Saga sees strong travel demand but insurance headwinds remain
Travel bookings are also ahead of the prior year, with booked revenue 14 per cent up, on a higher number of passengers.
Strong demand for cruise holidays has helped Saga get off to a good start to the year, compensating for weakness in its insurance business.
Saga, the UK’s specialist in products and services for people over 50, said its river and ocean cruise businesses have had an “exceptional start to the year” with booked load factors ahead of last year, at 83 per cent for ocean cruises and 78 per cent for river.
Travel bookings are also ahead of the prior year, with booked revenue 14 per cent up, on a higher number of passengers.
Despite the strength in travel, the firm said market conditions for insurance remained “challenging”. Insurance has been a drag on the company for the past couple of years due to the impact of net rate inflation.
Saga said it is “taking action” to stabilise its broking business and is seeing “early signs” of the expected benefits in motor insurance. However, rising net rate inflation in home insurance means these actions have less impact overall.
“The pricing action taken in Insurance Underwriting continues to earn through, further improving the combined operating ratio,” Saga said.
“Saga has made a good start to the new financial year. Our Ocean Cruise business has traded exceptionally well and, in insurance, we have continued to take actions within a market which remains challenging,” Mike Hazell, chief executive, said.
“Looking ahead, we are focused on driving sustainable business growth in a capital-light way, while growing our customer base and deepening our connections with those customers.”
The company said it is continuing to explore partnership opportunities to “support our growth ambitions”, but gave no further details.
Analysts at Peel Hunt said this was a key consideration for the business going forward.
“There is no further news on Saga’s partnership plans, which continue to be explored in order to delever the business…we maintain our Hold stance awaiting further strategic action to place Saga on a firmer financial footing,” they said.
The group’s interim results covering the six months to the end of July will be released on 2 October.
