The Medibank Private Ltd (ASX: MPL) share price is down 3% after the private health insurer was punished by APRA after the cybercrime event
.
Earlier this year, Medibank suffered from a cyberattack which led to personal details of a large amount of its customers being exposed.
APRA’s $250 million punishment
The Australian Prudential Regulation Authority (APRA) has told Medibank that it will apply an additional capital adequacy requirement of $250 million from 1 July 2023 following APRA’s review of Medibank’s cybercrime event.
Medibank said that it has sufficient existing capital to meet this adjustment.
After applying this additional requirement, Medibank said it’s “well capitalised with unallocated capital remaining at 30 June 2022 levels, which was $148 million.” Due to this, Medibank said that it would not need to reduce its target health insurance required capital ratio.
APRA noted that the requirement “will apply until Medibank has met key remediation milestones” which will be agreed with APRA. APRA also said it would conduct a technology review of Medibank. I wouldn’t call these positives for the Medibank share price.
The ASX private health insurer share said it will continue to provide its “full support and work collaboratively” with APRA including on the remediation program.
Management commentary
Medibank CEO David Koczkar said:
Safeguarding customer data is a responsibility Medibank takes very seriously.
Medibank has continued to strengthen our systems and processes to provide our customers with the security they expect and deserve. We will continue to work to enhance our systems and processes even further.
Our company remains strong and well capitalised.
We continue to support our customers through the Medibank Cyber Response Support Program, which includes mental health and wellbeing support, identity protection and financial hardship measures.
Final thoughts on the Medibank share price
The company has been through a lot over the last nine months and this is yet another setback for the company, which may indirectly reduce profitability a little by having to hold onto more capital than before.
I think Medibank could continue to do well in the coming years, but it’s already quite large, so I’m not sure if it will be able deliver long-term outperformance unless policyholder numbers keep growing at a solid pace.
