Comprehensive Financial Analysis of Medibank Private Limited

This report provides a financial analysis of Medibank Private Limited, a leading insurance company in Australia. It examines the company's market position, noting its 29.1% market share and 3.8 million members. The analysis includes a Porter's Five Forces assessment, evaluating the threats of new entrants and substitute products, bargaining power of suppliers and buyers, and competitive rivalry. The report highlights Medibank's profitability, despite challenges in core business earnings, and emphasizes the insurance industry's potential for growth amidst changing regulations and customer expectations. The conclusion underscores the importance of strategic management in navigating competitive forces to sustain profitability in the insurance sector. Desklib offers this report as a valuable resource for students studying finance and insurance.

Financial Analysis

INTRODUCTION
The Medibank Private Limited is the leading company in the insurance industry in Australia.
From many of the years, the Medibank has reformed its functioning of doing the operation of
the business in the Insurance Industry (Medibank Private Health Insurance | For Better
Health, 2018). The company is the 2nd largest company in health insurance sector after Bupa
with total members of around 3.8 million members, and also has a 29.1% of the market share
of the industry it is prevailing in with two of its brands. Further, previously it was Australian
government business, and later on, it becomes privatised in 2014 by the Abbott Government,
and now the company operate as a listed on the Australian Stock Exchange.
Medibank Private Limited Porter Five (5) Forces Analysis for Insurance Industry:
Threats of New Entrants: Threat of new entrant is low due to high restrictions on entry and
strict compliance with the law. However, new contestants in Insurance Company bring in the
improvements and the best approaches so as to make the things completed in an
effective way with the low system of an estimation, reducing expenses, and providing new
incentives to the customers. By innovating new products and services brings new customers
to the fold a give a reason tp regular customer to buy Australia group major products.
Bargaining Power of Suppliers: Risk of the supplier is high as
they have a monopolistic approach. All organizations in the Insurance borrow money for
specific lenders (Berry‐Stölzle, NiniandWende, 2014). The investors in the insurance
companies use their energy to diminish the higher cost from the company in the insurance
industry .by experimenting the different policies using different strategies which can high the
amount of insurance can shift it from one company to another.
Dealing Power of Buyers: Purchasers are frequently a requesting part thus their bargaining
power is high. They are having a number of options thus the company is required to be
competitive to ensure their leading position. By preparing a large customer base will be
helpful in two ways it will lower down the buyers bargaining power and it provide a chance
to company to increase its discounts and offers.
Threats of Substitute Products or Services: At this point when the other product or services
fulfils the needs of the customers in different ways, the company gainfulness endures
(Subramaniam and et al. 2015). However, substitute of banking services is not there thus

the risk of substitute is low. Threat of substitute services is tackle by being providing service
rather than providing just products.
Conflict among the Existing Competitors: when the competition between the recent players
in the industry is quite serious then it will pull the costs and reduce the benefits of the
business. (De Leeuw and et al. 2014). Medibank Private Limited works in an exceptionally
aggressive Insurance industry which increases the risk of competition. Bt
constructing sustainable differentiation and building a scale conflicts among
existing competitors decreased.
The insurance sector has great potential of growth as it has undergone through a paradigm
shift in operating and regulation dynamics over the last decade. The leaders of the
insurance company have a lot of things in their minds regarding political and regulatory
disruptions all around the world. There are certain changes in some of the rules, and the
way they have been operated have also changed. Accelerating development in the path of
the business is being conducted by higher expectations of the customers and the
innovation. The disruptive new players are seeking to capture the share of the market from
the present insurers. As always the compliance and regulation needs are significant and
tends to change every time.
The insurance company can recognize. According to the Porter Five Forces in detail, the
Medibank’s management can transform the powers in order to support them.
CONCLUSION
From the above analysis, it can be concluded that there was a rise in the profitability level of
the Medibank Private Limited company. Despite the fall in the core business earnings of the
Medibank, there was about 8% rise in the profitability of the company. From the past years, it
has been extremely profitable for all the insurance companies. The profits by the insurance
companies are generated by remarkable underwriting profits and the investment income. The
insurance industry has always been in much more profits when done business through
underwriting perspective.

REFERENCES
Berry‐Stölzle, T.R., Nini, G.P. and Wende, S., 2014. External financing in the life insurance
industry: evidence from the financial crisis. Journal of Risk and Insurance, 81(3), pp.529-
562.
De Leeuw, J., Vrieling, A., Shee, A., Atzberger, C., Hadgu, K.M., Biradar, C.M., Keah, H.
and Turvey, C., 2014. The potential and uptake of remote sensing in insurance: A
review. Remote Sensing, 6(11), pp.10888-10912.
Medibank Private Health Insurance | For Better Health, 2018. [Online]. Available through
<https://www.medibank.com.au/ >. [Accessed on 26th May 2018].
Subramaniam, N., Wahyuni, D., Cooper, B.J., Leung, P. and Wines, G., 2015. Integration of
carbon risks and opportunities in enterprise risk management systems: evidence from
Australian firms. Journal of Cleaner Production, 96, pp.407-417.