Saga Plc – the businesses of which span cruise, travel, insurance, money, and media – has issued a trading update a day after it was confirmed that discussions are being held to potentially sell the group’s in-house underwriter Acromas Insurance Company Limited (AICL).
In its trading update on Tuesday, Saga said it remains on track to report an underlying profit before tax within the £20 million to £30 million range for the year ended January 31, 2023. Thanks to the continued recovery in the cruise and travel segments, the group’s revenue is expected to hit as much as a 50% increase compared to the prior year.
As for Saga Insurance, which spans retail broking and underwriting, the division is slated to produce a mixed bag of results.
The unit’s parent company announced: “Insurance broking is expected to be broadly in line with guidance… Insurance underwriting, in line with the wider market, continued to experience high levels of claims inflation which we estimate to have averaged 13% for the year as a whole.”
Key numbers include expected revenue growth of more than 200% for travel insurance under the retail broking operations. Motor and home margins per policy are expected to be around £71. The underwriting business, meanwhile, is poised to report an underlying current year combined ratio of around 125%.
“We have, since the middle of the year, been taking significant actions to re-price the motor book, with pricing now in line with technical requirements,” highlighted Saga, which is in talks for a possible sale of AICL. “These price increases will begin to flow through to earned premium, and we expect to report a significantly lower underlying combined operating ratio in 2023/24.”
Meanwhile the broader company announced it is pivoting and will leverage Saga Media and the group’s database of 10 million people over 50 to become ‘The Superbrand’ for older people in the UK.
A capital markets event is taking place in London at 3pm today (January 24) to outline the strategy’s details, including the launch of a dedicated website for over-50s called Saga Exceptional.
“Today we are laying out our plans as we pivot Saga for growth and sharpen our focus on building the largest and fastest-growing business for older people in the UK,” said group chief executive Euan Sutherland. “This is all part of the wider plan to make Saga the leading Superbrand for what we call the ‘Experience Generation’.”
The event is open to analysts and institutional investors.
