Saga profits jump after motor unit drives ahead

 
Caitlin Morrison
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Saga saw a 9.7 per cent increase in car insurance policies (Source: Getty)
Insurer Saga posted a 140 per cent jump in pre-tax profit for the six months to 31 July, up to £101.3m from £42.2m, and announced its first interim dividend of 2.2p.

The company, which specialises in products for the over-50s, highlighted its motor business, which saw a 9.7 per cent increase in policies.

Trading Ebitda in the motor business was up 2.6 per cent to £68.3m, from £66.6m in the first half of 2014, and combined operating ratio stood at 68 per cent.

However, in its home insurance division, Saga saw a 2.6 per cent reduction in core policy numbers.

Lance Batchelor, Saga chief executive, said continued strong cash generation had allowed the group to further reduce its debt ratio and that a solid performance in its core businesses of financial services and travel meant good growth in underlying profitability.

He added that this growth was partially offset by the impact of a full six months of costs associated with becoming a listed company, “a situation that will not repeat to the same extent in the second half of the year”.

Saga floated on the London Stock Exchange in May 2014, in a high-profile initial public offering that failed to live up to the hype preceding it.

The group listed at 185p per share, but drifted downwards in the weeks to follow.

However, shares in Saga closed at 205.5p yesterday, up by 2.19 per cent.

The group plans to launch an investment service, as well as investing in a new shipping capacity. This, along with the launch of its motor panel, will be “important” for the future of the business, Batchelor said yesterday.

“We are confident of delivering on our targets for the full year and of continuing to build sustainable returns for shareholders through profit growth, cash generation and our progressive dividend policy,” said Batchelor.

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