INSURANCE FIRM Hibernian hopes to build up a 15 per cent share of the health insurance market after taking a 70 per cent stake in number three operator Vivas.
Hibernian, which is owned by UK plc Aviva, confirmed yesterday that it was buying into Vivas by taking over the holdings of Dermot Desmond's IIU and a team of Vivas management and staff. The remaining 30 per cent of Vivas will be retained by AIB, which already works closely with Hibernian through the companies' joint ownership of Ark Life.
No price was disclosed for the deal but it is thought to place a valuation of €45 million on Vivas as a whole. This is based on the health insurer's gross assets of €88.9 million at the end of last year.
Mr Desmond owns one-third of the company, with Vivas chief executive Oliver Tattan holding a further 22 per cent, although the firm is known to have different categories of shareholders. Of Vivas's 70 employees, about half have some form of ownership in the group.
Initially, all Vivas staff will move to Hibernian but it is thought unlikely that Mr Tattan will remain with the enlarged company after integration has been completed. The transaction will require approval from both the Competition Authority and the Financial Regulator.
Stuart Purdy, chief executive of Hibernian yesterday professed himself "delighted" to have completed the deal, which is thought to have been under negotiation for some months. The two companies have had a relationship since 2006, when Hibernian began selling Vivas products through its branch network.
Vivas has built up a position of about 7 per cent in the health insurance market since being founded in 2004 to take on VHI and Bupa (now Quinn Healthcare) with a €12.5 million equity fund-raising.
It has 2,000 corporate customers, including a number of large multinationals.
"Clearly we want to try and take it to a different level in terms of scale," said Mr Purdy.
Hibernian is likely to rename Vivas to help leverage off the Hibernian brand, which has 1.1 million customers. It is the market leader in general insurance and sits within the top three for life and pensions.
Mr Purdy said the firm would focus on cross-marketing within its customer base, as well as tapping into AIB's 276 outlets for distribution. "It makes absolute sense" for AIB to retain its stake, Mr Purdy added.
Vivas has consistently attempted to differentiate itself in the health insurance market by offering new benefits such as cervical cancer vaccination and laser eye corrective surgery.
Hibernian was at pains yesterday to reassure Vivas customers that they need take no action on foot of the acquisition.
"There will be no change to any members' policies or benefits and all members should continue with their current health treatment plans unchanged," the firm said in a statement.
Vivas's most recent published accounts, for 2006, show that it had gross premiums of €29.8 million. The firm made a pretax loss of €262,394 that year and had accumulated losses of €6.8 million. It is thought to have generated revenues of €64 million last year and to have recorded a profit of less than €10 million. The health insurance market is estimated to be worth more than €1 billion in premiums each year, with more than half the population holding private insurance.
