NIB Holdings Limited (ASX: NHF) has announced that it is spending up to $25 million to acquire a travel insurance business from QBE Insurance Group Ltd (ASX: QBE). The acquisition includes the distribution and claims capability of QBE Travel, but excludes the capital supporting the business. QBE Travel has partnerships with well-known Australian brands and has a network of more than 2,000 travel insurance agents. It has a 24-hour emergency assistance service, claims management and medical underwriting capability. One of NIB’s main aims is to grow its World Nomads Group (WNG) travel insurance business and this acquisition will…
You can continue reading this story now by entering your email below
The acquisition includes the distribution and claims capability of QBE Travel, but excludes the capital supporting the business.
QBE Travel has partnerships with well-known Australian brands and has a network of more than 2,000 travel insurance agents. It has a 24-hour emergency assistance service, claims management and medical underwriting capability.
One of NIB’s main aims is to grow its World Nomads Group (WNG) travel insurance business and this acquisition will give the business greater scale and distribution reach. According to NIB, WNG’s annual domestic gross written premium could grow by up to 40%.
The transaction will be funded with existing available capital. However, one-off transaction costs will be around $11 million and amortisation of related identifiable intangibles will be around $2 million per year.
NIB Managing Director, Mark Fitzgibbon, said “Since acquiring WNG in mid-2015, we’ve made no secret that we like the fundamentals and growth prospects that underpin the travel market.
“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 market which today account for almost half of WNG’s sales.”
Mr Fitzgibbon went on to say that it may not be too long until travel insurance, international workers and students health insurance and NZ operations make up half of all earnings.
This seems like a solid fit for NIB and is yet another divestment for QBE. NIB is facing a lot of political pressure for its role in private health insurance affordability, but that doesn’t change the overall difficulty of rising healthcare costs and a growing ageing population.
NIB is trading at 18x FY19’s estimated earnings. This isn’t a bargain price but it could be a good long-term price if private health insurance affordability doesn’t get worse.
However, it might be a better idea to invest in these hot stocks for your portfolio instead.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.