nib has announced the $25 million acquisition of QBE’s travel insurance business.
QBE Travel is currently Australia’s fourth-largest travel insurer. The acquisition includes the distribution and claims capability of QBE Travel but excludes capital supporting the business and the QBE brand.
nib said the acquisition is consistent with its strategy to grow its World Nomads Group (WNG) travel insurance business by providing greater scale and distribution reach.
It will fund the transaction through existing available capital. The health insurer said, given the size of the transaction, it is immaterial to earnings per share, excluding one-off transaction and integration costs (forecast to be approximately $11 million) and amortisation of related identifiable intangibles (forecast to be up to approximately $2 million annualised).
The acquisition is expected to complete in the first quarter of 2019.
QBE Travel has an extensive distribution network including partnerships with well-known Australian brands, as well as a national network of more than 2,000 travel insurance agents. The business also includes a 24-hour emergency assistance service, claims management and medical underwriting capability.
nib said the acquisition has the potential to increase WNG's annual domestic gross written premium by up to 40 percent.
Managing director Mark Fitzgibbon said the acquisition builds further momentum within nib’s travel insurance that has already recorded sales growth of 7 percent for FY18.
“Since acquiring WNG in mid-2015, we’ve made no secret that we like the fundamentals and growth prospects that underpin the travel insurance market,” he said.
“Travel insurance is much closer to health insurance than most imagine given more than 60% of travel insurance claims are medically related. And of course, people travelling internationally more and more is a mega-trend. We’re benefiting from this, not only in the Australian market but also in overseas markets which today account for almost half of WNG’s sales.”
Mr Fitzgibbon said the QBE travel business will extend WNG’s scale.
“Greater scale is becoming increasingly important as are opportunities to achieve revenue and cost synergies. Being part of the nib Group, allows for example, the WNG business to access nib hospital and provider networks, claims management capability and distribution channels,” he said.
Mr Fitzgibbon said the company's non-Australian resident private health insurance businesses, including travel insurance, international workers and students health insurance and New Zealand operations, accounted for 30.4 percent of its earnings last year.
“Aided by the contribution from acquisitions such as QBE Travel, we see a future not too far away, in which these businesses will account for as much as 50% of our earnings,” he added.