Medibank Private has appointed banker Craig Drummond as its new chief executive in a move that has analysts tipping a push for consolidation in the $19 billion private health insurance sector.
Mr Drummond, a 30-year banking veteran who most recently helped transform National Australia Bank - declined to comment on expectations of M&A activity, telling AAP on Tuesday it was not a priority at present.
Analysts believe he will target acquisitions after the federal government completes its review of the private health sector.
One health care analyst, who did not want to be identified, described Mr Drummond as a "transactions man."
"I think he's been hired to take Medibank through to the next level, and that will probably involve some further activity. He's not there to maintain the status quo," he said.
Medibank, which is Australia's biggest private health provider and has a market value of around $7.77 billion with no debt, could "easily digest a $200 million acquisition", the analyst added.
Mr Drummond told AAP that his priority is getting to know the business and key stakeholders, plus getting to grips with the changing industry regulatory landscape.
"The industry itself is growing but the rules of the game are not completely clear yet," he said.
Medibank is in a strong financial position, thanks to strong demand for its services from Australia's ageing population, and the leadership of outgoing chief executive George Savvides.
During his 14-year stewardship, Mr Savvides guided the company through the transition from government ownership to its listing on the Australian Securities Exchange in December 2014.
He also led a crackdown on improper health insurance claims.
Mr Drummond, 55, acknowledged there was room for improving the group's top-line performance.
Mr Drummond quit NAB in February after overseeing its capital raising and disposal of international assets, including Clydesdale Bank.
He was most recently group executive, finance and strategy of NAB, but left after reportedly losing out to Andrew Thorburn, who took over the top job at NAB last year.
Medibank chairman Elizabeth Alexander said the board was delighted Mr Drummond had agreed to lead the group, which has around 3.9 million members.
"Craig has an outstanding reputation for his leadership capabilities, strategic thinking and business acumen. He brings with him deep experience in regulated service industries requiring a strong customer focus," Ms Alexander said.
Medibank chief operating officer David Koczkar will serve as acting CEO from April 1 when Mr Savvides retires, with Mr Drummond to take over on July 4.
Mr Drummond's total fixed remuneration will be $1.5 million a year, plus short and long-term incentives.
Medibank, along with its peers including nib and Bupa, will increase its premiums by more than five per cent from April 1 after recently securing approval from Health Minister Sussan Ley.
In February, Medibank forecast annual operating profit of more than $470 million and premium revenue growth of between 4.5 per cent and five per cent.
Medibank shares ended up one cent at $2.85 in a lower overall market.
Share
