Specialist insurer Saga posted a 9.6 per cent jump in pre-tax profit for the year ended 31 January 2015, up to £195.5m from £178.3m the year before.
The company, which targets the over-50 market, failed to live up to expectations when it listed on the London Stock Exchange in May last year. It floated at the bottom of its price range, and closed on the first day of trading at 184.5p, below the listing price of 185p. There followed a period of decline, however yesterday saw the share price rise by 2.39 per cent to close at 193.1p.
Saga has proposed a final dividend of 4.1p per share, which represents an annualised return of over eight per cent for retail shareholders who invested in the float.
Chief executive Lance Batchelor said the 2015 financial year had been “significant and successful” for Saga and added that the group’s business model supported its goal of maximising returns for investors by “optimising the balance between investment in value enhancing growth opportunities, a progressive dividend policy and our commitment to debt reduction”.
The firm saw a marked improvement in its motor business, with the combined ratio for core motor underwriting moving from 88.4 per cent in the 2014 financial year to 77.9 per cent.
Policy numbers also increased by 1.5 per cent, however the company maintains quite a negative outlook on the sector. Batchelor said that, it “continued to experience challenging conditions in the motor market”.
“Prices stabilised in the second half of 2014 but since then, there have been no meaningful signs of any price increases.”
Analysts at Numis said Saga had produced a set of solid results, with “positive signs for future growth”. Earlier this week the broker initiated coverage of the insurer with a buy rating “based on a strong business model and untapped potential within”.