April International is looking to double its international private medical insurance (IPMI) business in the next four years and expects to be active in acquiring other providers as well.
The provider is setting its sights on organically growing its IPMI premiums written from around €300m per year to €600m (£259m to £520m) by 2027, April Group CEO Eric Maumy told Health & Protection.
There will be a share of April Group’s pot of €1.5bn to €2bn (£1.29bn to £1.73bn) available for mergers and acquisitions activity over the period as it looks to consolidate its growth.
The provider has also committed to significantly upgrading its IT infrastructure for UK-based IPMI advisers with the intention of launching its April On platform in early 2024 and the Easy Claim service in 2025.
And April International is considering extending its range of local offices further.
Speaking exclusively to Health & Protection, Maumy (pictured) explained the group was finalising its ambitious growth plans after completing a majority investment by private equity house KKR and other investors in April.
He noted the reasons for agreeing the deal with KKR included its experience in the insurance and wealth management sectors and the long-term vision to build the business for eight to 10 years.
“If you want to transform a business, the good thing is you get the pressure of the private equity because they give you a lot of pace and you have to speed-up, but the beauty of it is that we also have some room for transformation,” Maumy said.
The full strategic plan following the investment will be published next March, but Maumy is comfortable enough to reveal some of the details and the plans for growing the business.
“Today we write €1.8bn (£1.56bn) of premium a year across the group, of which €300m is on IPMI,” he continued.
“With that €1.8bn it is roughly €600m revenue, and looking to the future the idea is to reach €1bn (£870m) of revenue.”
Double in four years
It is that €300m of IPMI premiums which Maumy feels there is ample room for the business to grow, in a global market he estimates at around €15bn (£13bn).
The first intention is to grow organically with the business already seeing 15% to 20% organic growth for the last four years, but the new goals would appear to stretch even those targets.
“When we look at the future just through organic growth, in 2027 the idea is to be around €600m – to double in size in four years,” Maumy said.
“And on the top of that we will do mergers and acquisitions (M&A). If we do M&A, and we are really ready to invest a lot in that, we will likely be between €600m and €1bn in premiums.
“Then you can say you have started to consolidate the market and you can play not exactly in the same courtyard as the very big insurers, because they are very big, but it changes your size and your prospects. It’s really what we are thinking about.”
M&A in tier two and three insurers
Maumy clearly expects there to be a significant amount of consolidation among international health insurers and views the market in roughly three tiers: the top tier with the largest blue chip insurers such as Allianz, Bupa and Cigna; tier two including Now Health, Global Benefits Group, David Shield, MSH, Henner and April International, and tier three including William Russell and some regional providers.
“Our belief is that clearly the consolidation is going to take place among tier two and tier three, and we intend to be one of the consolidators,” Maumy added.
He highlighted that many insurers had suffered financially due to the Covid pandemic and so some may not be able to reach the necessary size to compete effectively in the market.
“We faced the same situation but what we experienced was exactly the opposite, so we are in good shape, we are growing and backed by shareholders who want to grow in the field.
“My gut feeling is there will be some moves in tier two and tier three because some of the players maybe do not have a clear vision about what they want to achieve and some of them do not have the financial means.
“And to be clear, in this landscape if you don’t reach a critical mass – and I really insist on that because it’s about cost containment, and it’s absolutely critical to get the right medical network – you’re going to suffer.
“You’re going to have difficulties to have the right value proposition, and to do that, you need to be bigger.
“So when we look at it, we think that’s the reason why we’re going to have some mergers in this field.”
UK adviser technology upgrades
One of the biggest targets for this expansion is in the UK market, where the firm recognises there is scope to improve its offerings to advisers and match its worldwide developments.
This will feature a particular focus on upgrading technology and systems for advisers over the next two years.
The April On quotation, underwriting and administration platform will be introduced in the UK in early 2024, with the Easy Claim app to follow in 2025.
“The only country where we could not do that before was the UK for one simple reason, which was technology,” Maumy said.
“So we have decided to invest a lot in IT; our back office platform in the UK was not modern enough to do the application programming interfaces (APIs) and all these things, so now we are invested everywhere in the world.
“We have started in Asia and in France, but we are going to move all of Europe on to the same platform, meaning that the UK will get access to this application.”
There is also a desire within the insurer to focus on maintaining and streamlining customer service beyond pricing and product benefits.
“On the top of that, they will get people who have got time to look after what is not managed through digitisation, that’s really a promise to customers,” Maumy added.
Middle East, Africa and South America
Those plans will also be met with further expansion globally with April International looking to setup in new locations around the world.
In the last year it has founded new offices in Germany and Dubai to service the markets in those locations.
For Germany, this was largely based on demand from local brokers who were keen to use the insurer and gave it the chance to enter a large IPMI market, it said.
In Dubai it has worked with local partner Salama and with Mednet as its third party administrator (TPA) in setting up the location.
“For Dubai the reason was different, we need to be in Dubai for compliance reasons,” said April International Europe CEO Isabelle Moins.
“If you are not based in Dubai you cannot work with corporate clients and the collective segment.”
Noting the office is operating with a fully locally compliant solution based on an individual and SME proposition, Moins added that business is coming in “quite regularly”.
“For the next regions, we are carefully looking at the market size, the need for compliance and also the possibility of having partners or brokers in the country,” she continued.
“So we currently think we have opportunities in the Middle East in some countries, in Africa and, not immediately but in the future, in South America.
“We are not going to go in to Brazil or all the countries, but we have some opportunities there.”
Long-term focus
But the provider is aware that some markets can be highly volatile and difficult for entry, so said it wants to focus on understanding the long-term possibilities of setting-up in any locations.
“We don’t want to commit or enter any market without committing to the long term,” added April International UK managing director Joe Thomas.
“We’ve got long-term strategic partners in terms of investment and it’s very much the same as how we’re approaching the business on IPMI; if we are entering a new market or are animating a new target segment, we do so for the long term.
“There’s no kind of quick commercial wins to short-lived commercial growth, it’s very much a committed approach to the markets that we’re entertaining.”