Over-50s specialist insurer Saga posts increased profit and says Brexit vote has not hurt business

Caitlin Morrison
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Saga said its travel business had not been impacted by the recent Brexit vote

Insurer for the over-50s Saga has reported an 8.5 per cent increase in profits for the six months to 31 July.

The figures

Pre-tax profit was up 8.5 per cent to £109.9m from £101.3m, while trading profit ticked up slightly to £117.6m from £117.5m.

Earnings per share rose 8.2 per cent to 7.9p from 7.3p.

In its motor insurance business, the combined operating ratio improved to 58.6 per cent from 65.5 per cent.

The company hiked its interim dividend by 23 per cent to 2.7p from 2.2p. Last year, the group paid out a 7.2p dividend for the full year.

The group increased the number of active customers on its books by 3.8 per cent, to 2.7m.

Saga's share price was up 1.92 per cent at the market open.

Why it's interesting

Saga is feeling positive despite any market uncertainty caused by Brexit, and said it has seen "no discernible impact to date from Britain's decision to leave the European Union".

The firm added that this was especially notable in the its business, where a recent poll of customers revealed that 99 per cent said Brexit "would not make them reconsider their future holiday plans".

The group also appears to have shaken off investor concerns around the loss of its largest shareholder towards the end of 2015 - the stock slumped after Acromas Bid sold a 13 per cent stake in the insurer last December.

What Saga said

"Saga already has significant brand awareness and customer loyalty but we have been working hard to enhance our understanding of the relationship with our customers," said chief executive Lance Batchelor.

"This has produced some fascinating insights and opportunities and we are underway with the work that will enable us to capitalise on our findings.

"The robust operational performance in the first half means that we are on track to meet our targets for the full year."

What the analysts said

Despite the company's positive take on the results, analysts were more mixed in their impressions.

"‚ÄčThis is a somewhat unspectacular set of results," said Joshua Raymond at XTB.com. "The anaemic growth in trading profit means the firm must keep a tight grip on costs, whilst they remain confident travel insurance will continue to see demand, despite the drop in value of the pound making holidays abroad for UK consumers more expensive.”

Meanwhile, Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "There are several things to like in today’s results. Continued growth in customer numbers and no impact on the number of products sold per customer is a good sign that the group continues to cross sell effectively.

"More importantly, progress is clearly being made on the key insurance initiatives Over the coming years these initiatives should provide the cash to continue delivering returns to shareholders, while funding investment in the group’s various trial projects. If it can sell these to its 11.3m strong customer database as effectively as it is doing at present, Saga could become the go-to investment for those looking to benefit from the increasing power of the grey pound."

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