With Mbf Sealed, Bupa May Integrate Insurance Brands
The Age
Saturday July 26, 2008
HEALTH care giant Bupa is considering ditching the HBA and MBF brand names and has not decided whether to hold on to all the assets it picked up as part of its $2.41 billion buy-out of MBF earlier this year.
The company formally completed the acquisition last month but has not determined how it will pursue the integration of systems, product offering and branding. The acquisition gave Bupa about 28% of the Australian private health insurance market, adding MBF to its existing HBA and Mutual Community insurance brands.Dean Holden, newly appointed as managing director of Bupa Asia-Pacific, said as a first step the company would be tweaking its main insurance brands to indicate they were a part of the Bupa group, but he said a decision had not been made on whether this was a transitional arrangement to the stand-alone use of the Bupa name. "You can destroy a lot of value by suddenly saying, 'oh, we're just going to call it Bupa from day one', and you find that your 3 million customers have never heard of you," he told BusinessDay."Being a retail brand, I think you'd have to move away from that very, very carefully and over a long period of time."While the company is amid bedding down its latest acquisition, Mr Holden said Bupa was still monitoring the market for acquisition opportunities."If I think if I said to Eric (Dodd, Bupa Australia managing director) and Richard (Bowden, Mr Dodd's deputy) today, I'm off trying to buy another fund, I think they'd probably hit me," he said."Sometimes you're not in control of the timing of these things. We've got no specific conversations going on now, but we would be interested in increasing our influence across the Australian market."He said the company was particularly interested in insurers that would allow it to expand in places where it lacked a strong market presence.The Western Australia-based HBF and Geelong-based GMHBA would both appear to fit Bupa's criteria, but Mr Holden declined to identify which funds he was considering.In May, the Federal Government announced the income threshold for the Medicare levy surcharge would rise, from $50,000 a year to $100,000 a year for single people and from $100,000 a year to $150,000 a year for couples.While the change will make insurance less attractive, Mr Holden said the fact the change had not passed the Senate created uncertainty for the company in forecasting the drop-off in customer numbers."The system here is quite tied in with government, so we're just waiting for them to finish their deliberations and as soon as they've done that we'll be able to firm up on our numbers," Mr Holden said.He said the company had not seen a noticeable decline in customer numbers due to the anticipated surcharge changes, with factors such as interest rates and petrol prices having a larger effect.While MBF's private health insurance business was the main prize in its acquisition, it came with the company's travel insurance and life insurance businesses. Mr Holden said the decision on what would happen to those assets was subject to a strategic review, but the company did not want to be distracted from its core strengths."We wouldn't profess to want to be a multi-line insurer or underwriting general insurance products, no," he said. "Bupa is very much a health and care-focused company. In the financial services, the products we like are those which are those that are around the protection of the individual, for example, the critical illness which do have some sort of relationship back to the health and care credentials of Bupa."Bupa is also seeking to use acquisitions to increase market share in the fragmented aged-care business. Bupa is the second-biggest player, with the 3975 beds in 48 homes it has through its Amity business giving it about 3% of the market.Mr Holden said Bupa's aged-care businesses in Britain and Spain created opportunities to transfer expertise to the Australian market.He said senior managers in the new structure had been appointed, and that second- and third-tier managers would be in place by the end of September.
© 2008 The Age