Travel insurance specialist Cover-More Group has acquired Travelex Insurance Services.
The confirmation follows a binding heads of agreement between the two companies for the purchase which was announced by Cover-More on 27 September 2016.
Cover-More Group Chief Executive Officer, Mike Emmett, said the acquisition provides Cover-More with accelerated entry into North America and a platform for further expansion in the world's largest travel insurance market.
"Travelex Insurance Services is an excellent strategic fit for our business and we expect significant revenue and cost synergies as a result of the acquisition," he said.
Travelex Insurance Services, headquartered in Omaha, Nebraska, is the third largest retail travel insurance specialist in the USA. Cover-More, based in Sydney, Australia, provides global travel insurance and medical assistance services through retail travel agency networks, airlines, financial institutions and direct to customers.
Cover-More has operations in eight countries: Australia, China, India, Malaysia, New Zealand, Singapore, United Kingdom and United States.
Mike Emmett said Cover-More valued Travelex Insurance Services for the strength of the brand and reputation, the partner relationships and the expertise and talent of the management team.
He said the acquisition provides strong strategic benefits to Cover-More as the company expects to unlock substantial incremental value by combining Travelex Insurance Services and Cover-More's operations and capabilities, for example:
- the removal of duplicated costs in Cover-More's existing USA start-up
- reduced operating costs to support existing Cover-More customers in North America as Cover-More currently provides travel protection products for Flight Centre Travel Group
- leveraging Cover-More medical assistance and operations capabilities in other geographies
- leveraging 'follow-the-sun' cost efficiencies in medical assistance and operations arising from a presence in Australia, India and the USA.
Michael Ambrose, President, Travelex Insurance Services, will continue to lead the company as CEO, USA for Cover-More. He said the two companies complement each well.
"Combining Travelex's extensive sales and marketing expertise in offering travel insurance with Cover-More's predictive intelligence solutions and global digital commerce platforms will create an organization positioned to provide travelers with innovative tailored insurance products worldwide."
"The acquisition presents a great opportunity for Travelex Insurance Services to continue to grow in partnership with a specialist in the travel insurance market, and build on the successes we have delivered over the past 20 years," he said.
Travelex Insurance Services will continue to operate as usual maintaining focus on growing distribution, increasing sales, while delivering excellent customer service. There will be no change in existing management and sales teams.
Mike Emmett said that Cover-More expected the acquisition to deliver substantial additional revenue sources from:
- new distribution partnership opportunities leveraging the combined skills and capabilities and geographic scope
- opportunities to build new partnerships with travel, aviation and financial institutions
- increased on-line and direct distribution opportunities leveraging the Travelex Insurance Services' name and market profile
- increased insurance attachment rates in Travelex Insurance Services by deploying IMPULSE technology
- build-out of medical assistance customers in USA resulting from Travelex Insurance Services' name and reputation
- providing a platform to expand across North America including in Canada and Mexico.
Cover-More funded the acquisition through a combination of debt financing and a fully subscribed entitlement share offer for institutional and retail investors on the Australian Securities Exchange (ASX).