Insurer plans for costs of friends

Pet ownership rates in Australia are among the world’s highest. According to the Animal Health Alliance, more than 60 per cent of households own a pet, with dogs in 40 per cent of households and cats in 30 per cent. By comparison, the European Pet Food Federation reports dog and cat ownership in Britain to be 24 per cent and 19 per cent respectively.

To date, the nation’s affinity for furry friendship may have coincided with little planning for the associated costs. It is estimated that only 4 per cent of cats and dogs are subject to pet insurance in Australia, compared with 25 per cent in Britain.

The world’s most prepared pet owners appear to be the Swedish, where 40 per cent of cats and dogs are subject to insurance despite having one of the EU’s lowest rates of pet ownership.

The coming listing of Greenstone aims to ensure that Australians are more financially prepared for unforeseen events involving their pets and personal health.

Founded in 2007 by private South African insurance group Hollard, Greenstone is focused on the development, marketing and administration of retail insurance products in Australia. The company has a direct-to-consumer distribution strategy. Its principal assets include distribution and administration agreements with Hannover Re, Woolworths, Medibank and the RSPCA.

Greenstone also controls intellectual property surrounding proprietary brands including Real Insurance, Prime Pet Insurance, Guardian Insurance, Australian Seniors Insurance Agency and Choosi.

With impetus for Greenstone’s listing driven by a vendor sale, incentive for new investors is provided by the company’s established profitability and growth record. Greenstone is on course to generate its third consecutive year of increasing profits during the 2016 financial year and is scheduled to pay dividends.

While vendors will retain a significant stake in the business, there are risks surrounding the company’s earnings quality. Greenstone’s financial performance is heavily reliant on new sales rather than recurring income. The company has successfully diversified with a portfolio of life and other health-related insurance products. However, its mixed history of cashflow conversion