Saga reduced its net debt over the period by £31.2 million to £729.0 million despite the impacts of the pandemic - a significant reduction from £760.2 million in the previous year.
In its retail broking division, Saga reported 1.6 million motor and home policies as of January 31, 2022, up 1.4% from the previous year, with motor and home gross margin per policy remaining stable at £74. Additionally, its three-year fixed-price product remained popular, representing 47% of the motor and home book compared to only 35% in 2020/21.
Customer retention also improved at 82.8%, up 2.3 ppts from the previous year. Meanwhile, the proportion of new business acquired directly, rather than through price-comparison websites, remained at 59%. The insurance group also maintained a disciplined approach to pricing following the implementation of the Financial Conduct Authority’s market study pricing rules.
In its underwriting division, Saga reported an underlying profit before tax of £54.1 million, including £42.1 million reserve releases in the previous year.
During the same period, policies in relation to the Saga book were 3% ahead of the figure in the previous year, a return to growth for the first time since 2012. However, the insurance group’s current year combined operating ratio reached 96.3%, up from 91.4% in 2020/21, with motor claims frequency in the second half of the year aligning with pricing assumptions as claims frequency started becoming normal following the COVID-19 lockdowns.
Commenting on Saga’s latest financial performance, group chief executive officer Euan Sutherland said it delivered a resilient performance while laying down the foundations for future growth by reducing its debt, strengthening its financial position, and rebranding to change its older customers’ perceptions.
“The insurance business delivered a robust performance with the second year of policy growth after several years in decline,” Sutherland said. “This performance is a testament to the resilience and determination of our wonderful colleagues, and I would like to thank them for their hard work and dedication through what has been a challenging period.”
Moving forward, Saga aims to fully bounce back from the impacts of the COVID-19 pandemic while remaining mindful of the current challenging external environment.
“Against this backdrop, we are now looking to convert the foundations laid over the past two years into sustainable growth and are further evolving our strategic approach,” Sutherland said.
“Our growth plan will see us focused on maximising our existing businesses, reducing our debt while step-changing our ability to scale the business and positioning Saga as ‘The Superbrand’ for older people. We already have a strong brand, management team, and financial position – all the tools required to return the business to sustainable growth and create long-term value for our stakeholders.”
