On a call to analysts on Thursday, Mr Drummond pointed to “uninformed commentary” around profitability in the industry and said despite tough economic conditions, premium increases were not meeting the rising costs of Australian healthcare.

“Forgoing a premium increase by funding claims out of surplus equity reserves is unsustainable.”

Mr Drummond said predictions that private health insurers would make savings due to lower claim volumes during the COVID-19 pandemic have not played out. “While significant savings were projected by some commentators at the beginning of the crisis, this has not eventuated,” he said.

“The industry regulator APRA has said that the vast majority of surgeries and extra services disrupted through COVID-19 will ultimately take place. In preparation for this we have accrued a $297 million balance sheet liability.”

Data from the Australian Prudential Regulation Authority released this week showed net margins across the private health insurance sector had contracted over the past quarter from 4.9 per cent to 2.8 per cent.

Citi analysts Nigel Pittaway and Virad Mather said the concerns over margins had a silver lining. “The positive angle on these weak margins is that they should support the industry’s argument that it needs the deferred premium rate increase to go ahead from 1 October as planned, despite some contending it should be cancelled altogether,” they said.

Medibank also announced the appointment of a new chairman, with QBE Insurance chairman Mike Wilkins to take over from long-standing chair Elizabeth Alexander on September 30.

Ms Alexander had served as chairman since March 2013 and said she was proud to have overseen Medibank’s transition to life as a listed company.

Income across the company’s investment portfolios also plummeted as the pandemic hit world markets. Net investment income came in at $2.4 million for the year, a drop of more than $100 million on last year’s figures.

The company’s health management arm Medibank Health, which includes telehealth and at-home care services, was a bright spot in the numbers. Operating profit jumped 25.8 per cent for the year to $27.8 million.

Medibank shares fell as much as 4.5 per cent throughout Thursday, hitting a low of $2.73 just after 10.30 but recovered in afternoon trading to $2.86.

The company declared a final dividend of 6.3¢, down 14.9 per cent on 2019.