Switzerland's Zurich Insurance Group has agreed to buy Australia's biggest travel insurance provider, Cover-More Group, for $551m, stepping up its investment in the Australian market.
Global buyers have been drawn to the broader Australian insurance sector.
Returns on equity there are healthy and banks have been selling insurance assets due in part to regulatory changes requiring them to hold more capital.
Zurich had already bolstered its presence in Australia in March through the purchase of Macquarie Group's life insurance division for an undisclosed sum.
Other recent transactions include National Australia Bank's sale of 80% its life insurance division to Nippon Life for A$2.4 billion in October.
Cover-More shares surged 43% today after Zurich's A$1.95 cash a share offer, a 48% premium to the target's last closing price of A$1.32 on Friday.
The company was floated by private equity firm Crescent Capital in December 2013 at A$2 a share.
Analysts said Cover-More was appealing as a growth business given increasing outbound travel volumes in Australia, driven in part by low airfares.
The company has a 40% share of the Australian travel insurance market, and as of the end of September, outbound travel was growing by 4.8% a year, according to the Australian Bureau of Statistics.
Australia's second largest travel insurer, Allianz, has a 25% share of the market, according to research firm IBISWorld, while Suncorp and QBE Insurance Group each hold around 6%.
Cover-More Chairman Louis Carroll said Zurich planned to operate Cover-More as a discrete business and retain the existing management team.
