Over-50s group Saga in talks to sell insurance underwriting arm
The holiday and financial services firm said it was in discussions over a possible sale of Acromas Insurance Company, which underwrites around 25 per cent to 30 per cent of its insurance business.
Reports at the weekend suggested Saga was looking for buyers to offload its in-house insurance business to raise up to £90m to help pay down some of its £721m debt.
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Hide AdSaga did not confirm who it was in talks with or how much any potential deal could be worth.
Shares lifted by 3 per cent in Monday morning trading.
It comes after Saga warned over profits in September last year due to difficulties in its insurance arm, which has seen soaring claims costs, in line with the wider sector.
Saga slumped to a £257.5m loss in the six months to July 31 due to a £269m impairment in its insurance operations.
It said at the time that its underwriting division was seeing claims inflation running at about 13 per cent.
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Hide AdOn confirming Acromas sale talks, Saga said: “The board has looked at the opportunities to optimise Saga’s operational and strategic position in the insurance market, in line with the evolution to a capital-light business model and the stated objective to reduce debt.
“It has concluded that a potential disposal of its underwriting business is consistent with group strategy.”
The group’s chief executive Euan Sutherland has been leading an overhaul at Saga, which saw its cruise and holidays business knocked badly during the pandemic.
The sale of Acromas would not see it stop selling insurance products, but shifting the risks associated with the policies it offers to another firm.
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Hide AdSaga has already been cutting the number of its products it underwrites itself.
Saga can trace its roots back to 1951, when Sidney De Haan founded a travel company from a hotel in Folkestone, Kent. His business offered affordable off-peak holidays exclusively to retired people.
By the 1960s, Saga was recording rapid growth with a particular focus on the Algarve, as well as adding further destinations throughout the UK. Saga also developed the concept of direct marketing so its customers could deal could deal directly with the company, rather than having to go through travel agents.