HCF Media Release
Sydney, Monday, 19 February 2018
Australia’s largest not-for-profit health fund, HCF, and Western Australia’s largest health fund, HBF, are considering a merger that would see HCF and HBF hold approximately 18.4% market share and provide members of both funds the benefits of scale required to compete with the larger private health insurers.
The merger is a logical fit, given both funds’ not-for-profit structure and member-first approach. Any merger will be subject to regulatory approvals and other conditions. The respective Boards and Councillors of HCF and HBF, responsible for ensuring members’ interests are protected, must approve the proposed merger.
Sheena Jack, HCF’s CEO and Managing Director, said a merger of HCF and HBF, Australia’s third and fifth largest health funds respectively, would give the not-for-profit health insurers a greater voice in the industry.
“The not-for-profit business model exists for its members, rather than shareholders, and plays a vital role in our economy, not just in private health insurance but across many industries. The best interests of our combined membership would, as always, be our number one focus,” Ms Jack said.
“This merger of equals would provide a significant increase in size which will enable greater benefits to be passed on to members. Strategically, this merger would create a truly national player with combined strength to grow both brands and better compete in what is a challenging industry,” Ms Jack added.
HCF Chairman Robert Goaley said HCF’s number one priority has always been its members and this will continue.
“HBF lives by that philosophy too. Combined, we could reduce upward pressure on premium increases due to an enhanced competitive position in the market and offer a superior customer experience,” Mr Goaley said.
The Chairman said both not-for-profit foundations will be maintained.
Key details of the proposed merger include:
- A merged entity would have a combined asset position of $4.0 billion, enabling reinvestment in the business and minimising future premium increases.
- If approved by the Councillors of both organisations, the merger could be completed in the middle of the year following regulatory approvals, including the ACCC and APRA. Until these approvals are obtained, HCF and HBF will continue to operate as they currently do.
- If approved, an entity will be established with a Board comprising equal numbers of Directors from HCF and HBF. All HCF and HBF Councillors will be offered the opportunity to maintain their governance roles over the merged group.
- After any merger, there will be a transition period in which the operations of HCF and HBF will be combined.
HCF will provide another update on the proposed merger following the vote of Councillors next month.
Notes: Last month, HCF announced its average premium rate increase of 3.39%, the lowest for 16 years, and the lowest of the major funds, while the industry average was 3.95%.