Health insurer nib expects rival Medibank Private to become a much tougher competitor following its public float.
Chief executive of nib Mark Fitzgibbon said Medibank’s performance had lagged behind its competitors in recent years and predicted the government-owned insurer would “come out swinging” after its privatisation in November.
“They would have to be disappointed with their growth in recent years, compared to the market,” he told AAP after the company’s annual general meeting on Wednesday.
“So I would expect they will come out swinging and try to at least grow at a level equivalent to their market share.”
Medibank will join nib as the only listed private health insurers on the Australian stock market in late November, following an initial public offering that’s expected to deliver up to $5.5 billion to the federal government.
Mr Fitzgibbon said the move would create a more competitive health insurance market, but believes nib will continue to increase its market share.
“We still expect the system to grow and we still expect to do better than the system because of the investment we are making in growth and the tactical manoeuvres we are making,” he said.
Those investments include its decision to expand beyond its traditionally younger customer base and target older Australians through fellow insurer APIA.
Meanwhile, nib expects premiums to rise by between six and seven per cent for the foreseeable future, roughly in line with rising claims costs.
Mr Fitzgibbon predicted the number of health insurers in the market would shrink over the next decade or so, from 34 to four or five.
“We have 34 health insurers in the country, it’s way too many,” he said.
He said nib was interested in pursuing mergers and acquisitions under the right circumstances.
“Any insurer who finds themselves in a position where they think their policy holders’ best interests lie in a merger, our door is open,” he said.
He said nib had been out-bid for possible mergers and acquisitions in the past due to a conservative investing approach.
But he declined to comment on the possibility nib itself might be a takeover target for Medibank.
“nib like any other company on the stockmarket is for sale every working day, so I can’t speculate on that,” he said.
Mr Fitzgibbon reaffirmed nib’s target for a net operating profit of between $75 million and $82 million this financial year.
Shares in nib finished Wednesday five cents lower at $3.12.
