Australian travel insurance provider Cover-More Group is buying Travelex Insurance Services, the third largest retail travel insurance specialist in the US, for $US105 million ($A137 million).
Cover-More says Travelex is an excellent strategic fit, providing accelerated entry into North America and a platform for expansion.
The company says the deal creates a global platform with new opportunities across Cover-More’s verticals including travel and aviation, financial institutions and medical assistance.
Travelex generated $US124 million ($A161 million) in gross written premiums and $US9.5 million ($A12.4 million) in EBITDA (earnings before interest, taxes, depreciation, and amortisation) for the 12 months to June.
The acquisition will be funded through a share entitlement offer to raise $A73.3 million with the balance funded through bank debt.
Travelex has more than 3,400 distribution partners, 70 specialty risk clients and 85 insurance programs. It insured 1.3 million travelers in 2015 and has licences in all 50 US states.
In 2016, Cover-More reported a 7.6% rise in gross sales to $502.1 million. Net profit after tax was down 27% to $18.7 million, partly due costs of international expansion, higher-than-usual levels of advisory fees and further investment in management capability.