HBF and HCF scrap planned $4 billion health insurance merger

Western Australia's largest health insurer, HBF, has pulled out of a planned merger with eastern states not-for-profit health fund HCF.

The decision to withdraw from the long-mooted deal, which was tipped to be worth as much as $4 billion, follows intense discussions between the two companies since they signed an in-principle agreement in February.

The deal would have seen the combined entity become the third-biggest health insurance provider in Australia, behind Bupa and Medibank Private.

The two companies would have retained separate identities and be run by their own management under a new umbrella company, overseen by a common board of 10 directors.

In February HBF chairman Tony Crawford described the potential merger as compelling, based on the companies' common values and shared commitment to members.

But in a joint statement released on Friday afternoon, HBF and HCF said they had moved away from the merger in the interests of their respective members.

"HBF has been clear from the outset that the merger would only proceed if it provided real benefits to HBF members in Western Australia," managing director John Van Der Wielen said.

"We agreed on broad principles for the proposed merger with HCF, but as discussions progressed it became apparent that pursuing the transaction would not be in the best interests of our members."

His comments were echoed by his HCF counterpart, Sheena Jack, who said the timing of the merger was not right.

"Our focus at this time is to continue delivering strong results and we remain dedicated to delivering affordable products and greater benefits for our 1.5 million members through the execution of this strategy."

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