MEDIBANK PRIVATE LIMITED — Investor Presentation 2021

Aug 24, 2021

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2021 full year results

Investor presentation

David Koczkar – Chief Executive Officer Mark Rogers – Group Executive Chief Financial Officer & Group Strategy

25 August 2021

Important notice

The information contained in this presentation is general information 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 related bodies corporate, directors, officers, employees, professional advisors and agents (“Related Parties”) as to the fairness, accuracy, completeness, reliability or correctness of the information, opinions and conclusions contained in this presentation.

An investment in MPL securities is subject to investment and other known and unknown risks, some of which are beyond the control of MPL, such as general economic conditions in Australia, exchange rates, the market environment in which MPL operates and inherent regulatory risks in MPL’s business. MPL does not guarantee any particular rate of return or the performance of MPL securities.

Past performance information in this presentation is given for illustrative purposes only. It is not, and should not be relied upon as, an indication of future performance.

‐ This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of MPL and associated entities ‐ and certain plans and objectives of the management of MPL. Forward looking ‐ statements can be identified by the use of forward looking terminology, including without limitation the terms “believes”, “estimates”, “anticipates”, “expects”, “predicts”, “intends”, “plans”, “goals”, “targets”, “aims”, “outlook”, “aspiration”, “guidance”, “forecasts”, “may”, “will”, “would”, “could” or “should” or, in each case, ‐ their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts.

Such forward‐looking statements are not guarantees or predictions of future performance and are based on information, expectations and assumptions as at the date of this presentation regarding MPL’s present and future business strategies and the future political, regulatory and economic environment in which MPL will operate.

Such forward‐looking statements involve known and unknown risks, uncertainties and other factors. The nature of such factors may cause the actual results or performance of MPL to be materially different from the results or performance expressed or implied by such forward‐looking statements. No representation or warranty is made that any of these statements or forecasts (express or implied) will come to pass or that any forecast result will be achieved.

To the full extent permitted by law, MPL and its Related Parties disclaim any obligation or undertaking to release any updates or revisions to information to reflect any change in any of the information contained in this presentation (including but not limited to any assumptions or expectations set out in the presentation).

All figures in the presentation are in Australian dollars unless stated otherwise and all market shares are estimates only. Some figures, amounts, percentages, estimates, calculations of value and fractions are subject to rounding. Accordingly, the actual calculations of these figures may differ from figures set out in this presentation. Further, some balances subject to rounding may not add consistently throughout this presentation.

The distribution of this presentation, including in jurisdictions outside Australia, may be restricted by law. Any person who receives this presentation must seek advice on and observe any such restrictions. Nothing in this presentation constitutes an offer or invitation to issue or sell securities, or a recommendation to subscribe for or acquire securities, by or on behalf of MPL, its related bodies corporate or any other person in any jurisdiction including where it is unlawful to do so. This presentation is not and does not constitute an offer to sell or the solicitation, invitation or recommendation to purchase any securities in the United States and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. This presentation may not be distributed or released, directly or indirectly, in the United States.

Abbreviations and acronyms used throughout the presentation may be found in the glossary. This presentation should be read in conjunction with MPL’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au.

Unless noted specifically within this presentation, all references to Operating Profit or NPAT are reported on a continuing basis.

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Highlights

David Koczkar Chief Executive Officer

FY21 highlights

Our ongoing focus on customers has led to improved advocacy and retention, driving financial performance

Experience

37.1 (+5.3) Medibank

43.0 (+1.8) ahm

record levels of customer advocacy (average service NPS)

c. 38[%]

of Medibank customer service interactions were through self-serve channels in June 2021 (June 2020: c. 30[%] )

c.1.3m

customers registered for My Medibank app, with c. 40[%] growth in claims made through the app

Value

c. $300m total COVID-19 financial support package to date including c. $103m customer give back

Lowest premium increase

in 20 years

c. 1.8m

customers using Members’ Choice Advantage $20.5m out-of-pocket savings

Health

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c. 760k (+51[%] ) Live Better Rewards and Activities interactions

c. 133k (+51[%] ) customers engaged with a Member Health Service

c. 7,650 (+32[%] ) customers used Medibank at Home

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FY21 financial results summary

Our financial performance reflects customer growth, ongoing cost discipline and positive investment market returns

Customer

outcomes

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+82.5k (+4.6[%] ) +6.8k reported net resident FY22 reported net resident policyholder growth policyholder growth +3.5[%] adjusted for net as at 14 August 2021 suspensions due to COVID-19

27.3[%] +37bps (12 months) market share

Key financial metrics

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7.9[% ] (-40bps) Health Insurance management expense ratio

$538.6m (+14.4[%] ) Health Insurance operating profit

$31.4m (+12.9[%] ) Medibank Health segment profit

$120.0m

(up from $2.4m in FY20) net investment income

$441.2m (+39.8[%] ) NPAT

6.9cps (+9.5[%] ) final ordinary dividend fully franked

12.7cps (+5.8[%] ) FY21 ordinary dividend fully franked

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Industry snapshot

Our national priority is to achieve high levels of COVID-19 vaccination rates among all Australians

Australia’s health needs are evolving		COVID-19 accelerating changing consumer trends			Private health playing a greater role in broader healthcare
Increasing incidence of chronic disease– almost 1 in 2 Australianslive with a chronic condition1 Australia’s population is ageing, with1 in 7 Australiansaged over 652 Increasing demand for mental healthsupport		Renewed focus on health and wellbeing Rapid adoption of telehealth,virtual andin-homecare Customers are valuing the choiceandpeace of mind provided by private health insurance			Mix ofpublic/private health system delivers flexible and high-quality outcomes for patients Increase inpublic hospital wait timesand constrained government budget PHI hospital livescovered in theunder 50s grew122k in FY21 – the largest 12-month increase since June 20143

These trends support the focus areas of our future strategy

1 Australian Institute of Health and Welfare - Chronic disease. Updated May 2021.

2 Australian Institute of Health and Welfare - Older Australia at a glance. Updated September 2018. 3 APRA Quarterly private health insurance statistics. Updated August 2021.

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Our strategy

Building a strong and connected business to drive broader system change and sustainability

Focus on our Grow our customers and people core business

Transform into a health company

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Deliver leading Further differentiate customer experiences our customer offerings Deliver more value Empower our people Maintain cost discipline Be a partner of choice

Invest in prevention, choice and better care Build successful standalone businesses Bring benefits back to our core business

Better Health for Better Lives

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Focus on our customers and people

FY21 achievements

Future focus

• Record high level of customer advocacy

• Integration of Live Better with My Medibank app

• Partner of choice in health e.g. Calvary, Myhealth, Velocity and East Sydney Private Hospital

• Upskilled retail team, allowing them to adapt and work flexibly across customer support channels and introduced new ways of working across Medibank

• Recognised as a leader in diversity and inclusion:

• Ranked in the top 20 global companies for gender diversity[1]

• 2 on Australian Network on Disability’s Access and Inclusion Index[2]

• 3 in Australia & New Zealand’s Best Places to Work in the Banking, Superannuation and Financial Services industry[3]

• Digitisation of health offerings and personalisationof the experience. For example:

• Seamless digital claiming experience with the addition of Apple Wallet

• End-to-end digital mental health support tools

• Building programs around important health journeys (e.g. Planning, Pregnancy and Parenting)

• Continue frontline team evolution to provide exceptional customer experiences and broader health conversations

• Further advance data and analytics to better support our customers’ health needs

• Continue to evolve our health partnerships to deliver value and choice for our customers

• Update Accessibility and Inclusion Plan and Reconciliation Action Plan

• Continue improvement in our ESG performance and ratings in key global indices

Milestones

New milestones for FY22

• 1 Top 100 of Equileap's 2021 Gender Equality Global Report & Ranking

• 2 Australian Network on Disability’s Access and Inclusion Index 2020-21 3 Australia and New Zealand’s Best Places to Work list published by The Australian Financial Review and Boss Magazine

• 4 Benchmark reflects sustaining service levels while continuing to digitisethe service delivery model

• 5 FY22 benchmarks are based on the global average adjusted for Australian healthcare and financial insurance industry context

Customer	advocacy:	Service NPS (average)	Employee advocacy: eNPS	Employee advocacy: eNPS	Employee advocacy: eNPS
	FY21	FY22 benchmark4		FY21	FY22	benchmark5
Medibank	37.1	>35	Place to work	+30		≥24
ahm	43.0	>35	Products and services	+26		≥19

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Grow the core business

FY21 achievements

• Market share up 37bps – the strongest increase over a 12-month period in more than 10 years

• Dual brand strategy is working:

• First Medibank brand growth since FY13

• Two brands appeal to distinct market segments, with new to industry share of joins moderately higher in FY21

• Growth in digital channels responding to shifting customer preferences (FY21: c. 33% of sales, FY20: c. 24%)

• 130bps improvement in retention

Future focus

• Our differentiated customer offerings will support acquisition and retention, specifically:

• Leverage our dual brand strategy to offer more choice and value

• Target growth in corporate, overseas and regional markets

• Innovate Extras products to improve value, flexibility and buying experience

• Broaden and deepen customer relationships through our health offerings and diversified products

• Continue to proactively engage with customers about their cover through our Right Cover program

Milestones

~~New milestones for FY22 plus longer-term aspirations~~

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Net policyholder growth 3.5% 1 Target c. 3% growth [2]
1.6% [1]
0.8%
FY19 FY20 FY21 FY22
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Aspiration to grow 25-75bps
Market share movement (bps) 37 over 3 years
4 4
FY19 FY20 FY21 FY24
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Market share

Net policyholder growth

Net policyholder growth	Market share
FY211 FY22 target2 +3.5% /+64.3k c. 3%, including continued growth in the Medibank brand FY21 FY22 – FY24 target c. $20m $40m including $15m in FY22 Health Insurance productivity delivered	FY21 FY24 aspiration
	27.3% up 25-75bps

• 1 Adjusted for suspensions and reactivations occurring as the result of COVID-19

• 2 Assumes slowing industry participation growth in FY22 relative to FY21

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Transform into a health company

Drive engagement in health and wellbeing, and preventative programs at scale

FY21 achievements

Future focus

Health and wellbeing

• Ongoing personalised health engagement program had 4.7m interactions with increased interactions during COVID-19

• c. 760k Live Better Rewards and Activities interactions (+51%)

• Improved retention amongst customers engaged with Live Better

• Launch new Live Better partnerships and rewards, and expand into broader health and wellbeing market

• Continue to connect our programs and tools to streamline the experience of our customers according to their health needs

• Scale-up, embed and digitise preventative programs to improve reach and address key customer health needs

Preventative programs

• 8 preventative health programs available nationally

• 7k+ new customers enrolled in a preventative health program (+23%)

• Average customer advocacy at 70+ NPS for preventative health programs

Milestones

New health and wellbeing milestone

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	FY21	FY22 target
Customers engaged with Live Better1	c. 366k	c. 480k

• 1 Includes total customers who have engaged with our preventative health offering, including Live Better Rewards, Live Better Activities, preventative health programs and any new offerings developed

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Transform into a health company

Deliver a new customer focused approach to healthcare that’s accessible and sustainable

FY21 achievements

Future focus

Primary care and navigation

• Myhealth grew to 95 clinics

• c. 2.5m telehealth interactions across triage, mental health and health concierge services

• c. 20% of Medibank customers admitted to hospital were supported by our Health Concierge program

Clinical homecare

• Medibank at Home cared for c. 7,650 customers this year (up c. 32%)

• 900+ public admissions through My Home Hospital since its launch in Jan 2021

Short-stay, no-gap program

• Halved the number of bed days per episode for no-gap joint replacement procedures

• Assist Myhealth to strengthen its digital capability to support more proactive, predictive and preventative care in the community

• Invest in technology platforms to digitise the telehealth offering with integration into the health system, including for corporate and overseas customers

• Increase support for Medibank customers through the health system

• Embed and grow My Home Hospital platform and consider opportunities in other markets

• Expand short-stay, no-gap to additional sites and modalities including general surgery

Milestones

Milestone broadly tracking in line on an underlying basis, with some temporary COVID-19 financial impacts in FY21

Medibank Health operating profit (excluding Myhealth and other investments)

• Contracted with 7 hospitals for no-gap joint replacements

• FY21 minority investments include East Sydney Private Hospital and new private hospital in Melbourne that will provide short-stay surgical procedures

FY21 FY22 target

• $32.2m Organically replace the reported FY18 $30m operating profit of Garrison by FY22 (tracking broadly in line on an underlying basis)

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Financial results

Mark Rogers Group Executive – CFO & Group Strategy

Group financial summary

Financial year ended 30 June ($m)	2020	2021	Change
Group revenue from external customers1	6,769.6	6,910.4	2.1%
Health Insurance operating profit	470.6	538.6	14.4%
Medibank Health segmentprofit1	27.8	31.4	12.9%
Segment operating profit	498.4	570.0	14.4%
Corporate overheads	(37.4)	(41.7)	11.5%
Group operating profit – continuing operations	461.0	528.3	14.6%
Net investment income	2.4	120.0	n.m.
Amortisation of intangibles	(9.0)	(4.6)	(48.9%)
AASB 16 Leases transition adjustment	3.3	-	n.m.
Other income/(expenses)	(7.5)	(11.4)	52.0%
Profit before tax	450.2	632.3	40.4%
Income tax expense	(134.6)	(191.1)	42.0%
NPAT - continuing operations	315.6	441.2	39.8%
Effective tax rate2	29.9%	30.2%	30bps
EPS (cents)2	11.4	16.0	39.8%
Underlying NPAT3	367.3	398.7	8.5%
UnderlyingEPS (cents) 3	13.3	14.5	8.5%
Dividend per share (cents)	12.0	12.7	5.8%
Dividendpayout ratio3	90.1%	87.7%	(2.7%)

• Corporate overheads: – Inflation and a $3.8m increase in D&O insurance expense

• – FY22 D&O insurance cost to be in line with FY21

• Investment income of $120m following COVID-19 impacted markets in prior period

• Increase in other income / (expenses) largely due to $4.2m increase in M&A costs

• Amortisation charge reduced as some intangibles balances fully amortised

• Tax rate:

• Effective tax rate of 30.2% reflects $9m of one-off non-deductible expenditure

• – Expect FY22 tax rate to be marginally below corporate tax rate of 30%

1 Excludes discontinued operations

2 Calculated on total operations

3 See glossary for definition of Underlying NPAT, and slide 31 for a reconciliation of NPAT – continuing operations to Underlying NPAT. Dividend payout ratio based on Underlying NPAT from total operations

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COVID-19 impacts – claims recovery

Private hospital claims[1]

Private hospital claims[1] – FYTD May 21 $ growth vs pcp[2]

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3 -6%
Total
Surgical -4%
Non-surgical -9% -3%
Victoria Other states
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2%
5%
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Total:

• Victorian claims -6% due to Jul – Oct lockdown (FYTD Nov 2020: -15%)

• Other states claims +2% (FYTD Nov 2020: +2%)

• Gap between non-surgical and surgical claims growth closing

• In recent months, Victorian claims more in line with claims growth in other states

Surgical:

• Victorian claims -4% (FYTD Nov 2020: -11%)

• Other states claims +5% (FYTD Nov 2020: +6%) reflecting recovery of deferred surgical activity

Private hospital non-surgical[4] claims

COVID-19 impacts

Private hospital non-surgical[4] claims – FYTD May 21 $ growth vs pcp[2]

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4% 0%
-7% -8% -3% -3% -9%
-14%
-29%
-38% Other States Victoria
Psych Rehab Respiratory Other Total non-surgical
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• Victorian claims -9% (FYTD Nov 2020: -21%) and Other states -3% (FYTD Nov 2020: -14%)

• Rehab annual spend c. 23% of non-surgical claims nationally and down on average 12% relative to surgical claims volumes

• Total Hospital deferral assumption of 59% (1H21: 85%):

• Surgical claims assumption remains at 85%

• Slower than expected recovery in rehab claims supports reduction in non-surgical claims deferral assumption to 50% (1H21: 85%)

• Deferred claims liability:

• $224m at 30 June 2021 from $297m at 30 June 2020

• Closely monitoring activity during current lockdowns

• Net FY21 cost of $3m (1H21 net cost of $10m):

• $226m of customer support measures

• $223m permanent claim savings

• 2 pcp includes FYTD February 2020 plus FY19 March - May claims (adjusted for inflation and exposure days) due to COVID -19 impact

1 Private hospital services incurred by Medibank Group excluding prostheses and medical

3 Total growth includes a portion of other claims not yet categorized

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4 Based off industry standard Diagnosis Related Groups (DRGs). Surgical categorisation involves the use of an operating room

Health Insurance result

Operating performance reflects policyholder growth and benefits from our productivity agenda

Financial year ended 30 June ($m) 2020 2021 Change	COVID-19 impact COVID-19 Adj.1
Premium revenue 6,545.6 6,680.3 2.1%	226.0 6,906.3
Claims expense (5,539.5) (5,586.2) 0.8%
Risk equalisation 7.9 (24.6) n.m.
Net claims expense (5,531.6) (5,610.8) 1.4%	(223.0) (5,833.8)
Gross profit 1,014.0 1,069.5 5.5%	3.0 1,072.5
Management expenses (543.4) (530.9) (2.3%)
Operating profit 470.6 538.6 14.4%	3.0 541.6
Gross margin 15.5% 16.0% 50bps
MER 8.3% 7.9% (40bps)
Operating margin 7.2% 8.1% 90bps

Underlying performance

Underlying performance
Financial year ended 30 June ($m)	2020	2021	Change
Underlying revenue	6,625.6	6,906.3	4.2%
Reported gross profit	1,014.0	1,069.5	5.5%
FY20 under provision on central estimate	22.3	-	n.m.
FY21 over provision on central estimate	2.2	-	n.m.
COVID-19 impact	13.0	3.0	n.m.
Underlying gross profit	1,051.5	1,072.5	2.0%
Underlying gross margin	15.9%	15.5%	(40bps)
Underlying operating margin	7.7%	7.8%	10bps

Reported performance

• Reported gross profit up 5.5%:

• Revenue up 2.1%

• Net claims expense up 1.4%

• Includes:

• Prior period provision impacts of $24.5m

• COVID-19 impacts (FY20: $13m / FY21: $3m)

Underlying performance

• Gross profit up 2.0%:

• Reflects strong policyholder growth

• Gross margin down 40bps to 15.5%:

• Stable resident margin

• Overseas mix and claims trend impacts

• Operating profit up 6.6% to $541.6m:

• Gross profit growth

• Reduction in management expenses

• Operating margin up 10bps to 7.8%:

• Improving MER offsets lower gross margin

• Benefits of productivity and increasing scale

1 FY21 COVID-19 adjustment of $226.0m to revenue includes waiver of the 1 April 2020 premium increase and customer suspensions relating to Australian resident portfolio only. Permanent claims savings -$223.0m as a result of COVID-19

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Health Insurance – policyholders

Stronger underlying resident policyholder growth of 3.5% in the last 12 months

Financial year ended 30 June ($m) 2020 2021 Change Policyholders1(thousand): Opening balance 1,796.0 1,806.6 0.6% Acquisitions 195.8 221.2 13.0% Lapses (167.0) (147.4) (11.7%) Net suspensions/reactivations (18.2) 8.7 n.m. Closing balance 1,806.6 1,889.1 4.6% - Medibank 1,388.2 1,417.8 2.1% - ahm 418.4 471.3 12.6% Acquisition rate3 10.9% 12.0% 110bps - Medibank 8.0% 9.0% 100bps - ahm 23.1% 23.0% (10bps) Lapse rate3 9.3% 8.0% (130bps) - Medibank 8.4% 7.3% (110bps) - ahm 14.4% 12.0% (240bps) Policyholder growth 0.6% 4.6% 400bps Total policy units1,4 (thousand) Closing balance 4,677.1 4,811.5 2.9% Average balance 4,697.6 4,763.1 1.4% Average revenueperpolicy unit1,4 ($) 1,393.4 1,402.5 0.7%

COVID-19 Adjusted2 2021 Change vs 2020 1,824.8 1.6% - - 1,889.1 3.5% 1,417.8 1.3% 471.3 10.9% 3.5% 190bps 4,811.5 1.9% 4,784.1 1.6% 1,443.6 2.6% • PHI market remains buoyant: – Industry hospital participation up 95bps to 44.5% – Hospital lives cover up 245k • Suspended policies: – Now in line with pre-COVID-19 levels – COVID-19-related suspensions largely reactivated • COVID-19-adjusted policyholder growth of 3.5% • Medibank brand up 1.3%: – Reflecting strong new to industry growth – Temporary closure of retail stores in Victori in June • ahm brand up 10.9%: – Significant improvement in retention – Q4 reduction in aggregator sales as we look to increase direct sales – Continues to attract younger customers

• Temporary closure of retail stores in Victoria in June

• Q4 reduction in aggregator sales as we look to increase direct sales

• 1 Consistent with reported industry data, policyholder numbers only include the resident portfolio whereas total policy units include both resident and overseas portfolios 2 Adjusted for suspensions and reactivations occurring as a result of COVID-19

• 3 Transfers of policyholders between ahm and Medibank are excluded in consolidated lapse and acquisition rates but included at brand levels. Lapse and acquisition rates are based on the average of the opening and closing balances for the period

• 4 Refer to glossary for definition of policy units. Policy units include both resident and overseas. Based on an average of the month-end balances over the reporting period

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Health Insurance – underlying resident claims

Underlying resident claims growth per policy unit declined to 2.5%

Financial year ended 30 June ($m)1 Claims expense	2020 (5,477.8)	2021 (5,706.2)	Change 4.2%
Risk equalisation Net resident claims expense - Hospital - Extras	7.9 (5,469.9) (4,079.8) (1,390.1)	(24.6) (5,730.8) (4,247.2) (1,483.6)	n.m. 4.8% 4.1% 6.7%
Average claims expense per policy unit2 ($)	(1,218.7)	(1,249.3)	2.5%
Hospital claims per policy unit growth Extras claims per policy unit growth	2.6% 3.8%	2.5% 3.9%	(10bps) 10bps
Resident hospital utilisation growth3	(0.1%)	(0.2%)	(10bps)
Resident extras utilisation growth3	2.2%	2.2%	-

• Gross claims expense up 4.2% and net claims expense up 4.8%

• Risk equalisation a $24.6m payable vs $7.9m receipt in FY20:

• Lower payable in 2H21 as COVID-19 claims impacts unwind (1H21: $17.8m / 2H21: $6.8m)

• Reflects lower than industry claims growth

• Expect to be a modest net payor going forward

• Total underlying claims per policy unit growth of 2.5%, down 20bps:

• Lower hospital claims growth due to reduced claims in public hospitals

• 2H21 lower than 1H21 reflecting improved risk equalisation outcome

• Stable extras claims per policy unit growth

• Variance in growth across Extras modalities reflects extent of COVID-19 impacts and subsequent rebound

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Indicative composition & movement
$ value
in dollar value [1] vs. FY20 movement
3% Private hospitals +5%
6%
Medical +4%
13%
Prostheses +4%
Hospital
Public -5%
14%
64%
Other n.m.
Dental +8%
8%
6%
Optical +4%
6%
Physiotherapy +3%
7%
Extras 53%
Chiropractic +5%
20% Alternative therapies +8%
Other modalities +8%
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• 1 All numbers are in respect of the resident portfolio and on an underlying basis. See slide 30 for reconciliation of reported to underlying claims and COVID-19 impacts

2 Refer to glossary for definition of policy units. Based on an average of the month-end balances over the reporting period

• 3 Estimated hospital utilisation is defined as the number of hospital admissions per hospital policy unit and includes a provision for IBNR and COVID-19. Actual hospital utilisation for FY20 was (0.1%) compared to the reported estimate of 0.2% as at 30 June 2020. Actual extras utilisation for FY20 was 2.2% compared to the reported estimate of 1.8% as at 30 June 2020. Estimated utilisation differs from actual utilisation largely as a result of the claims provision impacts.

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Health Insurance – underlying portfolio performance

Strong underlying gross margin performance driven by resident portfolio

	Resident Overseas Total	Resident Overseas Total	Resident Overseas Total
Financialyear ended 30 June ($m)1	2020 2021 Change	2020 2021 Change	2020 2021 Change
Premium revenue	6,457.2 6,754.8 4.6%	168.4 151.5 (10.0%)	6,625.6 6,906.3 4.2%
Net hospital claims	(4,079.8) (4,247.2) 4.1%	(104.2) (103.0) (1.2%)	(4,184.0) (4,350.2) 4.0%
Extras claims	(1,390.1) (1,483.6) 6.7%		(1,390.1) (1,483.6) 6.7%
Net claims expense	(5,469.9) (5,730.8) 4.8%	(104.2) (103.0) (1.2%)	(5,574.1) (5,833.8) 4.7%
Gross profit	987.3 1,024.0 3.7%	64.2 48.5 (24.5%)	1,051.5 1,072.5 2.0%
Gross margin	15.3% 15.2% (10bps)	38.1% 32.0% (610bps)	15.9% 15.5% (40bps)
Resident premium increase	3.29% 3.27% (2bps)	3.2% 1.5% (170bps) 5.8% 11.6% 580bps	3.29% 3.27% (2bps)
Downgrading	(1.4%) (0.9%) 50bps		(1.4%) (0.6%) 80bps
Revenue per policy unit growth rate	1.9% 2.4% 50bps		1.9% 2.6% 70bps
Claims per policy unit growth rate	2.7% 2.5% (20bps)		2.6%2 3.1% 50bps
Policy units (thousand)
Closing balance	4,507.6 4,630.9 2.7%	212.1 180.6 (14.9%)	4,719.7 4,811.5 1.9%
Average balance	4,488.5 4,587.3 2.2%	222.0 196.8 (11.4%)	4,710.5 4,784.1 1.6%

Underlying resident performance

• Gross profit increase in line with resident policyholder growth

• Downgrading down 50bps to 90bps:

• Benefit of improving Medibank policyholder trajectory and portfolio management initiatives

• Target at or below 100bps

• FY22 underlying claims per policy unit growth expected to be in line with 2H21: – Prostheses reform could provide upside with the benefit to be passed to customers through lower premium increases

• Watching rehab referral trends for signs of permanent change

Underlying overseas performance

• Underlying gross profit down $15.7m with 2H particularly impacted by lower than normal student intake in January:

• Revenue down in line with lower policies due to border closures

• Underlying claims per policy unit up 11.6% with increased usage of services

• Partially offset by $5.4m of lower sales commissions

• Higher claims growth reflects:

• Increased usage of services

• Impact of lower new student intake who are typically lower claiming

• Expect similar decline in policy units and claims growth per policy unit to remain elevated in FY22

• 1 All numbers are on underlying basis. See slide 30 for reconciliation of reported to underlying claims and COVID-19 impacts

2 The total underlying claims per policy unit growth rate in FY20 was reported to be 3.0%. This has been restated to reflect hindsight claims movements and an adjustment for suspended policies

18

Health Insurance – management expenses

Benefits of our productivity agenda and scale delivered a 40bps reduction in MER to 7.9%

Financial year ended 30 June ($m)	2020	2021	Change
Premium revenue	6,545.6	6,680.3	2.1%
Management expenses	(543.4)	(530.9)	(2.3%)
- Depreciation and amortisation	(45.7)	(43.7)	(4.4%)
- DAC amortisation	(38.1)	(39.3)	3.1%
- Overseas sales commissions	(13.1)	(7.7)	(41.2%)
- Operatingexpenses1	(446.5)	(440.2)	(1.4%)
MER	8.3%	7.9%	(40bps)
UnderlyingMER	8.2%	7.7%	(50bps)

• Management expenses down 2.3% to $530.9m:

• Operating expenses down 1.4%

• Non-cash costs broadly flat

• Overseas sales commissions down 41.2% due to impact of border closures on new customer sales

• Operating expenses declined $6.3m to $440.2m:

• Underlying cost inflation and volume impacts of c. 2.0%

  • Offset by c. $20m of productivity savings

• Productivity agenda:

  • $40m additional savings between FY22-24, including $15m in FY22

• Savings to come from process improvement, increasing use of digital channels and lower corporate property costs

• FY22 operating expenses:

• FY22 cost inflation expected to be broadly in line with FY21

• c. $2m impact of changes to superannuation guarantee from 1 July 2021 and Victorian payroll tax from 1 January 2022

• MER:

• Down 40bps to 7.9%

• Further improvement through productivity and scale benefits

1 Includes right-of-use depreciation of $21.8m in FY21 and $21.4m in FY20

19

Medibank Health result

Strong earnings growth despite short-term travel insurance headwind

Financial year ended 30 June ($m) Revenue	2020 270.0	2021 283.8	Change 5.1%
Gross profit	111.2	117.0	5.2%
Management expenses Operating profit Share of profit/(loss) from Myhealth Share ofprofit/(loss) from other investments1	(83.4) 27.8 - -	(84.8) 32.2 0.7 (1.5)	1.7% 15.8% n.m. n.m.
Medibank Health segmentprofit	27.8	31.4	12.9%
Gross margin	41.2%	41.2%	-
MER	30.9%	29.9%	(100bps)
Operatingmargin	10.3%	11.3%	100bps

COVID-19 impacts

• Higher earnings from telehealth in 1H21 largely offset by lower travel insurance

• Net COVID-19 operating profit impact in 2H21 of c. $2m:

• Telehealth revenue significantly lower in 2H21

• Ongoing border closures impact to travel insurance of c. $2m ($4m in FY21)

• Segment profit up by 12.9% to $31.4m: – Operating profit up 15.8% to $32.2m

• – 2H21 Operating profit down versus 1H21 largely due to COVID-19 impacts and modest seasonality

• Revenue growth of 5.1%: – Strong growth in-home care and telehealth divisions

  • Partly offset by significantly lower travel insurance sales

• MER down 100bps to 29.9%:

  • Increase in management expenses due to inflation

  • Leveraging largely fixed cost base

• $800k after tax losses from Myhealth and other investments:

  • 3 month 700k contribution from 33.4% economic interest in Myhealth ($2.6m FY21 pro-forma impact)[2]

  • Losses from other investments expected to unwind in FY22

• Underlying trajectory broadly in line with FY22 milestone:

  • Temporary travel insurance earnings impact of c. $4m in FY22 given ongoing border closures

  • Expect to be largely offset by contribution from Myhealth and other investments

  • Mindful of balancing short-term operating performance and investment in future growth

• 1 Includes interest income from loan to associates of $0.2m

2 Medibank’s 49% holding of the ordinary shares of Myhealth Medical Holdings Pty Ltd represents a 33.4% economic interest in the Myhealth Medical Group, taking into account management and local GP shareholdings in Myhealth Medical Holdings Pty Ltd and its subsidiaries

20

Investment portfolio and investment income

Strong investment returns driven by post COVID-19 recovery in equity and credit markets

						Investment returns	Investment returns
Financial year ended 30 June ($m)	2020	2021	Change			2020 2021	Change
Net investment income:
Growth	(26.6)	85.9	n.m.			(5.74%) 18.46%	n.m.
Defensive1	33.6	38.8	15.5%			1.61% 1.65%	4bps
Investment expenses	(4.6)	(4.7)	2.2%			- -	-
Total net investment income1,2	2.4	120.0	n.m.			0.09% 4.25%	416bps
Total net investment income–underlying2,3	76.3	59.3	(22.3%)			2.99% 2.10%	(89bps)
RBA cash rate (average)						0.65% 0.15%	(50bps)
Underlyingspread to RBA cash rate						2.34% 1.95%	(39bps)
Closing balance:
Growth	466.8	488.5	4.6%	•	Asset allocation:
Defensive	2,374.9	2,464.9	3.8%		–	Retained 20% growth and 80% d
Total balance	2,841.7	2,953.4	3.9%		–	Additional $326.8m set aside to
Average monthly balance:						liability and customer give back
Growth	463.9	465.4	0.3%	•	RBA cash rate impacts:
Defensive	2,086.8	2,355.4	12.9%		–	Reduced FY21 interest income b
Total average monthlybalance	2,550.7	2,820.8	10.6%		–	At current level c.	$1m further i

  - Retained 20% growth and 80% defensive allocation

  - Additional $326.8m set aside to meet deferred claims liability and customer give back

  - Reduced FY21 interest income by c. $10m

  - At current level c. $1m further impact expected in FY22

• Underlying investment income down $17m:

• Growth portfolio investment income performance driven primarily by stronger equity market returns

• Defensive portfolio investment income increased as credit spreads tightened, offsetting the impact of the lower RBA cash rate

• Normalisation adjustment of $60.7m pre-tax

• Lower RBA cash rate and flattening of the yield curve

• Spread to RBA cash rate of 1.95% within target (150 – 200bps)

3 Adjusted to normalise all growth asset returns to long-term expectations and defensive asset 21 returns for credit spread movements

1 Includes interest income from non health fund investments, short-term operational cash sub portfolio and operational cash 2 Reported and underlying returns are calculated using total average monthly balances

Capital and dividend

Our capital position reflects strong capital generation and disciplined capital management

Financial year ended 30 June ($m) Total equity1 Less: Intangible and illiquid assets1 Total tangible and liquid assets Determined but unpaid ordinary dividend	2020 1,797.8 (460.4) 1,337.4 (173.5)	2021 1,906.1 (445.3) 1,460.8 (190.0)
Cost ofproduct bonus additions2	(10.5)	(10.5)
Total tangible eligible capital Required capital - Health Insurance - Other	1,153.4 873.2 91.8	1,260.3 942.0 147.6
Unallocated capital	188.4	170.7
Health insurance capital (%)3	13.2%	13.0%
Dividend	FY20	FY21
Final ordinary dividend per share (cents)	6.3	6.9
Full year ordinary dividend per share (cents)	12.0	12.7
Fullyear dividendpayout ratio4	90.1%	87.7%

• Health Insurance capital:

  • Ratio at the top end of 11% to 13% target range[3]

  • Increase supports premium revenue growth

• Other required capital increased following the $63m investment in Myhealth

• Unallocated capital of $170.7m:

  • Investment in Myhealth offset by strong investment income and lower inadmissible assets

  • Strong capital position provides ability to fund inorganic growth and consider capital management

• Very well placed to implement new PHI capital standard:

  • Draft standard expected in late CY21 and aim to provide an update on impact in early CY22

  • Expected to allow for the issuance of sub-debt

• Final ordinary dividend of 6.9cps, fully franked:

  • Total FY21 ordinary dividend of 12.7cps, fully franked

  • 87.7% payout ratio of Underlying NPAT (target range 75% - 85%) reflects strong capital position

  • Payment Date for final ordinary dividend: 30 September 2021 (Exdividend Date 8 September 2021, Record Date 9 September 2021)

• 1 2020 updated to reflect change in accounting policy for software intangibleassets. Refer Note 20(a) of the consolidated financial statements

• 2 Policies that include a product bonus receive an entitlement every 1 January to spend on otherwise uncovered expenses. The allowance is booked on 1 January each year

• 3 Calculated as required Health Insurance related capital post dividends divided by the last 12 months’ Health Insurance premium revenue inflated by the growth rate in Health Insurance premium revenue over the same 12 month period 4 Dividend payout ratio is based on Underlying NPAT from total operations. See glossary for definition of Underlying NPAT

22

Key areas of focus for FY22

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Investment in core enablers – technology, digitisation and people

Focus on top line growth and managing downgrading in PHI

Continued organic and inorganic growth in Medibank Health

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Claims management capabilities:

• Payment integrity innovation

• Investment in preventative health and new care settings

Increasing scale and productivity allows capacity to invest in growth and improve MER

Leverage our strong balance sheet and capital generation

23

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Conclusion

David Koczkar Chief Executive Officer

Sustainability of the health system

The role of reform

Aligning prostheses prices with the public sector and overseas

• The price of medical devices in Australia is c. 30% higher than in New Zealand, France and the UK[1]

• Prostheses reform consultation underway with potential to save the industry $500m[1] over four years, supporting continued low premium increases

Improving quality and reducing waste

• Ongoing clinical led review of Medicare Benefits Schedule

• Supporting preventative healthcare to improve how resources across the system are effectively utilised

• Expanding funding for care outside of acute settings

Encouraging participation

• c. 330k Australians paid the Medicare Levy Surcharge in FY19[2]

• There is a need to continue encouraging greater participation among young adults

Our focus on innovation

==> picture [264 x 263] intentionally omitted <==

----- Start of picture text -----

Preventative Improving
Increasing
and better customer choice customer
connected and value experiences
health
Supporting new
care models
----- End of picture text -----

Better Health for Better Lives

1 Private Healthcare Australia 2 Australian Taxation Office: Taxation statistics 2018 -19

25

Key points

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Our strategy has evolved but our customers and people remain at the centre of everything

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We will continue to expand our customer and provider relationships , offer broader support in health and wellbeing , and focus on prevention , innovation and value

Supported by our differentiated offering and focus on key markets, our growth ambitions in PHI stretch beyond FY22

We will continue to invest and partner to evolve new models of care in Australia, accessible to patients in both private and public systems

Transforming to a health company means investing in prevention, choice and better care, building successful standalone businesses and bringing benefits back to our core

26

FY22 outlook

Customer relief

Policyholder growth

Claims

Productivity

Growth

We continue to assess claims activity and any permanent net claims savings due to COVID-19 will be given back to customers through additional support in the future

Aiming to achieve c. 3% policyholder growth[1] in FY22, including continued growth in the Medibank brand

Underlying average net claims expense per policy unit is forecast to be in line with 2H21 (2.4%) among resident policyholders

FY22 productivity target of $15m in Health Insurance management expenses

Targeted inorganic growth for Medibank Health and Health Insurance remain areas of focus

27

1 Assumes slowing industry participation growth in FY22 relative to FY21

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Appendix

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FY21 milestone scorecard

Objectives[1]

FY21 outcomes

	FY21 outcomes	FY21 outcomes
	FY20 FY21 FY21 target Medibank 31.8 37.1 >30 ahm 41.2 43.0 >40 Customer advocacy: Service NPS (average)		Employee advocacy FY21 FY21 target Engagement 83% ≥85% eNPS +26 ≥+19
	FY20 FY21 FY22 target Education: Health engagement interactions c. 2m c. 4.7m >2m Prevention: Live Better interactions3 c. 500k c. 760k >1m Support: Health Assist interactions4 74k 165k >150k
	Education: Health engagement interactions c. 2m c. 4.7m
	Prevention: Live Better interactions3	c. 500k c. 760k
	Support: Health Assist interactions4	74k 165k
	1 July20 – 30 June 21 +3.5% / +64.3k Policyholder growth5	By brand5 Medibank +1.3%/+18.1k ahm +10.9% / +46.2k		Market share 1H21 2H21 up 28bps up 9bps

1. Customer and employee advocacy

Continue to achieve a high level of advocacy by delivering exceptional experiences for our customers and employees

2. Health and wellbeing differentiation

Double the uptake of Medibank’s Live Better and Health Assist programs by FY22 while ensuring every customer[2] has at least one personalised health interaction through the year

3. Health insurance growth

We aim to increase market share and achieve total policyholder growth between 3.5%-4%, including an expectation of growing the Medibank brand by between 1.2%-1.4% during FY21[5]

4. In-home care

Virtual hospital beds more than 300 by end of FY22

	Total		Medibank customers
	30 June 20 259 beds	30 June 21 347 beds	30 June 2021 c. 7,650 Medibank customers serviced by 291 beds

5. Medibank Health

By FY22 organically replace the reported FY18 $30m operating profit of Garrison

6. Productivity

FY21 productivity target of $20m and additional $30m during FY22-FY23

Medibank Health operating profit

	Medibank Health operating profit
	FY18 (baseline)6 FY20 FY21 $47.3m $27.8m $32.2m (excluding Myhealth & other investments)
	FY20 FY21 c. $20m c. $20m Productivity delivered

• 1 Milestones as presented in FY21. All new and continuing FY22 -FY24 milestones are detailed throughout the remainder of the presentation.

2 Based on number of policyholders that consent to contact for marketing purposes, some exclusions may apply. Excludes new joins and customer lapses over the period

• 3 Includes the number of customers who have downloaded Live Better and enrolled for rewards plus Live Better at Home interactions

• 4 Includes Health Concierge, 24/7 Support, CareComplete, Medibank at Home, Better Knee, Better Me, Heart Health at Home and other new program interactions

5 Excluding the impact of policyholder suspensions due to COVID-19 financial hardship 6 Includes the $30m operating profit of Garrison

29

Reconciliation of reported to underlying claims and COVID-19 impacts

COVID-19 impacts – Health Insurance

Financial year ended 30 June ($m)	2020	2021	Total
6mth waiver of April 2020 premium increase	65	96	161
Customer suspensions	15	27	42
Giveback	-	103	103
Total customer relief impact	80	226	306
Resident Hospital claims	-	(170)	(170)
Overseas claims		13	13
Resident Ancillaryclaims	(67)	(66)	(133)
COVID-19 claims expense impacts	(67)	(223)	(290)
Net COVID-19 Impacts	13	3	16

COVID-19 claims liability impacts

COVID-19 claims liability impacts
Financial year ended 30 June 2021 ($m)	Hospital1	Ancillary	Total
30 June 2020 – COVID-19 claims liability	234.4	62.7	297.1
Hindsight provision movement	19.8	-	19.8
Hospital deferral rate assumption change	(73.1)		(73.1)
Net (utilisation) / deferral duringtheperiod	39.1	(59.1)	(20.0)
30 June 2021 – COVID-19 claims liability	220.2	3.6	223.8
(Lower) / Higher than expected claims	(142.8)	(6.9)	(149.7)
Change to Liabilityincrease / (decrease)	(14.2)	(59.1)	(73.3)
COVID-19 claims expense impacts	(157.0)	(66.0)	(223.0)

Reconciliation of reported to underlying claims

Financial year ended 30 June ($m)	2020	2021	1H21
Total Reported Claims	(5,531.6)	(5,610.8)	(2,819.1)
FY20 Under provision on central estimate	22.3	-	-
FY21 Over provision on central estimate	2.2	-	-
COVID-19 claims expense impacts	(67.0)	(223.0)	(114.5)
Total Underlying Claims	(5,574.1)	(5,833.8)	(2,933.6)
UnderlyingClaimsperpolicyunitgrowth	2.6%	3.1%	3.0%
Reported Resident Claims	(5,426.4)	(5,494.8)	(2,761.2)
FY20 Under provision on central estimate	19.3	-	-
FY21 Over provision on central estimate	4.2	-	-
COVID-19 claims expense impacts	(67.0)	(236.0)	(118.9)
Underlying Resident Claims	(5,469.9)	(5,730.8)	(2,880.1)
Underlying Claims per policy unit growth
Total Resident	2.7%	2.5%	2.6%
Hospital	2.6%	2.5%	2.5%
Extras	3.8%	3.9%	3.8%
Reported Overseas Claims	(105.2)	(116.0)	(57.9)
FY20 Under provision on central estimate	3.0	-	-
FY21 Under provision on central estimate	(2.0)	-	-
COVID-19 claims expense impacts	-	13.0	4.4
UnderlyingOverseas Claims	(104.2)	(103.0)	(53.5)
UnderlyingClaimsperpolicyunitgrowth	5.8%	11.6%	10.6%

30

1 Hospital includes overseas

Reconciliation of Group operating profit and Underlying NPAT

($m)	FY20	FY21	Change
Group operating profit – continuing operations	461.0	528.3	14.6%
Operating loss – discontinued operations	(0.8)	-	n.m.
Groupoperating profit – total operations	460.2	528.3	14.8%

Underlying NPAT

Underlying NPAT
($m)	1H20	2H20	FY20	1H21	2H21	FY21
NPAT – total operations	177.9	137.1	315.0	226.4	214.8	441.2
NPAT – discontinued operations	(0.7)	0.1	(0.6)	-	-	-
NPAT– continuing operations	178.6	137.0	315.6	226.4	214.8	441.2
Normalisation of growth asset returns	1.2	42.0	43.2	(13.2)	(18.0)	(31.2)
Normalisation for defensive asset returns – credit spread movement	(0.4)	8.9	8.5	(9.8)	(1.5)	(11.3)
Underlying NPAT	179.4	187.9	367.3	203.4	195.3	398.7
Dividend payout ratio1	87.8%	92.3%	90.1%	78.5%	97.3%	87.7%

1 Calculated on Underlying NPAT – total operations

31

Group financial summary – half by half

Group financial summary – half by half
	Change
($m) 1H20 2H20 1H21 2H21	2H21 v 2H20 2H21 v 1H21 1H21 v1H20
Group revenue from external customers1 3,421.5 3,348.1 3,442.2 3,468.2	3.6% 0.8% 0.6%
Health Insurance operating profit 224.2 246.4 254.6 284.0	15.3% 11.5% 13.6%
Medibank Health segmentprofit1 13.3 14.5 18.8 12.6	(13.1%) (33.0%) 41.4%
Segment operating profit 237.5 260.9 273.4 296.6	13.6% 8.4% 15.1%
Corporate overheads (18.7) (18.7) (18.2) (23.5)	25.7% 29.1% (2.7%)
Groupoperating profit – continuingoperations 218.8 242.2 255.2 273.1	12.8% 7.0% 16.6%
Net investment income 38.5 (36.1) 71.8 48.2	n.m. (32.9%) 86.5%
Amortisation of intangibles (4.5) (4.5) (3.4) (1.2)	(73.3%) (64.7%) (24.4%)
AASB 16 Leases transition adjustment 3.3 - - -	n.m. n.m. n.m.
Other income/(expenses) (1.5) (6.0) (1.7) (9.7)	61.7% n.m. 13.3%
Profit before tax 254.6 195.6 321.9 310.4	58.7% (3.5%) 26.4%
Income tax expense (76.0) (58.6) (95.5) (95.6)	63.1% 0.1% 25.7%
NPAT – continuing operations 178.6 137.0 226.4 214.8	56.8% (5.1%) 26.8%
EPS (cents)2 6.5 5.0 8.2 7.8	56.8% (5.1%) 26.8%
Underlying NPAT3 179.4 187.9 203.4 195.3	3.9% (4.0%) 13.4%
UnderlyingEPS (cents) 3 6.5 6.8 7.4 7.1	3.9% (4.0%) 13.4%
Dividend per share (cents) 5.70 6.30 5.80 6.90	9.5% 19.0% 1.8%
Dividendpayout ratio3 87.8% 92.3% 78.5% 97.3%	5.4% 23.9% (10.6%)

• 2 Calculated on total operations

1 Excludes discontinued operations

3 See glossary for definition of Underlying NPAT, and slide 31 for a reconciliation of NPAT – continuing operations to Underlying NPAT. Dividend payout ratio based on Underlying NPAT from total operations

32

Health Insurance policyholders – half by half

Health Insurance policyholders – half by half
	Change
1H20 2H20 1H21 2H21	2H21 v 2H20 2H21 v 1H21 1H21 v1H20
Premium revenue ($m) 3,315.5 3,230.1 3,324.5 3,355.8	3.9% 0.9% 0.3%
Policyholders1(thousand):
Opening balance 1,796.0 1,807.7 1,806.6 1,855.6	2.6% 2.7% 0.6%
Acquisitions 98.3 97.5 102.6 118.6	21.6% 15.6% 4.4%
Lapses (86.6) (80.4) (62.8) (84.6)	5.2% 34.7% (27.5%)
Net suspensions/reactivations - (18.2) 9.2 (0.5)	n.m. n.m. n.m.
Closing balance 1,807.7 1,806.6 1,855.6 1,889.1	4.6% 1.8% 2.6%
- Medibank 1,401.5 1,388.2 1,405.8 1,417.8	2.1% 0.9% 0.3%
- ahm 406.2 418.4 449.8 471.3	12.6% 4.8% 10.7%
Acquisition rate2 5.5% 5.4% 5.6% 6.3%	90bps 70bps 10bps
- Medibank 4.1% 3.8% 4.1% 4.9%	110bps 80bps -
- ahm 11.3% 11.8% 11.3% 11.6%	(20bps) 30bps -
Lapse rate2 4.8% 4.4% 3.4% 4.5%	10bps 110bps (140bps)
- Medibank 4.5% 4.0% 3.3% 4.0%	- 70bps (120bps)
- ahm 7.2% 7.2% 5.0% 6.9%	(30bps) 190bps (220bps)
Policyholdergrowth 0.7% (0.1%) 2.7% 1.8%	190bps (90bps) 200bps
Total policy units1,3 (thousand):
Closing balance 4,709.1 4,677.1 4,761.6 4,811.5	2.9% 1.0% 1.1%
Average balance 4,711.1 4,684.0 4,736.5 4,789.7	2.3% 1.1% 0.5%
Annualised average revenueperpolicyunit1,3($) 1,407.5 1,379.2 1,403.8 1,401.3	1.6% (0.2%) (0.3%)

• 1 Consistent with reported industry data, policyholder numbers only include the resident portfolio whereas total policy units include both resident and overseas portfolios

• 2 Consolidated lapse and acquisition rates exclude transfers of policyholders between ahm and Medibank at a combined brand level. Figures at brand level include these transfers. Lapse and acquisition rates are based on the average of the opening and closing balances for the period

3 Refer to glossary for definition of policy units. Policy units include both resident and overseas portfolio. Based on an average of the month-end balances over the reporting period

33

Investment portfolio

As at 30 June 2021	Balance ($m)	Portfolio composition	Target asset allocation
Australian equities	119.3	4.8%	5.0%
International equities	147.4	6.0%	6.0%
Property	169.3	6.9%	7.0%
Infrastructure	52.5	2.1%	2.0%
Growth	488.5	19.8%	20.0%
Fixed income1,2	1,421.9	57.8%	60.0%6
Cash3	552.1	22.4%	20.0%6
Defensive	1,974.0	80.2%	80.0%
Total Fund (pre-STOC)	2,462.5	100.0%	100.0%
Short-term operational cash4	326.8	-	-
Total Fund	2,789.3	100.0%	100.0%
Non health fund investments5	164.1
Total investmentportfolio	2,953.4

• 1 Target asset allocation comprises floating rate notes and asset-backed investments (33.0% vs 32.0% in 2020) and other fixed income (27.0% vs 20.0% in 2020). The Group’s average credit duration is approximately 2.0 years, average interest rate duration is approximately 0.7 years, and the average credit rating is ‘A’

• 2 For investment portfolio purposes, fixed income comprises fixed income securities ($1,823.4m), less reclassified cash with maturities between 3-12 months ($179.0m), less non health fund fixed income securities ($111.2m), less short-term operational cash fixed income securities ($148.6m), plus cash allocated to the Fixed income portfolio ($37.3m).

• 3 For investment portfolio purposes, cash comprises cash and cash equivalents ($671.7m) plus cash with maturities between 3-12 months ($179.0m), less non health fund investments ($52.9m), less short-term operational cash ($178.3m), less operational cash ($30.2m) less cash allocated to the Fixed income portfolio ($37.3m).

• 4 Short-term operational cash (“STOC”) sub-portfolio of the fund’s investment portfolio consists of short dated defensive assets with the purpose of funding the COVID-19 claims liability and customer giveback. Given the short-term nature of this portfolio, it is not subject to the existing SAA, TAA framework

• 5 The fund’s SAA does not apply to the non health fund investment portfolio

• 6 During the period, the target Fixed Income allocation increased to 60% (2020: 52%) and the target Cash allocation reduced to 20% (2020: 28%)

34

Glossary

Term Definition 1H Six months ended/ending31 December of the relevant financialyear 2H Six months ended/ending30 June of the relevant financialyear APRA Australian Prudential Regulation Authority bps Basispoints (1.0% = 100 bps) cps Centsper share CY Calendaryear DAC Deferred acquisition costs Downgrading The difference between the average premium rate rise and revenue growth per policy unit eNPS Employee Net Promoter Score. A measure of the likelihood of an employee to recommend the company’s products and services and the company as a place to work EPS Earningsper share FY Financialyear ended/ending30 June FYTD Financialyear to date Health Insurance Includes both resident and overseas IBNR Incurred but not reported MER Management expense ratio n.m. Not meaningful NPAT Netprofit after tax NTI New to industry pcp Prior corresponding period PHI Private Health Insurance. Overseas Overseas students health cover (OSHC) and Overseas visitors cover (OVC)	Term Definition
	Policyholder The primary person who is insured under a private health insurance policy (other than in relation to overseas students or visitors), who is not a dependent child, and who is responsible for paying the premium
	PSEUs or policy units Policy Single Equivalent Units are used by Medibank as a standard measure of income units. They take into account the number of adults on a policy, and whether they have Hospital Cover or Extras Cover or both. For example, a household with two parents and three children, all of which had both Hospital and Extras Cover, would represent four policy units (2 adults x 2 types of Cover = 4). This measure includes residents and overseas policies and only adult insureds are typically counted in the calculation of PSEUs
	Resident Hospital and/or extras cover for a compliant health insurance product
	SAA Strategic Asset Allocation. The long-term portfolio asset allocation that meets the expected risk and return objectives of the fund
	Service NPS A measure of the likelihood of an existing customer to recommend the brand immediately following a service interaction
	TAA Tactical Asset Allocation. The medium-term portfolio asset allocation that varies to the strategic asset allocation in order to help optimise risk-adjusted investment returns in light of the prevailing relative market pricing
	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 investments and movements in credit spreads, and for one- off items, especially those that are non-cash, such as asset impairments. Underlying NPAT is not adjusted for outstandingclaimsprovision movements or COVID-19 impacts
	Underlying Underlying figures (excluding Underlying NPAT, Underlying EPS and Underlying investment income) are adjusted for outstanding claims provision movements and COVID-19 impacts
	Virtual hospital beds The number of people receiving hospital substitute treatments by Medibank Health which is calculated for a given period as total days of hospital substitute treatments service / number of days in the period
	YoY Year onyear – as compared to the corresponding period in theprioryear

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