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Saga reassures on annual results

By Sean Farrell

Date: Tuesday 28 Jan 2020

Saga reassures on annual results

(Sharecast News) - Saga said annual profit would be in line with guidance as the over-50s insurer and holiday provider seeks to steady its business after a rocky period.
In a trading update for the six months to the end of January, Saga said its insurance broking business was showing progress. The division has increased sales of three-year fixed price policies and attracted more direct customers.

Saga is under new management after a profit warning last April highlighted problems at the insurance division. The company has also struggled to shake off a fusty image.

Euan Sutherland, the former boss of Superdry and the Co-operative Group, was appointed chief executive in December to lead a revamped top team.

In home and motor insurance, customer retention of 75% was about two percentage points higher than in the prior period, the company said. Saga-branded home and motor sales will be about 3% lower in the year to the end of January, reflecting stiff competition and disciplined sales policies.

The insurance underwriting business is experiencing higher inflation on third-party damage and theft costs, in line with other insurers. The trend will not have a major impact this year but could squeeze margins modestly in future if pricing stays competitive, the company added.

At the travel business, tour revenues will fall by about 5% but business is holding up better where Saga has a differentiated offering such as in escorted tours. Saga's new Spirit of Discovery ship has been successful and its Spirit of Adventure vessel is on target and budget for delivery in August.

Saga said: "We are seeing good progress and a significant improvement in the quality of execution. The insurance business is in a much more stable position than a year ago and our cruise business is fully on track. Our customers are responding well to what we are doing and it is clear that the Saga brand remains strong with our core target market."

Saga's shares, which have more than halved in the past year, rose 7.6% to 44.90p at 0956 GMT as investors responded to the solid update.

Will Ryder, an equity analyst at Hargreaves Lansdown, said: "It's been a rough year for Saga investors, but the business looks like it's stabilised. The absence of bad news is good news, and the group can now look to recover lost ground.

"While the insurance broking division is still in decline, some aspects look more positive, particularly around the new three-year fixed policies. Meanwhile, the new cruise ships are looking healthy and no major operational hiccups have materialised."







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