Cover-More upbeat about 2017

Insurance head talks about growth plans, takeover bid

Cover-More upbeat about 2017

Insurance News

By Mina Martin

After a stormy 2016 that culminated in a takeover bid from a global insurance giant, the head of Australia's largest travel insurer is looking forward to a stronger 2017.

Cover-More Group CEO Mike Emmett has revealed that the company's growth plans are focused around increasing its distributors around the world.

"We've said we're not going to be limited by the geographies we operate in, so we are targeting distribution partners in the airline industry around the world," Emmett told Australian Financial Review.

The insurer is planning to double the number of its airline partners over the next two years. It is currently partners with five airlines ̶ Air New Zealand, Malaysia Airlines, Virgin Australia, Hong Kong Express, and Go Air, India. It is also seeking to forge deals with global travel agencies, banks, and insurers.

Speaking about the surprise $741 million bid by Zurich for the travel insurer in December last year, Emmett said its success will be a boon for the company. 

"There are clearly going to be opportunities for us, there will be occasions where Zurich have existing relationships with large airlines that we wouldn't have targeted because of scale or credibility," he told AFR.

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Cover-More posted an adjusted EBITDA up 2% to 20.8 million in the period to December 31, and confirmed its earnings guidance for full year 2017 at between $54 million and $57 million, the report said.

Net profit after tax rose 5.4% to $8.6 million.

The insurer did not declare an interim dividend, but intends to declare a $0.05 per share special dividend if the Zurich deal gets approved by shareholders. 

"In our view, the 2017 half-year results reflected the fact the company is very much in strategy reset mode as it moves from a geographic based business model to an industry vehicle model," Bell Potter analyst John O'Shea told AFR. "Integration costs now, with benefits to flow from full year 2018."

The company had a busy 2016, having acquired Travelex Insurance Services in the US, signed a new underwriting agreement with Berkshire Hathaway, and reduced operating costs.

The Cover-More head expressed optimism over the company's future earnings potential.

"I'm positive and optimistic in terms of the progress we've made over the last few years to continue to improve the business. The earning forecast we've made for the full year is a significant improvement on last year's EBITDA," he told AFR.

Related stories:
Zurich announces $741 million acquisition
Cover-More Group makes US acquisition

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