Cover-More is accelerating its North American expansion with the $US105 million ($138 million) purchase of Travelex Insurance Services, the third-largest retail travel insurance specialist in the US.

The acquisition will provide a platform for further growth and reduce costs for supporting customers in North America, the Sydney-based travel insurer says.

Travelex Insurance Services has licences in all 50 US states and covered 1.3 million travellers last year. It has 3400 distribution partners, 70 specialty risk clients and 85 insurance programs.

It generated about $US124 million ($163 million) in gross written premium and $US9.5 million ($12.5 million) in earnings before interest, tax, depreciation and amortisation (EBITDA) in the year to June 30, on a pro forma basis.

The purchase, to be completed later this year, will be funded through a fully underwritten share offer to raise about $73.3 million, and bank debt.

Cover-More says the deal will be positive for earnings per share this financial year, while cost savings of $500,000 to $1.5 million a year will be generated over the next few years.

It also says it is in final negotiations with two international insurers for a two-party underwriting arrangement.

The new deal would allow distribution in all global markets except the US, which will be covered by other arrangements, and include replacement of the current underwriting agreement with Munich Re’s Great Lakes Australia.

Cover-More’s trading in the first two months of the year was in line with market forecasts for EBITDA, with September also likely to be positive.

“Group revenue is growing year on year supported by the benefit of price increases and new revenue sources in Australia and New Zealand travel insurance services,” it said.

Revenues in India continue to “grow strongly”, and the US business’ contribution is increasing.

Cover-More will provide a further update at its annual general meeting on November 10.