Bupa to sell UK Protection and Risk Business

Bupa has recently announced its intention to sell its UK Protection and Risk Business, Bupa Health Assurance Ltd, to Resolution for £165.5m.  Resolution has recently completed the purchase of the majority of the UK Life arm of AXA, having also bought Friends Provident last year. I can really see the strategic fit for Resolution as it looks to boost its market share through portfolio acquisition. I’m struggling to see the Bupa rationale other than an opportunity for raising what might be, some much needed cash. 

Natalie-Jane Macdonald MD at the Bupa parent company, Bupa Health and Wellbeing, says the decision to sell allows Bupa to concentrate on healthcare products and services.

With protection and risk insurers increasing their focus on paying for treatment even earlier to reduce their liability and speed up a return to work, their products and services are getting closer and closer to the private medical insurance model. Prudential has already launched a hybrid protection and PMI product which I’m sure will not be the last.

Which begs the question as to what Bupa are going to do with the cash raised. How are they going to use it to concentrate on healthcare products and services when they have just sold some of them off to a sector of the market that is making a bee line for its traditional proposition?

It wouldn’t surprise me to see them buying a smaller PMI provider to help maintain their market share at a time when organic growth is proving very difficult.

The impact for employers will be less choice and higher prices. This reduced choice will have a knock on effect on intermediaries and continue to fuel the high levels of consolidation we have already seen in this sector of the market.