MEDIBANK PRIVATE LIMITED — Investor Presentation 2017

May 1, 2017

2 May 2017, Sydney

Important Notice

The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. To the extent permitted by law, no responsibility for any loss arising in any way from anyone acting or refraining from acting as a result of this information is accepted by Medibank Private Limited ("MPL") or any of its related bodies corporate. No representation or warranty, express or implied, is made by any person, including MPL, and its directors, officers, employees, professional advisors and agents ("Related Parties") as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation.

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About Medibank

A leading private health insurer with a growing integrated healthcare business

Australian Health Insurance Industry

Challenges and opportunities in an evolving consumer landscape

OPPORTUNITIES

Hospital substitution and reducing low value care

Transparency

Chronic disease management med₁,b

For Better Health

Advocating for Regulatory Reform

Regulatory reform needed, but pace and extent of change less certain

Strategic Priorities

Unlocking Medibank's potential to drive growth and competitive positioning

Deliver superior	Optimise our	Leverage	Expand
customer service	product suite	our scale	integrated care
Easy to deal with and $\bullet$ enable channel of choice Employees empowered $\bullet$ to help customers • Trusted and reliable - we do what we say we'll do Proactive and $\bullet$ personalised engagement	• Return value to our customers via product investments • Insight led propositions that improve choice, flexibility and fit to customer needs • Two brands focused on key segments, providing differentiation	Utilise our unique data $\bullet$ and insights Empower customers $\bullet$ through data sharing Personalisation and $\bullet$ predictive analytics • Superior healthcare value - collaborative, partnership value- based purchasing	Leverage infrastructure $\bullet$ and capabilities into new populations • Prevention through health and wellness • Substitution through in home care • Support through healthcare concierging

Maintain strong financial position

Milestone Scorecard

Some early indicators of progress

Bupa, HCF and nib $\overline{1}$

• $2\,$ Australian residents only
• nib 1H17 operating margin 8.8%. Bupa and HCF not available. $\mathfrak I$
• nib, AMP, IAG and QBE. 1H17 ROEs are annualised $\overline{4}$

Customer Reorientation

Improvements in customer service, product value and transparency, but still more to be done

Technology Improvement

On track for new IT system to soon move out of hyper-care as planned

• Clearer priorities and stronger governance across business
• Navigated through premium review period for the first time on the new platform
• Good progress in Tax Statement preparation
• Embedding of new IT system (DelPHI) remains on track $\bullet$
• Significant reduction in DelPHI-related incidents
• Expect to move out of hyper-care within the next three months as planned

Greater stability of technology is visible through improving customer experience $\bullet$

Healthcare Initiatives

Helping to drive better outcomes for our customers

• Continued momentum in CareComplete - now reached 10,000 participants
• Providing customers with the information they need to make informed decisions - Health Concierge
• Delivering in-home care to our customers - rehab, chemo and palliative care in the home
• Collaborative value-based purchasing with providers - e.g. St John of God

1H17 Result Summary

Operating result reflects increased investment in customer initiatives

• Group net profit after tax (NPAT) \$231.9m, up 1.9% from \$227.6m in 1H16
• Underlying NPAT of \$219.4m, up 1.8% from \$215.5m in 1H16
• Health Insurance: 8.2% decrease in operating profit to \$249.4m from \$271.7m in 1H16, reflecting increased investment in customer initiatives, new IT system amortisation and moderately higher growth in utilisation rates
• $-$ Premium revenue of \$3,117.9m, up 1.2%
• Gross margin of 16.9%, down from 17.2% in 1H16
• Management expense ratio of 8.9%, compared to 8.4% in 1H16
• Operating margin of 8.0%, down from 8.8% in 1H16
• Complementary Services: 88.0% increase in operating profit to \$17.3m reflects divestments in 1H16
• Net investment income: \$76.8m, up from \$18.6m in 1H16 due to higher equity market returns and stronger credit markets
• Interim dividend of 5.25 cents per ordinary share fully franked medi hank

For Better Health

• Health Insurance operating profit for FY17 expected to be approximately \$490 million
• Short term focus remains to further strengthen the core. Investment in the customer will continue, funded from internal productivity gains where possible
• Customer experience, value and outcomes are all improving, but it will take time to turn around the historical market share trajectory
• Expanding our customer offer will gain more focus later in 2017

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Q&A

Glossary

Term	Definition	Term	Definition
	Six months ended/ending 31 December of the	FY	Financial year ended/ending 30 June 20XX
1H	relevant financial year	MPL	Medibank Private Limited
2H	Six months ended/ending 30 June of the relevant	NPAT	Net profit after tax
	financial year	NPS	Net promoter score
10	Three months ended/ending 30 September of the	PHI	Private health insurance
	relevant financial year	PHIO	Private Health Insurance Ombudsman
2 0	Three months ended/ending 31 December of the	ROE	Return on equity
	relevant financial year	Underlying NPAT	Underlying NPAT is calculated based on statutory NPAT 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 equity investments, and for one-off items, especially those that are non-cash, such as asset impairments
30	Three months ended/ending 31 March of the relevant financial year
bps	Basis points $(1.0\% = 100$ bps)
CY	12 months ended 31 December 20XX

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