When shares in the government-owned health insurer start trading in the first half of next year, Medibank Private will be one of Australia's biggest listed companies.

There are no details yet about the allocation of shares to small investors or institutions, or other aspects of the float. However, if the experience of previous floats of government businesses is any guide, investors can probably expect a nice return on their money.

Medibank Private is the country's largest health insurer with about 30 per cent of the market. About four million people having policies with the insurer. It will be the biggest listing of a government asset since the Queensland government's $4.6 billion float of rail business QR National, now called Aurizon, in November 2010.

Analysts say the best guide as to how investors could fare with Medibank is probably health insurer NIB, a mutual society that was listed in 2007. Having listed at 85¢ , its shares are now trading at about $2.80.

Back then, NIB policyholders were offered shares, but it's unlikely the policyholders of Medibank will receive shares for free. Finance Minister Mathias Cormann said this week he was against such a move, and there is no legal requirement for the government to do so because Medibank is not a mutual society. The Rudd government converted Medibank from a not-for-profit to a for-profit in 2009. Michael Heffernan, a senior client adviser and economist at Lonsec sharebrokers, says the government will want to ensure the float is successful and that the price of Medibank's shares rises on listing; though there can never be any guarantee of that, especially if there is a general downturn in the market.

He says small investors could be offered shares at a discount to the price paid by institutional investors.

Heffernan says it should be another rewarding privatisation such as the Commonwealth Bank, CSL and Telstra.

NIB pays out about 65 per cent of its earnings as dividends. That is not as good as the big banks, which pay out about 75 per cent, but is still a high payout ratio, says David Ellis, head of financial services equities research at Morningstar. Medibank Private can be expected to pay good dividends as well, he says.

Elio D'Amato, chief executive of Lincoln Indicators, says there is a ''lot of value'' in the Medibank brand.

''Once these businesses become private enterprises, they loosen the shackles of bureaucracy,'' he says. Senior executives of a sharemarket-listed Medibank Private will be given incentives to increase profits.

''However, that said, Medibank has been 'for profit' for four years,'' D'Amato says. That means any boost in earnings growth through efficiencies may be limited. Nevertheless, D'Amato thinks it likely that the float will be successful.

Morningstar's David Ellis also sees limited growth opportunities for Medibank Private. The New Zealand health insurance market is well provided for, and not-for-profit health insurers are not likely to want to merge, he says.

Also, the health insurance sector is highly regulated, with premium increases approved by the government. And Australia's population is ageing and requires more expensive medical services.

Still, Medibank's latest annual report shows it is finding some new markets. International students require health insurance as part of their visa conditions and Medibank is tapping into that market. Health insurers are also diversifying into travel insurance and pet insurance.

D'Amato recommends that rather than speculating on quick gains from the Medibank float, investors should focus on the company's financial health and longer-term prospects, and make sure owning shares in the health insurer aligns with their wider investment strategy.