July 6 (Bloomberg) -- MBF Australia Ltd., a health-care insurer owned by policyholders, received takeover approaches from a rival and buyout firms ahead of its planned initial share sale.

The approaches will be considered while the board continues to prefer a share sale, Sydney-based MBF said in a statement today, without identifying the bidders.

British United Provident Association Ltd., the U.K.'s biggest private health-care company, proposed buying MBF for A$1.5 billion ($1.3 billion), the Australian Financial Review reported today, without saying where it got the information.

Combining MBF with BUPA would create Australia's biggest private health insurer with 1.8 million policyholders and 28 percent of the market, overtaking government-owned Medibank Private's 27 percent, the Review said.

MBF is one of three Australian health insurers considering share sales as Australia's aging population boosts demand for medical services and the government encourages people to take out health insurance to reduce the burden on state-run hospitals.

Medibank will be sold to the public next year, Australian Finance Minister Nick Minchin said in February. NIB Health Funds Ltd., Australia's sixth-largest health insurer, said in March it will become a public company.

The proportion of people aged 50 and over is projected to rise to as much as 50 percent in 2051, from 29 percent in 2002, according to the nation's statistics bureau.

A 30 percent rebate on premiums introduced in 1999 has resulted in the proportion of Australia's 21 million population with health cover rising to 43.4 percent from 31.4 percent.

MBF's net income rose 21 percent to A$181 million in the year ended June 30, 2006, according to the company's Web site. The insurer hasn't released fiscal 2007 earnings.

BUPA entered the Australian market five years ago, when it teamed with Macquarie Bank Ltd. to buy Australia's No. 3 health insurance provider for A$595 million from Axa Asia Pacific Holdings Ltd.

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By Robert Fenner

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