Saga PLC on Wednesday reported improved half-year earnings and said it has paused a planned sale of its insurance underwriting arm, believing it can generate ‘greater value’ later when market conditions improve.
The company also said its chief financial officer will stand down.
Shares were down 3.9% to 117.80 pence in London on Wednesday morning.
Saga is a provider of products and services for over 50s, including insurance and cruises.
It said revenue in the six months that ended July 31 rose 15% to £355.3 million from £309.8 million a year prior. Saga’s pretax loss narrowed to £77.8 million from £261.8 million a year earlier.
Helping to slim the loss, Saga took an impairment of insurance goodwill of £68.1 million, down 75% from £269.0 million 12 months earlier.
Excluding those impairments, underlying pretax profit declined 45% to £8.0 million from £14.6 million. Adjusted for a previous accounting regime, its underlying pretax profit was just 4.3% lower at £13.4 million from £14.0 million. The IFRS 17 accounting standard was ushered into the insurance sector at the start of 2023.
‘I am pleased to announce a 15% increase in revenue for the first half of the year, due to the continued growth of our Cruise and Travel businesses, in addition to further debt reduction. Alongside this, under consistent accounting standards, we report an underlying half year profit that is broadly in line with the prior year,’ Chief Executive Euan Sutherland said.
‘In Ocean Cruise, bookings are on track to achieve our targets for the full year, reflecting continued strong customer demand, while our River Cruise business has returned to profit with a 34% increase in guest numbers. Travel is also on track to return to profit for the full year.’
Sutherland explained Saga’s insurance arm grappled with a ‘backdrop of a difficult inflationary market’.
The CEO added: ‘While travel and private medical insurance are achieving strong year-on-year revenue growth, the performance in motor continues to weigh on earnings and this has resulted in an impairment of goodwill.’
Saga put the brakes on a potential sale of its underwriting unit. Back in January, Saga had announced the plan to sell Acromas Insurance Co Ltd, its in-house underwriter for the home and motor insurance business, and the company has been in discussions for the disposal since.
On Wednesday, Saga explained: ‘We had previously announced that we were looking to sell our insurance underwriting operations and, while we were able to establish terms for the sale, the board believes that greater value could be generated once conditions within the insurance market improve. We will, however, continue to evaluate our options as the landscape evolves.’
CFO James Quin will leave Saga to ‘focus on a portfolio career’, the company said. Quin will be replaced by Mike Hazell, who was most recently CFO of the Co-op Group. Hazell joins Saga on October 9 and will have a ‘detailed hand over period’ with Quin.
‘Before working at the Co-op he was CFO and joint chief executive officer of Debenhams, the retail chain. Previous experience has included time at BSkyB and Pfizer [Inc],’ Saga added.
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