will only be engaged to provide a permissible
non-audit service where there is a compelling reason for
it to do so, and will not be engaged to perform any service
that may impair or be perceived to impair its judgement or
independence.
PwC did not provide any non-audit services to the Group
during the year.
Remuneration report
The remuneration report on pages 54 to 73 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
Chair
24 August 2023
Melbourne
David Koczkar
Chief Executive Officer
The relevant interests of directors in Medibank securities at
the date of this directors’ report were:
Director
Mike Wilkins
David Koczkar
Dr Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham
David Fagan
Kathryn Fagg
Linda Bardo Nicholls
Performance
rights
1,894,877
Ordinary
shares
100,000
1,042,597
50,000
44,623
72,832
40,000
47,016
32,750
45,000
Environmental regulation
The Group’s operations are not subject to any particular
and 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.
Annual Report 2023 53
Remuneration report
For the financial year ended 30 June 2023
Dear shareholder,
On behalf of the Board, I present to you Medibank’s
remuneration report for 2023 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.
• 62.3% vesting of Medibank’s 2021 long-term incentive (LTI)
in line with the terms of grant, noting no vesting against the
market share hurdle.
• Zero increase to CEO remuneration in 2024.
• 2024 fixed remuneration increase only for Executive KMPs
with expanded portfolios.
This has been a challenging year for Medibank, and we
recognise the impact the cybercrime event has had on our
customers, our people, and shareholders. We have worked
hard to regain the trust of our customers, and I am pleased
to report that momentum has returned to our business
as a result of this focus. We continue to support affected
customers through our Cyber Response Support Program,
which includes a range of services including mental health
and wellbeing support, identity protection and financial
hardship initiatives.
For the first time in our 47-year history, we have surpassed
4 million health insurance customers. We have also delivered
the lowest premium rise in 22 years and have returned more
than $450m in permanent net claims savings to our customers,
continuing to fulfil our commitment not to profit from COVID-19.
We also continued to drive the change needed to make our
health system more sustainable through our preventative
health programs, new care models and virtual health care.
We have delivered a solid result this year, with our health
insurance business returning to policyholder growth. This
was supported by underlying profit growth in Medibank
Health and our strong capital position, with net investment
income more than offsetting the non-recurring costs
associated with the cybercrime event.
Our remuneration strategy has been developed to recognise
our people for responsibly executing Medibank’s strategy,
role-modelling behaviours and achieving business objectives
that increase value for our customers, shareholders, and
the community. Supporting this strategy, our remuneration
framework reinforces our risk management framework,
linking individual performance and behaviours with achieving
business objectives that support Medibank’s long-term
financial success.
Remuneration decisions at a glance
• Average 3.8% increase in 2024 fixed remuneration for
Executive KMP’s excluding the CEO.
• Zero increase to Non-executive director fees for 2024.
• 2024 Maximum STI opportunity increased to 120% for the
Group Lead – Chief Customer Officer to align with other
Executive KMP roles.
Short-term incentives
Consistent with prior years, the Board adjusted STI outcomes
to normalise for COVID-19 related impacts (both negative
and positive). Group operating profit and Health Insurance
revenue growth were above the threshold required for STI
payments, while our Customer Net Promoter Score (cNPS)
fell short of expectations.
In consideration of striking the right balance between
executive incentive outcomes and the expectations of our
customers, shareholders and the community, the Board
exercised its discretion, and reduced the 2023 STI outcomes
for Executive KMP and other members of the executive
leadership team to zero.
Long-term incentives
Medibank’s 2021 LTI was tested following the completion
of the performance period on 30 June 2023. The Board
determined it was appropriate to allow the LTI to vest in line
with the terms of its grant, as the vesting outcome of 62.3%
reflects an appropriate balance between shareholder and
customer interests over the three-year period including the
impact of the cybercrime event. The outcome comprises:
• full vesting against EPS CAGR measure with a result of
10.8%, calculated including the costs associated with the
cybercrime event,
• partial vesting against the TSR measure with a performance
rank at the 64th percentile against our comparator group and
• Zero 2023 short-term incentive (STI) for the CEO, Executive
KMP and other members of the executive leadership team.
• no vesting against the market share growth measure, which
was negatively impacted by the cybercrime event.
• Variable remuneration outcomes reduced by approximately
$3.6m, including $2.6m specific to current ELT members
in response, to the cybercrime event.
54 Medibank
Executive KMP remuneration and non-executive
director fees
As a result of changes to individual role accountabilities
and with reference to the median of Medibank’s benchmark
comparator group, fixed remuneration increases were
provided to select Executive KMP to reflect their expanded
portfolios.
The maximum 2024 STI opportunity for the Group Lead –
Chief Customer Officer was also changed from 100% to
120% of fixed remuneration in recognition of the potential
impact this role has on this organisation and to align with
the STI opportunity of other Executive KMP.
Key changes for 2024 include longer deferral periods on
variable remuneration for our executive leadership team,
the introduction of customer service satisfaction in our STI
plan and the addition of a new brand sentiment performance
hurdle in our LTI plan. These changes will be effective from
1 July 2023 and are designed to meet both the deferral and
non-financial measure requirements of the standard. Further
details on these changes will be included in the 2023 notice of
annual general meeting and in the 2024 remuneration report.
Shareholders are encouraged to vote to adopt the report at
our annual general meeting in November.
Yours sincerely,
Zero increase in remuneration for the CEO and non-executive
directors.
2024 remuneration framework
During the year the Board reviewed the remuneration
framework to meet the regulatory requirements of APRA's
new remuneration standard (CPS511) and to further enhance
the focus on customer in our remuneration structures.
Dr Tracey Batten
Chair, People and Remuneration Committee
Contents
1.
Key management personnel overview
8.
2023 actual remuneration (Non-IFRS disclosure)
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 2023 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 2023
7.1 2023 short-term incentive (STI) performance scorecard
7.2 Medibank’s 2023 financial performance
7.3 2023 STI awards
7.4 2021 long-term incentive plan outcomes
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. 2023 non-executive director remuneration statutory
table
13. Non-executive director ordinary shareholdings
14. Medibank’s comparator group
15. Loans and other transactions with KMP
Annual Report 2023 55
Remuneration report
For the financial year ended 30 June 2023
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 2023, KMP
were as follows:
Key management personnel
David Koczkar
Chief Executive Officer
Full-year
Mark Rogers
Group Lead – Chief Financial
Officer & Group Strategy
Full-year
Milosh Milisavljevic
Group Lead – Chief Customer
Officer
Full-year
Andrew Wilson
Group Lead – Chief Executive
Amplar Health
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
Peter Everingham
Non-executive director
Full-year
David Fagan
Non-executive director
Full-year
Kathryn Fagg
Non-executive director
Full-year
Linda Bardo Nicholls
Non-executive director
Full-year
56 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 of the Chief Executive Officer has been maintained at current levels for 2024.
• Fixed remuneration increased only for Executive KMP’s with expanded portfolios for 2024.
• The average increase for Executive KMP's excluding the CEO was 3.8% for 2024.
Short-term
incentive
(STI)
• In consideration of the expectations of our customers, shareholders, and the community following
the cybercrime event the Board exercised discretion and reduced the 2023 STI outcomes for
Executive KMP to zero.
Long-term
incentive
(LTI)
• 2024 Maximum STI opportunity increased from 100% to 120% of fixed remuneration for the Group
Lead – Chief Customer Officer in recognition of the impact this role has on the organisation.
• Medibank’s 2021 LTI was tested following the completion of the performance period on 30 June 2023
and resulted in a vesting outcome of 62.3% in line with the terms of the grant.
• This outcome reflects full vesting against EPS CAGR measure with a result of 10.8% which includes
costs associated with the cybercrime event, partial vesting against the TSR measure with a
performance rank at the 64th percentile against our comparator group and no vesting against the
market share growth measure.
• 2024 LTI opportunity percentages for Executive KMP members, including the CEO, have been
maintained at current levels.
Non-executive directors
Non-executive
director fees
• Non-executive director fees have been maintained at their current levels for 2024.
Annual Report 2023 57
Remuneration report
For the financial year ended 30 June 2023
3. Medibank’s remuneration strategy
At Medibank, we believe that remuneration has a key influence
on behaviour and is valuable in reinforcing our culture.
Our people are guided by our purpose and values which
are anchored to the core pillars of our culture – health and
wellbeing, our people and customers, and our performance.
Our remuneration strategy has been developed to reward
our people for responsibly executing Medibank’s strategy,
role-modelling behaviours that strengthen our purpose and
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 success and risk management framework.
The diagram below illustrates the relationship between
Medibank’s remuneration strategy, reward framework and
the timeline of when 2023 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
• 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
2023 remuneration timeline
• 50% cash
• 50% performance
rights deferred
for 12 months
• Three-year deferred
performance rights
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
58 Medibank
FY23
FY24
FY25
50%
50%
35%
35%
30%
date earned
date granted
eligible for payment or vesting
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
Lead - People, Spaces & 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 52 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 performance measures that are aligned
to the achievement of Medibank’s customer and financial
milestones set out in the annual report. 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.
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 2023 did not
constitute a remuneration
recommendation
Annual Report 2023 59
Remuneration report
For the financial year ended 30 June 2023
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.
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 performance, customer outcomes,
community and shareholder expectations.
4.2.2 Malus and clawback of executive performance-
based remuneration
Medibank’s Malus and Clawback Policy provides the Board
with discretion to reduce, cancel, or recover performance-
based awards made to employees 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 Malus and Clawback Policy provides that if any
of these events occur 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.
Malus provisions allow Medibank to reduce or cancel the
award before it has been paid, while clawback provisions
allow Medibank to recover a performance-based award
after it has been paid (or share awards vested).
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 2023, 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 2023 $2
1,550,000
825,000
1,035,000
1,020,000
3,669,941
138,804
1,953,311
4,114,739
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 2023.
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 2023 ($3.52).
4.2.4 Share Trading Policy
We have a Share Trading Policy to ensure that non-
executive directors and 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 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.
60 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.
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
Please refer to page 50 of the risk management section
for an overview of our risk culture.
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 Hub Lead – Group Risk & Chief Risk Officer,
Group Lead – People, Spaces & Sustainability and Group
Lead – Trust, Legal & 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 long-term incentive (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 STI plan rules also
clearly articulate that failure to meet the risk, compliance and
behaviour gateway in any given performance period will lead
to ineligibility for a STI award for the performance period.
In 2023, 15 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 10 individuals in 2023
had their employment terminated following an incident of
misconduct. Further details on consequence management
can be found in our Sustainability Report 2023.
Medibank recognises the impact the cybercrime event
has had on our customers, our people, and shareholders.
In consideration of the expectations of our customers,
shareholders, and the community the Board exercised their
discretion and their powers under the malus and clawback
policy to reduce the variable remuneration outcomes of 10
(current and former) employees by approximately $3.6 million.
Annual Report 2023 61
Remuneration report
For the financial year ended 30 June 2023
6. Executive KMP remuneration components
6.3.1 STI gateways
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 2023 target remuneration mix
The 2023 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)
6.2 Total fixed remuneration (TFR)
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 2023 $
1,550,000
825,000
1,035,000
1,020,000
1 July 2023 $
1,550,000
900,000
1,070,000
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.
62 Medibank
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, cybersecurity, health and safety, bullying and
harassment, bribery and corruption and meeting our legal,
ethical and governance requirements.
• Ensure that the risks in respect of their position are well
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 Hub Lead – Group
Risk & Chief Risk Officer, Group Lead – People, Spaces &
Sustainability and Group Lead – Trust, Legal & 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, 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.
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?
Are deferred STI performance
rights entitled to receive a
dividend payment?
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.
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 2023, 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 2023. Actual target values are not disclosed as this is
considered commercially sensitive information.
Does Medibank have a malus
and clawback policy that applies
to the STI plan?
Medibank has a Malus and Clawback Policy that provides discretion to the Board
to reduce, cancel, or recover (clawback) any award made under the STI plan to
employees 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 executive 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 executive will forfeit any payment
under the STI plan, including any unvested deferred STI grants, unless otherwise
determined by the Board.
Annual Report 2023 63
Remuneration report
For the financial year ended 30 June 2023
6.3.4 Annual STI opportunity
6.4 Long-term incentive (LTI)
The target and maximum annual STI opportunity as a
percentage of total fixed remuneration for each Executive
KMP is outlined in the table below.
2023
2024
Executive KMP
Target Maximum Target Maximum
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
100%
65%
65%
65%
150%
100%
120%
120%
100%
65%
65%
65%
150%
120%
120%
120%
6.4.1 Key features of the LTI plan
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.
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 2023 LTI plan?
The performance period for the 2023 LTI plan is three financial years commencing 1 July
2022. 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.
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.
What method is used to
determine the number of
performance rights granted
to each participant?
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 2023 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 2022. This average price was $3.19.
What are the performance
hurdles under the 2023 LTI
plan?
Performance rights issued under the 2023 LTI plan are subject to 3 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 2022 and the performance period for the EPS performance hurdle will run for
3 years from 1 July 2022 through to 30 June 2025. 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.
64 Medibank
What are the performance
hurdles under the 2023 LTI
plan? cont.
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 2023 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
malus and clawback policy
that applies to the LTI plan?
Medibank has a Malus and Clawback Policy that provides discretion to the Board to
reduce, cancel, or recover (clawback) any award made under the LTI Plan to an employee
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.
Annual Report 2023 65
Remuneration report
For the financial year ended 30 June 2023
The annual LTI allocation value as a percentage of TFR for
each Executive KMP is outlined in the table below.
Medibank’s TSR ranking 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
2023 & 2024
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. Vesting schedules for the 2023 LTI allocation
are consistent with schedule applied to the 2022 LTI offer.
2023 EPS performance rights (35% of award)
Medibank’s TSR rank in the
2023 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.
In this context, the Board approved maintaining a threshold
EPS CAGR target of 3% for the 2023 LTI grant. Details of
the vesting schedule are outlined in the table below:
b) The value of all dividends and other shareholder benefits
paid by each company during the performance period
assuming that:
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.
2023 TSR performance rights (35% of award)
The Board approved maintaining the vesting schedule for
the TSR hurdle. 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 2023 TSR performance rights
to vest, Medibank must achieve the threshold TSR ranking
over the performance period. The percentage of the 2023
TSR performance rights that vest, if any, will be based on
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 2023 comparator group are
determined at the commencement of the performance
period. If the ordinary shares or stock of a member of the
2023 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.
2023 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%
66 Medibank
7. Linking remuneration and performance in 2023
7.1 2023 short-term incentive (STI) performance scorecard
Gateways
Both the Financial Gateway and the Risk, Compliance & Behaviour Gateway (in respect of each of the Executive KMP’s roles)
were met. In consideration of the cybercrime event and the expectations of our customers, shareholders, and the community,
the Board exercised their discretion and reduced 2023 STI outcomes for Executive KMP to zero. The following table details the
2023 STI performance scorecard measures, weightings, and assessment.
Measure
Description
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. Group operating profit for the purposes
of the 2023 STI is inclusive of cybercrime event related
expenses.
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.
Group
operating
profit
Health
Insurance
premium
revenue
growth
Weighting
Group
Lead – CEO
Amplar
Other
Executive
KMP
2023
Outcomes
CEO
45%
22.5%
35%
Above
threshold
20%
15%
25%
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%
12.5%
20%
Role-specific
big goals
Aligned to one or more of the following milestones:
1. Deliver leading experiences – Continue to achieve a high
level of customer and employee advocacy by creating
personalised and connected customer experiences,
empowering our people and collaborating with our
communities to make a difference.
2. Differentiate our insurance business – We aim to achieve
market share and net policy holder growth (including
growth in the Medibank brand) and to deliver $30m
productivity savings in FY23-FY25 including $10m in FY23.
3. Expand in health – We aim to achieve at least 15% p.a.
organic segment profit growth and to invest $150m -
$250m in total to grow Medibank Health inorganically
as suitable opportunities arise over the next 3 years
by focusing growth on prevention and integrated care
models, scaling and connecting our health business and
bringing benefits back to our core.
15%
50%
20%
Above
threshold
Below
threshold
Ranging
between
below
threshold
to ahead
of target
Annual Report 2023 67
Remuneration report
For the financial year ended 30 June 2023
7.2 Medibank’s 2023 financial performance
Medibank’s 2023 annual financial performance is provided in the table below in addition to the average 2023 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
2023
4.2%
$601.1m
$511.1m
14.6 cent p/s
$3.25
$3.52
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
0%
72%
70%
0%
56%
1.
2019 Group operating profit of $558.7 million includes $30.2 million of operating profit attributable to discontinued operations. For 2023 Group operating profit
of $647.5 million was adjusted to include the non-recuring cybercrime costs of $46.4 million.
7.3 2023 STI awards
The table below provides a summary of STI awards for the 2023 performance year.
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
Total STI
achieved $
-
-
-
STI cash (50%)
$
-
-
-
STI deferred
(50%) $
-
-
-
Total STI
achieved as %
of target
0%
0%
0%
Total STI
achieved as % of
max opportunity
0%
0%
0%
-
-
-
0%
0%
Target STI $
1,550,000
536,250
672,750
663,000
With consideration of the expectations of our customers, shareholders, and the community following the cybercrime event the
Board exercised discretion and reduced the 2023 STI outcomes for Executive KMP to zero.
7.4 2021 Long-term incentive plan outcomes
Medibank’s 2021 LTI was tested following the completion of the performance period on 30 June 2023. The Board determined
it was appropriate to allow the LTI to vest in line with the terms of its grant, as the vesting outcome of 62.3% reflects an
appropriate balance between shareholder and customer interests over the three-year period including the impact of the
cybercrime event. The table below outlines the final outcome against the EPS CAGR, Relative TSR, and market share
performance hurdles and associated vesting percentage for each.
Performance hurdle
EPS CAGR
Relative TSR
Market Share
Total 2021 LTI vesting percentage
Weighting
35%
35%
30%
Outcome
10.8%
64th Percentile
27.08%
Vesting percentage
100%
78%
0%
62.3%
The performance rights under the 2021 LTI Plan that do not vest because of the performance hurdle outcomes not being
met will lapse immediately.
The 2022 and 2023 LTI plans remain in restriction and will be assessed against their performance hurdles at the completion
of the 2024 and 2025 financial years respectively.
68 Medibank
8. 2023 actual remuneration (Non-IFRS disclosure)
The table below represents the 2023 ‘actual’ remuneration for Executive KMP and includes all cash payments made in
relation to 2023, in addition to deferred short-term incentive (STI) and long-term incentive (LTI) awards that vested in 2023.
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
$
1,548,269
823,442
1,033,788
1,019,308
Cash STI for
performance
to 30 June
2023
$
-
-
-
-
Total cash
payments
in relation
to 2023
$
1,548,269
823,442
1,033,788
1,019,308
Deferred
equity awards
that vested in
20231
$
660,095
55,900
583,240
624,528
Total
2023 actual
remuneration
$
2,208,364
879,342
1,617,028
1,643,836
Equity awards
that lapsed in
20232
$
384,422
78,471
320,350
384,422
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
1.
2.
Deferred equity awards that vested in 2023 relate to 2021 STI deferred performance rights (including shares allocated as dividend equivalent for the deferral
period as per plan rules) and 2020 LTI performance rights that vested during the year.
Equity awards that lapsed in 2023 relate to the portion of the 2020 long-term incentive (LTI) performance rights that lapsed following the testing of the
performance hurdles in July 2022.
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 2023
actual remuneration, the table below includes accrual amounts for equity awards being expensed throughout 2023 that are yet
to, and may never, be realised.
Short-term
benefits
Post-employment
benefits
Long-term
benefits
Equity-based
benefits
Other
Executive
KMP
Financial
year
Salary
$1
Short-term
incentive
(STI) $ Other $
Non-monetary
benefits
$2
Superannuation
$
Leave
$3
Deferred
STI
$
Performance
rights
$4
Termination
benefits
$
Total
remuneration
$
David
Koczkar
Milosh
Milisavljevic
Mark
Rogers
Andrew
Wilson
Total
Executive
KMP
2023
2022
2023
2022
2023
2022
2023
2022
2023
1,536,560
-
1,523,622
861,228
769,948
754,326
1,013,573
980,097
957,739
971,537
4,277,820
-
302,413
-
422,042
-
384,956
-
2022
4,229,582
1,970,639
-
-
-
-
-
-
-
-
-
-
18,082
21,838
13,897
14,833
15,891
15,836
20,929
20,614
68,799
73,121
27,500
27,500
27,500
27,500
59,869
47,627
56,347
40,033
25,408
110,493
23,749
25,456
25,000
64,362
50,213
60,576
105,864
276,922
103,749
212,598
-
-
-
-
-
-
-
-
-
-
1,616,992
1,279,338
419,506
299,655
634,380
649,377
612,467
626,895
3,283,345
2,855,265
-
-
-
-
-
-
-
-
-
-
3,259,003
3,761,153
1,287,198
1,438,760
1,799,745
2,155,463
1,666,804
2,089,578
8,012,750
9,444,954
1.
2.
3.
4.
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.
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.
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.
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.
Annual Report 2023 69
Remuneration report
For the financial year ended 30 June 2023
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 2023 remuneration mix for Medibank’s
Executive KMP as detailed in the ‘statutory remuneration table’.
Executive KMP
David Koczkar
Milosh Milisavljevic
Mark Rogers
Andrew Wilson
Non-performance-related
Performance-related
Fixed
remuneration1
Cash
STI
Deferred
STI2
50.4%
67.4%
64.8%
63.3%
0%
0%
0%
0%
13.2%
11.7%
11.7%
11.5%
Total
performance-related
remuneration
49.6%
32.6%
35.2%
36.7%
LTI3
36.4%
20.9%
23.5%
25.2%
1.
2.
3.
Fixed remuneration includes the accounting expense from all columns of the ‘statutory remuneration table’ other than ‘cash STI’, ‘performance rights’
and ‘deferred STI’.
Deferred STI includes the 2023 accounting expense of the 2022 deferred STI component within the ‘performance rights’ column of the ‘statutory
remuneration table’.
LTI includes the 2023 accounting expense of the 2021, 2022 and 2023 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 2023 Executive KMP equity award transactions and outstanding holdings granted in previous years are set out below.
Executive
KMP
David
Koczkar
Award type1
Balance
1 July 2022
Units
Value
Units
Value
Units
Value
Units
Value
Acquired
during 20232
Vested
during 20233
Lapsed
during 20234
Other
changes Balance 30 June 20235
Long-term incentive
1,105,817
728,840
1,549,513
246,617
882,586
Short-term incentive
Ordinary shares
Milosh
Milisavljevic
Long-term incentive
Short-term incentive
Mark
Rogers
Andrew
Wilson
Ordinary shares
Long-term incentive
Short-term incentive
Ordinary shares
Long-term incentive
Short-term incentive
Ordinary shares
102,787
858,734
241,774
-
24,118
557,043
94,480
392,355
594,635
93,322
995,119
75,025
108,838
183,863
15,315
-
15,315
62,521
100,042
162,563
75,025
98,816
273,841
386,254
660,095
55,900
-
55,900
228,202
355,038
583,240
273,841
350,687
624,528
105,321
384,422
-
-
-
-
21,499
78,471
-
-
-
-
87,767
320,350
-
-
-
-
105,321
384,422
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,654,311
3,679,826
240,566
861,226
1,042,597
3,669,941
373,063
84,472
39,433
829,528
302,410
138,804
617,648
1,371,012
117,888
422,039
554,918
1,953,311
622,125
1,381,118
107,529
384,954
1,168,960
4,114,739
-
173,841
-
168,103
84,472
-
210,893
123,450
-
207,836
113,023
-
-
357,387
302,410
-
448,358
441,673
-
441,859
404,348
1.
2.
3.
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.
Represents the maximum number of equity awards that may vest to each executive in respect to their time as KMP during 2023. 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 2021, 2022 and 2023
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.
Awards that vested in 2023 relate to the 100% vesting of 2021 Deferred STI award (including shares allocated as dividend equivalent for the deferral period as
per plan rules) and the 41.6% vesting of 2020 LTI award (granted 28 November 2019) 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.
4.
Awards that lapsed in 2023 relate to the 58.4% of the 2020 LTI award that did not meet the performance hurdle and subsequently lapsed.
5.
The value of unvested STI is determined by the number of units at 30 June 2023 multiplied by the unit price at grant. The value of unvested LTI is determined
by the number of units at 30 June 2023 multiplied by the fair value at grant. The value of ordinary shares is determined by multiplying the number of ordinary
shares at 30 June 2023 by the closing price of Medibank shares on the same date.
70 Medibank
10.2 Overview of unvested equity awards and fair value assumptions
All awards are subject to continued employment, malus and clawback provisions.
Award
2023 LTI
performance rights
2022 deferred STI
performance rights
2022 LTI
performance rights
2021 deferred STI
performance rights
2021 LTI
performance rights
2020 LTI
performance rights
Award
type
LTI
Performance
start date
1/07/2022
Performance
Performance
end date1 Grant date
6/12/2022
30/06/2025
measure Weighting
35%
30%
35%
EPS
Market share
TSR
Unit price
at grant
3.19
3.19
3.19
Fair value
at grant2
2.63
2.63
1.19
STI
LTI
STI
LTI
1/07/2022
1/07/2021
15/09/2023
30/06/2024
6/12/2022
3/12/2021
1/07/2021
1/07/2020
15/09/2022
3/12/2021
30/06/2023 26/11/2020
LTI
1/07/2019
30/06/2022 28/11/2019
Service
EPS
Market share
TSR
Service
EPS
Market share
TSR
EPS
Market share
TSR
100%
35%
30%
35%
100%
35%
30%
35%
35%
30%
35%
3.58
3.13
3.13
3.13
3.55
3.02
3.02
3.02
3.46
3.46
3.46
3.58
2.72
2.72
1.62
3.55
2.54
2.54
1.58
2.80
2.80
1.09
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
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).
Component Delivered
Description
11.1.2 Non-executive director remuneration
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.
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).
Non-executive director base and committee fees have been
maintained at their current levels for 2024. Based on the
composition of the Board, non-executive director fee spend
for 2024 will remain at $2,019,300 against the approved cap
of $2,300,000.
Annual Report 2023 71
Remuneration report
For the financial year ended 30 June 2023
Non-executive director fees applicable throughout 2023 and
2024 are set out in the table below:
Position
Fees 2023 & 2024 $
contribution limits. Superannuation contributions for non-
executive directors are drawn from the overall fees paid to
non-executive directors.
Chair
Non-executive directors
Committee chair fees
Audit Committee
Risk Management Committee
People and Remuneration Committee
Investment and Capital Committee
Committee membership fees
Audit Committee
Risk Management Committee
People and Remuneration Committee
Investment and Capital Committee
458,500
170,000
41,200
41,200
41,200
41,200
20,600
20,600
20,600
20,600
11.2 Non-executive director superannuation
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
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.
11.3 Shareholding policy for 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 at 30 June 2023, all non-executive directors have met
the minimum shareholding requirement. Further details of
current non-executive director shareholdings are provided in
section 13.
12. 2023 non-executive director remuneration statutory table
Non-executive director
Mike Wilkins
Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham3
David Fagan
Kathryn Fagg3
Linda Bardo Nicholls
Former non-executive directors
Peter Hodgett2
Christine O’Reilly2
Total non-executive director
remuneration
Short-term
benefits
Post-employment
benefits
Financial
year
Cash salary and fees
$
Non-monetary1
$
Superannuation
$
Total
$
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2022
2022
2023
2022
453,452
446,711
210,549
191,670
191,837
187,054
209,840
213,703
191,837
47,308
210,548
215,023
191,837
47,308
232,691
204,643
79,846
87,863
1,892,591
1,721,129
4,818
4,414
2,792
2,703
3,343
3,532
2,747
1,248
3,315
593
3,118
3,019
143
-
2,812
3,026
6,070
5,355
23,088
29,960
6,812
-
22,143
19,196
20,175
18,734
22,851
4,470
20,175
4,731
22,143
21,534
20,175
4,731
-
-
465,082
451,125
235,484
213,569
215,355
209,320
235,438
219,421
215,327
52,632
235,809
239,576
212,155
52,039
235,503
207,669
8,053
-
134,474
81,449
93,969
93,218
2,050,153
1,832,538
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.
Peter Hodgett’s and Christine O’Reilly’s 2022 remuneration reflects their retirement date from the Medibank Board of 18 November 2021.
3.
Kathryn Fagg’s and Peter Everingham’s 2022 remuneration reflects their commencement date as non-executive directors of 31 March 2022.
72 Medibank
13. Non-executive director ordinary shareholdings
Balance
30 June
2022
Acquired
during the
year
Other
changes
100,000
50,000
44,623
72,832
40,000
47,016
32,750
45,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
30 June
2023
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
2023 $2
Minimum
shareholding
requirement timeline
229,250
85,000
85,000
85,000
85,000
85,000
85,000
85,000
352,000 Requirement satisfied
176,000 Requirement satisfied
157,073 Requirement satisfied
256,369 Requirement satisfied
140,800 Requirement satisfied
165,496 Requirement satisfied
115,280 Requirement satisfied
158,400 Requirement satisfied
Non-executive director
Mike Wilkins
Tracey Batten
Anna Bligh
Gerard Dalbosco
Peter Everingham
David Fagan
Kathryn Fagg
Linda Bardo Nicholls
1. Minimum shareholding requirement based on annual non-executive director base fees for 2023 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 2023 ($3.52).
14. Medibank’s comparator group
15. Loans and other transactions with KMP
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.
During 2022 and 2023 there were no loans to KMP or any of
their 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 2023 73
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 75
page 76
page 77
page 78
Section 1
Basis of
preparation
page 79
1. Basis of
preparation
Section 2
Operating
performance
page 80
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 92
Section 4
Other assets
and liabilities
page 103
Section 5
Other
page 111
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 121
page 122
page 123
74 Medibank
Consolidated statement of comprehensive income
For the financial year ended 30 June 2023
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
2023
$m
2022
$m
2(b) 3(a)
3(a)
13(a)(ii)
16(b)
7,182.0
173.3
7,355.3
6,881.2
247.3
7,128.5
1.0
1.0
(5,859.7)
(27.6)
(455.5)
(109.8)
(115.5)
(78.1)
(118.4)
(1.8)
(1.4)
(6,767.8)
(5,679.8)
(34.7)
(467.5)
(90.1)
(85.9)
(73.8)
(115.0)
(2.4)
4.5
(6,544.7)
Profit before net investment income and income tax
588.5
584.8
Net investment income/(expense)
7(a)
138.6
(24.8)
Profit for the year before income tax
727.1
560.0
Income tax expense
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gain 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)
(216.0)
511.1
(166.1)
393.9
-
0.2
511.1
394.1
6(b)
18.6
14.3
Annual Report 2023 75
Consolidated statement of financial position
As at 30 June 2023
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.
76 Medibank
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
2023
$m
2022
$m
420.6
248.1
2,866.8
34.8
97.8
25.9
3,694.0
70.5
328.1
44.3
130.8
117.6
3.5
694.8
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
4,388.8
4,552.8
328.5
767.3
776.8
-
136.1
94.0
2,102.7
39.4
10.0
131.7
20.6
201.7
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
2,304.4
2,607.2
2,084.4
1,945.6
10(a)
10(b)
85.0
27.9
1,971.5
2,084.4
85.0
25.7
1,834.9
1,945.6
Consolidated statement of changes in equity
For the financial year ended 30 June 2023
Contributed
equity
$m
85.0
Note
Reserves
$m
22.3
Retained
earnings
$m
1,798.8
Balance at 1 July 2021
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)
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 2023
6(a)(i)
-
-
-
-
-
-
85.0
-
-
-
-
-
-
85.0
-
-
-
-
(2.5)
5.9
25.7
-
-
-
-
(4.5)
6.7
27.9
393.9
0.2
394.1
(358.0)
-
-
1,834.9
511.1
-
511.1
(374.5)
-
-
1,971.5
Total
equity
$m
1,906.1
393.9
0.2
394.1
(358.0)
(2.5)
5.9
1,945.6
511.1
-
511.1
(374.5)
(4.5)
6.7
2,084.4
The above statement should be read in conjunction with the accompanying notes.
Annual Report 2023 77
Consolidated statement of cash flows
For the financial year ended 30 June 2023
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
Dividends received from equity accounted investments
Purchase of plant and equipment
Purchase of intangible assets
Net cash inflow/(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
2023
$m
2022
$m
9(d)
16(b)
16(b)
14
6(a)(i)
7,148.1
192.4
4.5
(5,996.4)
(846.5)
(317.6)
184.5
71.2
(5.0)
1,761.2
(1,703.6)
(25.9)
2.5
(7.8)
(34.1)
58.5
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)
(4.9)
(39.7)
(374.5)
(419.1)
(3.1)
(38.8)
(358.0)
(399.9)
(176.1)
(75.0)
596.7
671.7
420.6
596.7
78 Medibank
Notes to the consolidated financial statements
30 June 2023
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 2023 were authorised for issue in accordance
with a resolution of the directors on 24 August 2023. 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 2023 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 2023 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 13: Provisions and employee entitlements.
• Note 15: Income tax.
Annual Report 2023 79
Notes to the consolidated financial statements
30 June 2023
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 2023, 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.
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
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.
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.
80 Medibank
(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 2023 is as follows.
Health Insurance
Medibank Health
$592.6m
$6,859.8m
$650.4m
$7,148.7m
$45.5m
$321.8m
$44.2m
$277.1m
2022
2023
2022
2023
Revenue
Operating profit
Revenue
Operating profit
30 June 2023
Revenue
Total segment revenue
Inter-segment revenue
Health
Insurance
$m
Medibank
Health
$m
Note
Total
$m
2(c)(iii)
7,148.7
-
277.1
(70.5)
7,425.8
(70.5)
Revenue from external customers
7,148.7
206.6
7,355.3
Operating profit
650.4
44.2
694.6
Items included in segment operating profit:
Depreciation and amortisation
Interest income from loans to associates
Share of net profit/(loss) from equity accounted investments
16(b)
(103.3)
-
-
(9.3)
0.2
(0.2)
(112.6)
0.2
(0.2)
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 net profit/(loss) from equity accounted investments
16(b)
(101.6)
-
-
(7.3)
0.2
4.5
(108.9)
0.2
4.5
Annual Report 2023 81
Notes to the consolidated financial statements
30 June 2023
(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)
Cybercrime expenses
Acquisition intangible amortisation
Mergers and acquisitions expenses
Other income/(expenses)
Profit for the year before income tax
Note
2023
$m
694.6
2022
$m
638.1
7(a)
(47.1)
(44.0)
647.5
594.1
138.6
(46.4)
(1.4)
(1.4)
(9.8)
(24.8)
-
(2.0)
(1.7)
(5.6)
727.1
560.0
(ii) Other items
Segment operating profit excludes the following:
• Corporate operating expenses of $47.1 million (2022:
$44.0 million) relating to the Group's corporate function.
• Net investment income/(expense), which comprises:
– 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.
– 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.
• Expenses incurred in relation to the Group’s cybercrime
event of $46.4 million (2022: nil). These costs have been
recognised within the relevant line items in the consolidated
statement of comprehensive income, including office and
administration expense of $22.0 million, employee benefits
expense of $15.6 million, information technology expense
of $7.6 million and marketing expense of $1.2 million.
Refer to Note 13(d) for further information.
• Acquisition intangible amortisation of $1.4 million
(2022: $2.0 million) not allocated to segments.
• Expenses in relation to mergers and acquisitions of
$1.4 million (2022: $1.7 million) which are not allocated
to the operating activities of the Group’s segments.
• Other income/(expenses) of $9.8 million (2022: $5.6 million)
which do not relate to the current period’s trading activities
of the Group’s segments, comprising primarily net costs
relating to the Group’s subleases and the Group’s share of
interest on lease liabilities in relation to its investment in
East Sydney Day Hospital Pty Ltd.
(iii) Loyalty program
Segment private health insurance premium revenue is
after $33.3 million (2022: $21.4 million) of transfers between
the Group’s other operating segments in relation to the
loyalty program.
(iv) Segment assets and segment liabilities
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.
82 Medibank
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.
$7,148.7m
2023 underwriting result after expenses
2023 underwriting result after expenses
$(5,927.9)m
$(570.4)m
$650.4m
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)
2023
$m
2022
$m
7,148.7
6,859.8
(6,016.6)
194.5
(67.0)
(36.8)
(5,925.9)
(2.0)
(5,927.9)
(5,415.0)
(224.5)
(55.5)
(36.1)
(5,731.1)
(0.5)
(5,731.6)
(570.4)
(535.6)
650.4
592.6
(i) Private health insurance premium revenue is
(iii) Net claims incurred consists of amounts paid and
after $33.3 million (2022: $21.4 million) of transfers
between the Group’s other operating segments in
relation to the loyalty program and $451.7 million
(2022: $369.4 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.
Refer to Note 3(b) for further information.
(ii) Claims incurred are prior to elimination of transactions
with the Group’s other operating segments of
$68.2 million (2022: $51.8 million).
Annual Report 2023 83
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)
2023
$m
440.1
253.8
55.2
10.9
760.0
7.3
767.3
3.7
0.4
0.1
4.2
5.8
10.0
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
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.
84 Medibank
Notes to the consolidated financial statements30 June 2023 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
in 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 4.35% per annum which equates to a reduction in the central
estimate of $2.7 million (2022: 1.81%, $0.9 million).
(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 2023 is 12.2% (2022: 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 98% (2022: 95%), increasing
this period as a result of increased uncertainty arising due to short-term changes in claims
processing driven by the timing of hospital contracting. 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 2023 is 2.5% of the outstanding claims liability
(2022: 2.5%).
Annual Report 2023 85
(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 liability relates to claims deferred as a result of surgeries and other health services restricted
for policyholders during the COVID-19 pandemic. At 30 June 2023, the COVID-19 liability includes
surgical and non-surgical hospital claims of $253.8 million (2022: $405.6 million) and ancillary
claims of nil (2022: $42.7 million).
Key estimate
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 restrictions
in March 2020. Any shortfall in claims up to June 2022 is deferred into the liability at the applicable
claims deferral rate. Claims deferral was ceased after June 2022 as despite the prolonged impact
of COVID-19, there have been no formal restrictions and lockdowns since that time impeding availability
and accessibility to surgeries and other health services. The Group will continue to reassess this
position. Utilisation of the liability occurs where the 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 annually for those 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% (2022: 85%)
for surgical claims and 20% (2022: 40%) for non-surgical 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.
86 Medibank
Notes to the consolidated financial statements30 June 2023 (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 estimate1
Risk margin
Claims handling costs
Movement in discount rate
Balance at 30 June
Note
(i)
2023
$m
871.1
5,942.5
(194.5)
2022
$m
631.5
5,369.8
224.5
(5,847.7)
(5,348.1)
(13.6)
20.2
2.0
(2.7)
(8.2)
2.0
0.5
(0.9)
777.3
871.1
Note: Movement includes both current and non-current. Claims incurred and claims paid exclude levies and rebates.
1
The over provision recognised in the current year includes $4.0 million that has been recognised within the COVID-19 liability at the applicable deferral rate.
Refer to Note 3(c)(i). The remaining amount has been recognised within the net permanent claims savings for the period.
(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.
Hospital
$m
405.6
(84.8)
4.0
(71.0)
253.8
Ancillary
$m
42.7
-
-
(42.7)
-
Total
$m
448.3
(84.8)
4.0
(113.7)
253.8
• An increase/decrease of 10 percentage points in the
adopted deferral rate for COVID-19 hospital claims would
result in a $51.4 million decrease/increase to profit after
tax and equity (2022: $54.2 million). The reasonable possible
range for the hospital deferral assumption is 75-100% for
surgical claims (2022: 75-100%) and 10-30% for non-
surgical and ancillary claims (2022: 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.
Balance at 1 July 2022
Net change in assumptions1
Amount over/(under) provided from central estimate
Decrease during the period
Balance at 30 June 2023
1. Includes change in expected deferral rate of $79.8 million.
(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 $31.1 million decrease/increase
to profit after tax and equity (2022: $25.4 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 $92.6 million decrease and $118.8 million
increase respectively to profit after tax and equity
(2022: $117.9 million).
Annual Report 2023 87
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 regular
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.
88 Medibank
Notes to the consolidated financial statements30 June 2023 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.
2023
$m
82.9
35.1
(38.9)
79.1
2022
$m
81.1
39.6
(37.8)
82.9
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
(2022: 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
Movements 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.
2023
$m
894.8
960.8
(817.5)
(129.6)
908.5
2022
$m
757.4
700.9
(697.0)
133.5
894.8
The unearned premium liability balance at 30 June 2023 includes a provision for premium deferral of $3.9 million (2022:
$133.5 million). The provision for premium deferral represents amounts owed at balance date in relation to the announcements
made by the Group to return permanent net COVID-19 savings to eligible policyholders via premium deferrals.
A separate customer give back provision of $136.1 million (2022: $178.6 million) is recognised in the consolidated statement
of financial position. Refer to Note 13(c) for further information.
Annual Report 2023 89
(a) Liability adequacy test
The expected cash outflows and the risk margin in the 30 June 2023 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 2023 and 2022. 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
2023
2022 final fully franked dividend
2023 interim fully franked dividend
2022
2021 final fully franked dividend
2022 interim fully franked dividend
Cents per fully
paid share
7.30
6.30
6.90
6.10
$m
Payment date
201.0
173.5
29 September 2022
22 March 2023
190.0
168.0
30 September 2021
24 March 2022
(ii) Dividends not recognised at the end of the reporting period
On 24 August 2023, the directors determined a final fully franked ordinary dividend for the six months ended 30 June 2023 of
8.30 cents per share. The dividend is expected to be paid on 5 October 2023 and has not been provided for as at 30 June 2023.
(iii) Franking account
Franking credits available at 30 June 2023 for subsequent reporting periods based on a tax rate of 30% are $533.6 million
(2022: $372.7 million).
(iv) Calculation of dividend paid
Medibank’s target dividend payout ratio for the 2023 financial year is 75-85% (2022: 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.
90 Medibank
Notes to the consolidated financial statements30 June 2023
Profit for the year – after tax
Normalisation for growth asset returns
Normalisation for defensive asset returns – credit spread movement
Underlying NPAT
2023
$m
511.1
(4.7)
(6.8)
499.6
2022
$m
393.9
22.7
18.5
435.1
Dividends Accounting Policy
A liability is recorded for any dividends determined on or before the reporting date, but that have not been distributed
at that date.
(b) Earnings per share
Basic and diluted earnings per share attributable to ordinary equity holders of the
parent (cents)
Profit for the year attributable to ordinary equity holders of the parent ($m)
2023
2022
18.6
511.1
14.3
393.9
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.
Annual Report 2023 91
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
Strategic Asset Allocation (SAA) 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 Non-Health
Fund 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
249.9
342.0
(4.8)
1,879.3
(342.0)
4.8
543.6
2,672.8
159.6
-
-
1.5
-
-
234.2
209.7
-
-
-
-
-
-
393.8
211.2
3,277.8
Total
411.0
342.0
(4.8)
2,323.2
(342.0)
4.8
543.6
Portfolio composition 30 June 2023 ($m)
Cash portfolio
Cash and cash equivalents (as reported in the statement
of financial position)2
Cash investments with longer maturities
Less cash allocated to the Fixed income portfolio
Fixed income portfolio
Fixed income (as reported in the statement of
financial position)
Less cash investments with longer maturities
Cash allocated to the Fixed income portfolio
Growth portfolio
Equities and investment trusts
Total investment portfolio
92 Medibank
Notes to the consolidated financial statements30 June 2023 Health Fund
Investment
Portfolio1
Short-term
Operational
Cash (STOC)
Non-Health
Fund Investment
Portfolio
Portfolio composition 30 June 2022 ($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
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 $9.6 million (2022: $24.3 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
2023
Portfolio
composition
30 June
2022
Target
asset
allocation
5.7%
4.5%
6.6%
3.5%
20.3%
5.4%
4.1%
7.4%
2.3%
19.2%
6.0%
5.0%
7.0%
2.0%
20.0%
57.7%
22.0%
79.7%
100.0%
59.0%
21.8%
80.8%
100.0%
60.0%
20.0%
80.0%
100.0%
Health Fund Investment Portfolio
Health Fund Investment Portfolio
International equities
$121.3m
Cash
$587.1m
Infrastructure
$94.7m
Australian equities
$153.2m
Property
$174.4m
Fixed income
$1,542.1m
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
Annual Report 2023 93
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)
2023
$m
86.0
27.2
34.8
(4.4)
(5.0)
138.6
2022
$m
17.9
43.1
(93.0)
12.3
(5.1)
(24.8)
1.
Includes interest income of $6.7 million (2022: $1.0 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.
94 Medibank
Notes to the consolidated financial statements30 June 2023 The following tables present the Group’s financial assets measured and recognised at fair value on a recurring basis.
30 June 2023
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 2023
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
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
-
-
-
-
153.2
121.3
-
-
58.7
2,054.8
-
209.7
-
-
174.4
94.7
-
-
153.2
121.3
174.4
94.7
2,113.5
209.7
58.7
2,539.0
269.1
2,866.8
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
1. Australian equities, international equities, property and infrastructure are indirectly held through unit trusts.
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.
The following table presents the changes in level 3 financial
assets during the period.
Balance at 1 July 2022
Acquisitions
Net unrealised gain/(loss)
on fair value movements
Infrastructure
$m
Property
$m
Total
$m
57.2
31.5
182.9
240.1
4.7
36.2
6.0
(13.2)
(7.2)
Balance at 30 June 2023
94.7
174.4
269.1
A 10% increase/decrease in the redemption price would
decrease/increase the fair value of the level 3 financial assets
by $26.9 million (2022: $24.0 million).
Annual Report 2023 95
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 target and
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 market 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 (2023: $420.6 million, 2022: $596.7 million) and fixed income assets (2023: $2,323.2 million,
2022: $2,379.8 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 0.5 years (2022: 0.3 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 $5.2 million increase/decrease to profit after tax and equity
(2022: $6.9 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 (2023: $121.3 million, 2022: $100.7 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 $9.4 million decrease/increase to profit after tax and equity (2022: $7.8 million) in the
AUD valuation of international equities financial assets. Balance date risk exposures represent the risk
exposure inherent in the financial instruments.
96 Medibank
Notes to the consolidated financial statements30 June 2023 (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
2023
$m
2022
$m
+10.0%
-10.0%
+10.0%
-10.0%
10.3
7.7
12.8
5.2
(10.3)
(7.7)
(12.8)
(5.2)
9.1
8.3
12.3
3.8
(9.1)
(8.3)
(12.3)
(3.8)
In relation to fixed income assets, a 25bps increase/decrease in credit spreads, with all other variables
remaining constant, would have resulted in a $7.4 million decrease/increase to profit after tax and equity
(2022: $5.8 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
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% (2022: 50%) of the cash portfolio can be invested in any one counterparty
bank and no more than 10% (2022: 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% (2022: 50%) and 15% (2022: 15%) of the portfolio respectively.
As at 30 June 2023 and 2022, the counterparty exposure of the Group was within these limits.
Annual Report 2023 97
(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
2023
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
2022
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
420.6
-
-
-
-
-
-
A-1
A
$m
A-2
BBB
$m
B & below
BB & below
$m
Not rated
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.4
237.7
153.2
121.3
174.4
94.7
Total
$m
420.6
10.4
237.7
153.2
121.3
174.4
94.7
326.1
649.2
400.0
338.2
7.7
392.3
2,113.5
-
209.7
-
-
-
-
209.7
326.1
1,279.5
400.0
338.2
7.7
1,184.0
3,535.5
-
-
-
-
-
-
-
596.7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6.3
596.7
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
Financial assets at fair value through
other comprehensive income
-
176.2
-
-
-
-
176.2
Total
285.5
1,592.8
378.8
329.2
7.6
1,082.7
3,676.6
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.
98 Medibank
Notes to the consolidated financial statements30 June 2023 (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% (2022: 20%) of its total investment assets in cash/
bank deposits and highly liquid short-term money market
instruments and fixed income securities. The Short-term
Operational Cash (STOC) sub-portfolio is reserved for funding
the COVID-19 claims liability and the customer give backs and
is invested 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 2023, 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 2023.
2023
Other trade and other payables1
Lease liabilities2
Total trade and other payables
Claims liabilities
COVID-19 claims liability3
Total claims liabilities
2022
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
295.0
18.4
313.4
482.5
78.0
560.5
329.8
17.7
347.5
389.8
95.9
485.7
2.6
17.6
20.2
33.9
175.8
209.7
1.4
17.4
18.8
23.8
352.4
376.2
5.9
14.9
20.8
6.8
-
6.8
2.5
31.8
34.3
6.8
-
6.8
9.1
10.6
19.7
3.0
-
3.0
7.4
15.9
23.3
3.3
-
3.3
312.6
61.5
374.1
526.2
253.8
780.0
341.1
82.8
423.9
423.7
448.3
872.0
312.6
55.3
367.9
523.5
253.8
777.3
341.1
76.9
418.0
422.8
448.3
871.1
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.
Annual Report 2023 99
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 to enable
the ongoing conduct of the business of the fund. The
standard consists of a requirement to hold a prescribed
(b) Trade and other receivables
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.
From 1 July 2023 the new Private Health Insurance (PHI)
Capital Framework will apply to the Group. In addition, APRA
has advised the Group that it will apply an additional capital
adequacy requirement of $250 million from with effect from
1 July 2023 following APRA’s review of the cybercrime event.
Premiums in arrears
Allowance for impairment loss
Trade receivables
Allowance for impairment loss
Government rebate scheme
Accrued revenue
Other receivables
Total trade and other receivables
Note: Government rebate scheme is non-interest bearing and generally on 15-day terms.
Note
(i)
(ii)
2023
$m
17.2
(6.8)
10.4
71.2
(3.5)
67.7
146.1
16.8
7.1
170.0
248.1
2022
$m
11.9
(5.6)
6.3
66.7
(2.1)
64.6
137.7
13.4
3.4
154.5
225.4
Past due but not considered impaired
(i) Premiums in arrears past due but not impaired are
$10.4 million (2022: $6.3 million).
(ii) Trade receivables past due but not impaired are
$10.0 million (2022: $8.0 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.
100 Medibank
Notes to the consolidated financial statements30 June 2023 (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
2023
$m
2022
$m
14
14
215.7
241.4
66.2
30.9
4.1
11.6
66.2
30.2
16.7
6.9
328.5
361.4
24.4
15.0
39.4
46.7
9.9
56.6
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.
Annual Report 2023 101
(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
(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
16(b)
14
2023
$m
511.1
2022
$m
393.9
118.4
115.0
6.7
1.4
1.8
4.4
(34.8)
(86.0)
(27.2)
5.0
1.8
(22.0)
(35.1)
(4.1)
(214.8)
113.2
(27.7)
13.7
(93.8)
(47.5)
184.5
5.9
(4.5)
1.6
(12.3)
93.0
(17.9)
(43.1)
5.1
2.4
(11.1)
(39.6)
1.7
123.2
(157.1)
34.2
137.4
239.6
81.1
948.5
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
(b) Reserves
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.
102 Medibank
Equity reserve1
Share-based payments reserve2
Total
2023
$m
17.8
10.1
27.9
2022
$m
17.8
7.9
25.7
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.
Notes to the consolidated financial statements30 June 2023
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
2023
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
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
Note
14
2023
$m
11.4
10.5
5.7
42.9
70.5
Plant and
equipment
$m
Leasehold
improvements
$m
Assets under
construction
$m
26.9
(15.5)
11.4
10.0
1.1
2.2
(1.9)
11.4
23.6
(13.6)
10.0
10.2
-
1.1
(1.3)
10.0
99.5
(89.0)
10.5
16.8
1.8
1.7
(9.8)
10.5
96.0
(79.2)
16.8
23.7
0.4
2.7
(10.0)
16.8
5.7
-
5.7
7.1
2.5
(3.9)
-
5.7
7.1
-
7.1
4.5
6.4
(3.8)
-
7.1
2022
$m
10.0
16.8
7.1
54.5
88.4
Total
$m
132.1
(104.5)
27.6
33.9
5.4
-
(11.7)
27.6
126.7
(92.8)
33.9
38.4
6.8
-
(11.3)
33.9
(c) Property, plant and equipment capital expenditure commitments
Capital expenditure contracted for at the end of the reporting period but not
recognised as liabilities
2023
$m
2022
$m
1.7
2.0
Annual Report 2023 103
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
2023
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
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
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
(89.4)
0.3
1.7
-
-
(1.4)
0.3
89.7
(88.0)
1.7
3.7
-
-
(2.0)
1.7
508.0
(418.4)
89.6
99.8
10.3
18.3
(38.8)
89.6
479.4
(379.6)
99.8
111.9
4.5
19.4
(36.0)
99.8
33.7
-
33.7
26.3
25.7
(18.3)
-
33.7
26.3
-
26.3
25.2
20.5
(19.4)
-
26.3
Total
$m
914.3
(586.2)
328.1
332.3
36.0
-
(40.2)
328.1
878.3
(546.0)
332.3
345.3
25.0
-
(38.0)
332.3
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.
104 Medibank
Notes to the consolidated financial statements30 June 2023 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
2023
Growth
rate
%
2.5
2.5
2.5
Pre-tax
discount
rate %
Goodwill
allocation
$m
11.4
11.7
11.7
96.2
11.1
97.2
2022
Growth
rate
%
2.5
1.0
2.5
Pre-tax
discount
rate %
11.6
12.4
12.4
Forecast
future cash
flows
Discount
rates
Growth rates
Other key
assumptions
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 the VIU calculations.
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 forecast cash flows contain key assumptions around 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.
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.
Annual Report 2023 105
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.
(b) Intangible assets capital expenditure commitments
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.
2023
$m
2022
$m
-
0.7
2023
$m
65.3
14.4
79.7
2023
$m
33.0
7.0
1.6
6.7
2022
$m
72.4
13.8
86.2
2022
$m
31.0
4.9
3.3
5.9
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
106 Medibank
Notes to the consolidated financial statements30 June 2023 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
Other
$m
Total
$m
Balance at 1 July 2022
Additional provision
Amounts utilised during the year
Reversal of unused provision
Balance at 30 June 2023
Balance comprised of:
Current
Non-current
8.7
6.2
(7.1)
-
7.8
7.8
-
4.2
-
(0.2)
-
4.0
1.3
2.7
4.5
0.7
(0.9)
-
4.3
0.8
3.5
10.7
9.8
(3.7)
-
16.8
16.8
-
8.1
5.3
-
14.1
41.5
30.8
(5.4)
(2.7)
-
-
-
(17.4)
(34.7)
-
2.0
(2.7)
34.9
2.0
28.7
-
6.2
Annual Report 2023 107
(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 (2022:
$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. $5.4 million was paid
during the year. 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 2022
Additional provision
Amounts utilised during the year
Balance at 30 June 2023
Total
$m
178.6
337.9
(380.4)
136.1
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.
108 Medibank
Customer give backs totalling $451.7 million were announced
during the current period, with $337.9 million of this expected
to be provided via a one-time cash payment and recognised
in the customer give back provision. The remaining give back
amount of $113.7 million has been recognised in the provision
for premium deferral in the unearned premium liability (refer
to Note 5). The closing balance at 30 June 2023 is largely
comprised of the recently announced $125 million one-time
cash give back that is expected to be paid by October 2023.
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.
(d) Contingent liabilities
(i) Cybercrime event
The Group was subject to a cybercrime during this year which
resulted in a data breach. Costs have been recognised in the
current period in relation to this matter, largely related to our
incident response and the customer support package.
Specific contingent liabilities in relation to the cybercrime
that may impact the Group as known at this reporting period
are set out below. The outcome and any potential financial
impacts of the matters below are currently unknown.
OAIC regulatory investigation
The Office of the Australian Information Commissioner
(OAIC) informed Medibank on 1 December 2022 that it was
commencing an investigation into the cybercrime. The
investigation will consider Medibank’s conduct in relation to
the unauthorised access that occurred in respect of the data
breach, including whether Medibank took reasonable steps
to protect personal information from unauthorised access
Notes to the consolidated financial statements30 June 2023 and misuse, and to destroy or deidentify personal information
that it is no longer required to retain.
Medibank continues to co-operate with the OAIC and its’ ongoing
investigation and has not received notice of any findings. The
OAIC investigation may result in fines, penalties, enforceable
undertakings or other regulatory enforcement action.
OAIC representative complaint
Maurice Blackburn, in collaboration with Bannister Law and
Centennial Lawyers, has lodged a representative complaint
with the OAIC alleging Medibank has breached its privacy
obligations and seeks compensation for loss and damage,
including but not limited to loss and damage for injury to
feelings and humiliation.
Medibank is defending the representative complaint.
Consumer class actions
On 7 February 2023, Medibank received notice of a consumer
class action filed in the Federal Court of Australia by Baker
& McKenzie in relation to the cybercrime. On 5 May 2023
Medibank received notice of a second consumer class action
filed in the Federal Court of Australia by Slater & Gordon.
On 1 August 2023 orders were made in the Federal Court
to consolidate the two consumer class action proceedings.
The consolidated consumer class action is being brought
on behalf of persons who were Medibank or ahm health
insurance customers between 21 December 2001 and
12 October 2022, and persons who provided personal
information to Medibank or ahm for the purpose of obtaining
a quote for insurance but did not become a customer.
The consolidated statement of claim includes allegations
of breach of contract, contraventions of the Australian
Consumer Law, breach of equitable obligations of confidence,
breach of the Privacy Act and breach of APRA Prudential
Standard CPS234. The amount claimed is unspecified,
however remedies sought include damages, declarations for
contraventions of the Privacy Act, injunctive relief requiring
Medibank to take reasonable steps to destroy or deidentify
personal information which Medibank no longer needs to
retain, interest and costs.
Medibank is defending this consolidated consumer class
action proceeding.
Shareholder class actions
On 29 March 2023, Medibank received notice of a
shareholder class action filed in the Supreme Court of
Victoria by Quinn Emanuel on behalf of persons who
acquired an interest in Medibank shares during the period
1 July 2019 to 19 October 2022.
On 29 June 2023, Medibank received notice of a second
shareholder class action filed in the Supreme Court of
Victoria by Phi Finney McDonald on behalf of persons who
acquired an interest in Medibank shares or entered into
equity swap confirmations of Medibank shares during the
period 10 September 2020 to 25 October 2022.
The statements of claim for both shareholder class actions
are substantially similar and include allegations of misleading
or deceptive conduct and that Medibank breached its
continuous disclosure obligations under the Corporations Act
2001 and ASX Listing Rules by not disclosing to the market
information relating to alleged deficiencies in its cyber
security systems. The amount claimed in both proceedings
is unspecified, however remedies sought include damages,
interest and costs.
Quinn Emanuel and Phi Finney McDonald have made an
application to the Supreme Court of Victoria to consolidate
the two shareholder class actions into one consolidated
shareholder class action. The outcome of this application
is currently unknown.
Medibank is defending the shareholder class action
proceedings.
(ii) Other contingency matters (excluding cybercrime
event)
The Group has issued $18.3 million of bank guarantees to
third parties for various operational and legal purposes,
including $10.0 million (2022: $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.
In addition to the items noted above in relation to the
cybercrime event, the Group is exposed from time to time to
contingent liabilities which arise from the ordinary course of
business, including:
• Losses which might arise from litigation.
• Investigations from internal reviews and by regulatory
bodies such as the ACCC, APRA, ATO, ASIC 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 from these other contingency matters is not material
or are not at a stage to support a reasonable evaluation of the
likely outcome.
Key judgement and estimate
Contingent liabilities are possible obligations whose
existence will be confirmed only on the occurrence or
non-occurrence of uncertain future events outside the
Group’s control, or present obligations that are not
recognised because it is not probable that a settlement
will be required or the value of such a payment cannot
be reliably estimated.
Judgement is exercised to identify whether a present
obligation exists and also in estimating the probability,
timing, nature and quantum of the outflows that may
arise from past events.
Annual Report 2023 109
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 lease agreements. The leases have
varying terms, escalation clauses and renewal rights.
As at 30 June 2023, 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
2023
$m
54.5
16.0
(27.6)
42.9
2022
$m
63.3
19.1
(27.9)
54.5
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
2023
$m
76.9
16.3
1.8
(39.7)
55.3
30.9
24.4
2022
$m
93.4
19.9
2.4
(38.8)
76.9
30.2
46.7
The maturity profile of the Group's lease liabilities based on
contractual undiscounted payments is provided in Note 8(c).
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 $0.6 million have been
recognised by the Group at 30 June 2023 (2022: $4.9 million).
These are presented within other assets in the consolidated
statement of financial position.
110 Medibank
Leases Accounting Policy
As a lessor
The Group acts as an intermediate lessor for one sublease
(2022: 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.
Notes to the consolidated financial statements30 June 2023 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
2023
$m
98.6
118.1
(0.7)
216.0
2022
$m
322.0
(156.6)
0.7
166.1
1.
Includes deferred tax of $110.1 million (2022: ($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
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
2023
$m
727.1
2022
$m
560.0
218.1
168.0
0.8
(3.6)
0.4
1.0
0.9
(1.6)
(1.3)
(0.6)
216.7
165.4
(0.7)
216.0
0.7
166.1
Annual Report 2023 111
(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
2023
$m
3.1
(16.3)
(23.7)
(12.0)
(6.3)
22.9
23.9
80.1
54.2
0.2
4.3
130.4
0.4
0.4
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
Net deferred tax assets
130.8
243.6
1. Includes deferred tax of $76.1 million (2022: $134.5 million) in relation to the COVID-19 claims liability. Refer to Note 3(b) for further information.
2.
Includes deferred tax of $40.8 million (2022: $53.6 million) in relation to the customer give back provision and $1.2 million (2022: $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.
112 Medibank
Notes to the consolidated financial statements30 June 2023
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 Ltd
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 Ltd
Medi Financial
Services
Pty Ltd
HealthStrong
Pty Ltd
East Sydney Day
Hospital Pty Ltd
(49%)
Adeney Private
Hospital Pty Ltd
(49%)
Integrated
Mental Health
Pty Ltd
(50%)
Medinet Australia
Pty Ltd
(3.82%)
Amplar Home
Health
Pty Ltd2
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. Home Support Services Pty Ltd changed its name to Amplar Home Health Pty Ltd on 28 July 2023.
Annual Report 2023 113
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 2023 the Group held the following investments in associates and joint ventures:
Name of company
East Sydney Day Hospital Pty Ltd
Calvary Medibank JV Pty Ltd
Myhealth Medical Holdings Pty Ltd
Adeney Private Hospital Pty Ltd
Medinet Australia Pty Ltd
SydOrtho Holdings Pty Ltd
Integrated Mental Health Pty Ltd (i)
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
Australia
Short stay hospital
Associate
Joint Venture
Associate
Associate
Associate
Joint Venture
Joint Venture
The following table shows the Group’s aggregated interests in equity accounted investments.
Balance at 1 July
Net additions
Dividends received
Share of net profit/(loss) for the year
Balance at 30 June
(i) Integrated Mental Health Pty Ltd
Ownership interest %
2023
49.00%
50.00%
49.00%
49.00%
3.82%
50.00%
50.00%
2023
$m
103.7
17.8
(2.5)
(1.4)
117.6
2022
49.00%
50.00%
49.00%
49.00%
3.85%
50.00%
-
2022
$m
77.1
22.1
-
4.5
103.7
On 3 March 2023, MHSI Pty Ltd acquired a 50% shareholding in Integrated Mental Health Pty Ltd (iMH) for consideration of
$15.5 million. The joint venture is seeking to deliver an innovative integrated mental health model via mental health facilities
and out-of-hospital support.
(ii) Other
Other movements during the period comprised:
• MH Solutions Investments Pty Ltd subscribed for an additional $5.0 million of shares in SydOrtho Holdings Pty Ltd
(SydOrtho) in line with SydOrtho’s achievement of milestones.
• Non-cash decrease of $2.7 million in relation to the reduction in the East Sydney Day Hospital Pty Ltd contingent
consideration provision (refer to Note 13(b)(v)).
114 Medibank
Notes to the consolidated financial statements30 June 2023
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 in associate or joint
venture is initially recognised at cost and is increased
or decreased to recognise the Group’s share of profit or
loss. Dividends received from an associate or joint venture
reduce the carrying amount of the investment. 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
2023
$m
3,609.9
4,297.2
2,091.8
2,331.0
2022
$m
3,441.7
4,192.8
2,207.1
2,355.8
85.0
85.0
6.3
10.1
1,864.8
1,966.2
6.3
7.9
1,737.8
1,837.0
501.5
377.1
501.5
377.1
(ii) Guarantees entered into by parent entity
The parent entity has entered into $10.0 million (2022: $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.
(iii) Contingent liabilities of the parent entity
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
2023
$m
1.7
-
2022
$m
2.0
0.4
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.
Annual Report 2023 115
Note 17: Related party transactions
(a) Transactions with equity accounted investments
Transactions with equity accounted investments
Claims incurred
Services received
Services provided
Interest received
Outstanding balances with related parties
Amounts payable
Amounts receivable
Loan receivable
2023
$m
(3.8)
(0.6)
6.6
0.2
(0.1)
0.5
2.9
2022
$m
(3.8)
-
26.6
0.2
(0.1)
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
2023
$
2022
$
6,262,298
240,338
276,922
3,283,345
10,062,903
8,024,431
185,198
212,598
2,855,265
11,277,492
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.
116 Medibank
Notes to the consolidated financial statements30 June 2023 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.
Performance rights granted do not carry any voting rights.
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 2023.
(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.
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 2023 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 2022. This average price was $3.19.
(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.
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.
Annual Report 2023 117
(b) Performance rights – Group
Outstanding at 1 July
Granted4
Forfeited1
Exercised2 4
Lapsed3
Outstanding at 30 June
Exercisable at 30 June
Number of equity
instruments
2023
2022
7,670,453
8,079,042
4,118,306
3,542,600
(535,324)
(1,371,837)
(1,319,276)
(825,420)
(1,189,011)
(1,753,932)
8,745,148
7,670,453
-
-
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.
4.
Instruments granted and exercised includes the additional Medibank shares received on the vesting of deferred STI performance rights as a benefit equivalent
to any dividends paid during the deferral period.
(c) Fair value of performance rights granted
Below is a summary of the fair values of the 2022 and 2023 LTI plans and the key assumptions used in determining the
valuation. The fair value was determined by an independent valuation expert and takes into account the terms and conditions
upon which they were granted.
TSR
performance rights
EPS and market share
performance rights
Grant date
Date of commencement of
service and performance period
Expected vesting date
Fair value
Share price at grant date
Dividend yield (per annum effective)
Franking rate
Risk free discount rate (per annum)
Volatility
2023
2022
2023
2022
6 December 2022
3 December 2021
6 December 2022 3 December 2021
1 July 2022
1 July 2021
1 July 2022
1 July 2021
30 June 2025
30 June 2024
30 June 2025
30 June 2024
$1.19
$2.93
4.2%
100.0%
3.1%
21%
$1.62
$3.14
3.7%
100.0%
0.2%
20%
$2.63
$2.93
4.2%
100.0%
n/a
n/a
$2.72
$3.14
3.7%
100.0%
n/a
n/a
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
118 Medibank
2023
$
2022
$
1,883,676
1,693,192
325,200
180,208
281,550
248,280
-
229,780
2,389,084
2,452,802
Notes to the consolidated financial statements30 June 2023 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 2022 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 2023 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.
Measurement
The standard introduces a new general measurement model
for accounting for insurance contracts. However, a simplified
premium allocation approach (PAA), similar in nature to the
Group’s existing measurement basis under AASB 1023 is
permitted if the coverage period of the contracts is less than
a year or provided there is not a material difference between
the PAA and what would have been recognised under the
general model.
The majority of the Group’s insurance policies have a coverage
period of one year or less and the Group will apply the
simplified PAA to these insurance contracts. For those policies
with a coverage period of greater than a year the Group has
developed a model and methodology to assess their eligibility
to apply the PAA. This assessment will be reperformed on an
ongoing basis, but has shown that the PAA is expected to apply
to all of the Groups’ insurance policies at transition.
For groups of contracts that apply the PAA and have a
coverage period of one year or less, AASB 17 provides
an option to recognise any insurance acquisition costs
as expenses when incurred. The Group expects to adopt
this option and will expense acquisition costs as incurred,
which is a departure from the current accounting whereby
acquisition costs are amortised over the average expected
retention period.
COVID-19 accounting
The impact of COVID-19 on the Group has seen the
recognition of a deferred claims liability and give back
provisions, both of which will be impacted by the new
standard.
The deferred claims liability represents claims that have been
deferred as a result of COVID-19. Under the new standard,
insurance liabilities are only able to include claims that have
occurred prior to the end of the reporting period. Therefore
claims that are expected to arise in the future but have not
yet been incurred, such as the deferred claims liability, are
unable to be recognised under AASB 17. Whilst not related
to COVID-19, the provision for bonus entitlements is similar
in that it represents the expected future utilisation of unused
benefit entitlements and is also unable to be recognised
under AASB 17 and will be derecognised on transition.
The cost of any premium deferral give backs provided to
policyholders is currently recognised upfront within the
provision for premium deferral in the unearned premium
liability. AASB 17 requires that any reduced premium received
from policyholders is recognised on a passage of time basis
over the coverage period. Accordingly the provision for
premium deferral will be derecognised on transition.
Onerous contracts
AASB 17 requires the identification of ‘groups’ of onerous
contracts which will be determined at a more granular level
of aggregation than the level at which the liability adequacy
test is currently performed under AASB 1023. Contracts that
are measured under the PAA are assumed to not be onerous
unless facts and circumstances indicate otherwise.
The Group has developed a framework to identify indicators of
possible onerous contracts which includes the consideration
of information provided to senior management to monitor
financial performance. If facts and circumstances are
identified that indicate an onerous contract may exist, then
detailed testing using the general model is performed and
any onerous contract losses are required to be recognised
in the statement of comprehensive income.
Risk adjustment
AASB 17 requires a risk adjustment to be used in the
measurement of insurance contract liabilities. The Group
expects to use a confidence level technique to estimate the
risk adjustment and this is expected to be in line with the
equivalent AASB 1023 risk margin.
Presentation and disclosure
AASB 17 will introduce a number of changes to the
presentation of the statement of comprehensive income
and balance sheet. In addition, the standard contains more
granular disclosure requirements compared with existing
reporting requirements.
Transition
The standard requires the full retrospective approach to
be adopted on transition, except to the extent that it is
impractical to do so. Given the relatively few measurement
differences that arise under the PAA, the Group will adopt
the full retrospective approach.
Annual Report 2023 119
Financial impact
Based on the key estimates and judgements outlined above
and the work performed to date, the adoption of AASB 17 is
estimated to increase the Group’s net assets by approximately
$360 million as at 1 July 2022. This is largely comprised of
increases to net assets arising from the derecognition of the
deferred claims liability and premium deferral provisions
offset by a decrease to net assets due to the derecognition
of deferred acquisition costs.
(c) Other accounting policies
(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.
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 2023.
120 Medibank
Notes to the consolidated financial statements30 June 2023 Directors' declaration
The directors declare that, in the opinion of the directors:
(a) the financial statements and notes set out on pages 74
to 120 are in accordance with the Corporations Act
Regulations 2001, including:
(i)
giving a true and fair view of the Company and the
Group's financial position as at 30 June 2023 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
(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.
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 Act 2001
for the year ended 30 June 2023.
This declaration is made in accordance with a resolution
of the directors.
On behalf of the Board,
Mike Wilkins AO
Chair
24 August 2023
Melbourne
David Koczkar
Chief Executive Officer
Annual Report 2023 121
Auditor's independence declaration
Independent auditor’s report
To the members of Medibank Private Limited
Auditor’s Independence Declaration
Report on the audit of the financial report
As lead auditor for the audit of Medibank Private Limited for the year ended 30 June 2023, I declare
that to the best of my knowledge and belief, there have been:
Our opinion
(a)
In our opinion:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
The accompanying financial report of Medibank Private Limited (the Company) and its controlled entities
(b)
(together the Group) is in accordance with the Corporations Act 2001, including:
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
(a) giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial performance
for the year then ended
period.
(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 2023
Marcus Laithwaite
•
Partner
•
PricewaterhouseCoopers
•
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
Melbourne
24 August 2023
•
•
•
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
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
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
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
122 Medibank
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 2023 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 2023
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, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Annual Report 2023 123
Independent auditor’s report
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
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 account balances or
classes of transactions of the
Medibank Health segment.
Amongst other relevant topics, we
communicated the following key audit
matters to the Audit Committee:
•
•
•
Impact of the cybercrime event
Continued impact of the COVID-19
pandemic
Estimation of the outstanding
claims liability
These are further described in the Key
audit matters section of our report.
For the purpose of our audit we used
overall Group materiality of $32m,
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.
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.
124 Medibank
Key audit matter
How our audit addressed the key audit matter
Impact of the cybercrime event
During the year the Group was subject to a cybercrime event
whereby a criminal accessed the Group’s systems using
stolen credentials, removed data and released data on the
dark web. The Group took steps to contain the incident and
close down the criminal’s attack path.
The Office of the Australian Information Commissioner
(OAIC) has commenced investigations into the cybercrime
event. A representative complaint has been lodged with the
OAIC alleging the Group breached its privacy obligations.
Consumer and shareholder class actions have been filed
against the Group in the Federal Court of Australia and the
Supreme Court of Victoria, respectively.
We considered this a key audit matter because of the
potential impact of the cybercrime event on the following
aspects of the Group’s financial report:
Financial reporting information
The Group prepares its financial report using data from
underlying systems, some of which were accessed by the
criminal. As a result, there is a risk that data may have been
compromised.
The preparation of the Group’s financial report is heavily
reliant on the effective design and operation of key
Information Technology (IT) and business process controls,
some of which are tested as part of planned audit
procedures. The cybercrime event increased the risk that key
controls relevant to the preparation of the Group’s financial
report may not operate effectively as intended.
Provisions and contingent liabilities
(refer to note 13(d))
Ongoing legal and regulatory matters may result in costs
associated with litigation, fines and penalties, compensation,
and/or other regulatory enforceable actions. Such costs are
dependent on the outcome of legal and regulatory processes
which remain ongoing.
As a result, significant judgement is required by the Group to
determine whether a provision and/or contingent liability is
required, and to estimate the amount of any such provision
and/or contingent liability required in accordance with the
requirements of Australian Accounting Standards.
Our audit procedures included consideration of the
potential impact of the cybercrime event on the following
aspects of the Group’s financial report:
Financial reporting information
In conjunction with PwC IT specialists and PwC cyber
security experts we have performed the following audit
procedures, amongst others:
• developed an understanding of:
o
o
o
key aspects relating to the facts and
circumstances of the cybercrime event, such as
the criminal’s attack path and the nature of the
criminal’s activities
the scope and results of the investigative work
performed by the Group and the Group’s experts
the Group’s governance and oversight of the
cybercrime event and cybersecurity uplift
activities.
• developed an understanding of the control activities
relevant to our audit and assessed whether they were
appropriately designed and implemented.
• assessed, on a sample basis, whether key control
activities relevant to our audit were operating
effectively throughout the year, including:
o
the potential impact of business disruption on the
operating effectiveness of ‘business as usual’
control activities
o the Group’s monitoring of fraudulent activities and
discrepancies or inconsistencies in financial
reporting information
o
o
o
o
the Group’s monitoring of customer and/or
hospital provider complaints
new control activities implemented by the Group
following the cybercrime event
in-scope IT Dependencies (such as interfaces,
key reports and calculations)
IT General Controls for breached and
non-breached systems.
• agreed, on a sample basis, the reliability and validity of
underlying financial reporting information obtained from
breached systems to an alternative data source.
•
inspected user activity in breached and non-breached
systems, including privileged users, for potentially
unauthorised activity.
Annual Report 2023 125
Independent auditor’s report
Key audit matter
How our audit addressed the key audit matter
Provisions and contingent liabilities
We performed the following procedures in relation to
provisions and contingent liabilities, amongst others:
• developed an understanding of the Group’s processes
and key controls for identifying and assessing the
impact of relevant legal and regulatory matters.
• evaluated the nature and financial impact of relevant
legal and regulatory matters on the Group’s financial
report, including any relevant post-balance date
developments.
• assessed, on a sample basis, whether costs in relation
to the cybercrime event were appropriately recognised
in accordance with the requirements of the Australian
Accounting Standards.
• assessed the reasonableness of relevant disclosures in
the financial report against the requirements of the
Australian Accounting Standards.
Continued impact of the COVID-19 pandemic
Estimation of the COVID-19 claims liability
(refer to note 3: $253.8m)
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’).
Claims deferral ceased after June 2022 because, despite the
prolonged impact of COVID-19, there have been no formal
restrictions and lockdowns impeding availability and
accessibility to surgeries and other health services during the
year.
The liability has been 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 for
the period March 2020 to June 2022, inclusive
(expected claims service level).
the rate at which deferred surgical and non-surgical
procedures are expected to catch up in future periods
(deferral rate).
variations in the above key assumptions by geography
and modality (claim type).
average policyholder lapse rate.
We have performed the following audit procedures,
amongst others:
• evaluated the design of the Group’s key controls
relevant to the COVID-19 provisioning process.
• evaluated the Group’s accounting policy for
recognising the deferral of claims due to the COVID-19
pandemic against applicable Australian Accounting
Standard requirements, Private Health Insurance
industry practices and publicly available health services
data.
• assessed, on a sample basis, significant data inputs
used by the Group to estimate utilisation of the COVID-
19 claims liability during the year (including the
relevance and reliability of data and potential indicators
of management bias).
•
together with PwC actuarial experts, we have:
o
assessed significant assumptions, and any
changes to these assumptions, adopted by the
Group in estimating the extent of a continued
impact of COVID-19 on claims incidence and
development patterns, with reference to
management’s clinical analysis as well as
external environmental and internal policyholder
or product factors.
126 Medibank
Key audit matter
How our audit addressed the key audit matter
o
o
o
considered the appropriateness of the Group’s
methodologies used to determine claims deferred
to future periods with reference to Private Health
Insurance industry practices.
on a sample basis, performed recalculations over
the mathematical accuracy of movements in the
COVID-19 claims liability during the year.
analysed claims incidence patterns against
expected underlying claims growth during the
year.
• assessed the reasonableness of disclosure of the
COVID-19 claims liability in the financial report against
the requirements of the Australian Accounting
Standards.
We have performed the following audit procedures,
amongst others:
• developed an understanding of the Group’s relevant
public announcements and commitments to financial
analysts, shareholders and policyholders during the
year.
• developed an understanding of the Group’s key
controls relevant to estimating and processing the
COVID-19 customer givebacks.
• assessed the appropriateness of the accounting
treatment and the reasonableness of the disclosure of
the COVID-19 customer givebacks within the Group’s
financial report against the requirements of the
applicable Australian Accounting Standards, having
regard to the Group’s public announcements, giveback
mechanisms and policyholder eligibility.
•
reconciled the amount and nature of customer
giveback public announcements made by the Group
during the year with amounts recognised and disclosed
in the Group’s financial report.
The COVID-19 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 the outstanding claims liability’).
We considered this a key audit matter due to the:
•
•
complexity, significant uncertainty and subjectivity
impacting the Group’s estimate of the liability, including
determining expected future claims utilisation patterns.
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 claims
liability.
Recognition of COVID-19 customer givebacks
(refer to Note 3: $451.7m, Note 5: $3.9m and
Note 13(c): $136.1m)
The COVID-19 customer givebacks represent the Group’s
commitments to return permanent net COVID-19 savings to
eligible customers arising from COVID-19 restrictions.
COVID-19 customer givebacks are recognised with
reference to the Group’s publicly announced customer
initiatives representing a return of permanent net COVID-19
savings to eligible policyholders.
The Group’s COVID-19 customer givebacks 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 givebacks owed to customers
as at 30 June 2023 is included in the consolidated statement
of financial position as ‘Unearned premium liability’ (Note 5)
or ‘Customer giveback provision’ (Note 13(c)), depending on
the mechanism used to giveback to customers.
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 givebacks
with reference to specific characteristics of the giveback
mechanisms.
Annual Report 2023 127
Independent auditor’s report
Key audit matter
How our audit addressed the key audit matter
Estimation of the outstanding claims liability
(refer to note 3: $510.4m)
The liability for outstanding claims relates to claims received
but not assessed and claims incurred but not 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.
A risk margin is therefore 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 98%
(2022: 95%).
The estimation of the outstanding claims liability involves
complex and subjective judgements about future events,
both internal and external to the business, including:
•
•
•
service levels for the most recent service month
(hospital) or two service months (overseas)
claims processing delays and pre-admission hospital
eligibility checks
historical patterns of claims incidence and processing.
We considered this a key audit matter because of the
significant judgement required by the Group in estimating
claims liabilities, including the extent to which claims
incidence and development patterns are consistent with past
experience, 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.
We have performed the following audit procedures,
amongst others:
• evaluated the design of the Group’s key controls
relevant to the claims reserving process (including data
reconciliations and the Group’s review of the
estimate).
• assessed, on a sample basis, whether the key controls
relevant to our audit were operating effectively
throughout the year.
•
together with PwC actuarial experts, we have:
o
o
o
assessed, on a sample basis, significant data
inputs used in the Group’s modelling and
measurement of the central estimate (including
the relevance and reliability of data and potential
indicators of management bias).
considered whether the Group’s actuarial
methodologies were consistent with actuarial
practices and those used in the Private Health
Insurance industry.
assessed significant assumptions, and any
changes to these assumptions, adopted by the
Group in estimating the outstanding claims liability
with reference to external and internal
environmental factors.
o
reperformed calculations over the mathematical
accuracy of the Group’s actuarial models.
• assessed the appropriateness of the accounting
treatment and the reasonableness of disclosure of the
outstanding claims liability in the Group’s financial
report against the requirements of the applicable
Australian Accounting Standards.
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 2023, 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 directors'
report and operating and financial review. We expect the remaining other information to be made available to us
after the date of this auditor's report.
128 Medibank
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 through our opinion on the financial report. We have
issued a separate opinion on the remuneration report.
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.
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.
Annual Report 2023 129
Independent auditor’s report
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 54 to 73 of the directors’ report for the year ended
30 June 2023.
In our opinion, the remuneration report of Medibank Private Limited for the year ended 30 June 2023 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
Marcus Laithwaite
Partner
Melbourne
24 August 2023
130 Medibank
Shareholder information
The shareholder information below is current as at 24 August 2023.
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
Rounding
Total
Number of
shareholders
44,365
131,268
13,990
7,381
201
Number of
shares
38,510,715
367,520,439
96,796,442
161,156,612
2,090,019,032
% of issued
shares
1.40
13.34
3.51
5.85
75.89
0.01
197,205
2,754,003,240
100.00
Unmarketable parcels
There were 919 holdings of less than a marketable parcel ($500) of shares (143 shares based on a market price of
$3.51 per share) and such holders held a total of 27,232 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
6 BNP PARIBAS NOMINEES PTY LTD
7
CITICORP NOMINEES PTY LIMITED
Number of
shares
886,438,939
454,621,638
352,442,059
135,979,370
72,474,536
27,460,612
26,018,991
8 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18,749,785
9 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
11 WARBONT NOMINEES PTY LTD
12 BOND STREET CUSTODIANS LIMITED
13 NETWEALTH INVESTMENTS LIMITED
14 BNP PARIBAS NOMS (NZ) LTD
15 IOOF INVESTMENT SERVICES LIMITED
16 NAVIGATOR AUSTRALIA LTD
17 NETWEALTH INVESTMENTS LIMITED
18 SOLIUM NOMINEES (AUSTRALIA) PTY LTD
19 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
20 BNP PARIBAS NOMINEES PTY LTD
6,934,877
6,394,969
6,036,480
4,808,007
4,671,507
4,407,028
4,291,839
3,721,738
3,067,565
2,522,537
2,485,524
2,279,500
% of
issued capital
32.19
16.51
12.80
4.94
2.63
1.00
0.94
0.68
0.25
0.23
0.22
0.17
0.17
0.16
0.16
0.14
0.11
0.09
0.09
0.08
Total
2,025,807,501
73.56
Annual Report 2023 131
Shareholder information
Substantial shareholders
As at 24 August 2023 the following holders had provided a substantial shareholding notice:
Number of shares % of issued capital
193,895,716
172,722,617
137,868,557
7.04%
6.27%
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 2023, 1,319,276
Medibank ordinary shares were purchased on market at
an average price of $3.70 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
24 August 2023
Ex-dividend share trading commences
13 September 2023
Record date for final dividend
14 September 2023
Payment date for final dividend
5 October 2023
Annual general meeting
22 November 2023
Half year results announcement
Payment date for interim dividend
February 2024
March 2024
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 2023 133
Medibank Private Limited
ABN 47 080 890 259