Health insurer nib holdings limited (nib) has announced the acquisition of QBE's travel insurance business (QBE Travel), Australia's fourth largest travel insurer, for a total consideration of up to A$25m ($18.5bn).
The acquisition includes the distribution and claims capability of QBE Travel, but excludes capital supporting the business and the QBE brand, nib says in a statement. Consistent with nib’s strategy to grow its World Nomads Group (WNG) travel insurance business, the acquisition will provide greater scale and distribution reach.
nib will fund the transaction through existing available capital. The acquisition is expected to complete in the first quarter 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. On completion of the acquisition, WNG annual domestic gross written premium has the potential to increase by up to 40%.
nib managing director, Mr Mark Fitzgibbon, said the acquisition builds further momentum within nib’s travel insurance business which aside from this transaction, has already seen sales lift by 7% 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,” Mr Fitzgibbon 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,” he added.
“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.
nib’s adjacent businesses, which includes travel insurance, international workers and students health insurance and its New Zealand operations, accounted for 30.4% of nib’s group earnings in FY17.
“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,” Mr Fitzgibbon concluded.
Acquired by nib in July 2015 for A$95m, WNG is currently Australia’s third largest travel insurance distributor. WNG is a managing general agent which performs all the functions of an insurer other than carrying the underwriting risk. This includes product design, pricing, marketing, sales, paying claims and emergency assistance.