Saga backs view as Travel unit shines and Ageas partnership progresses

(Alliance News) - Saga PLC on Tuesday maintained its guidance, as it reported strong trade in its Travel unit, while progress in the insurance division has meant it will receive a performance-based consideration as part of a deal with Ageas SA.

Saga is a London-based provider of products and services for people over 50. It said it traded in line with expectations in the period to June 29, the early stretch of its current financial year. The company said it is on track to "deliver its full year guidance". Its prior year concluded on January 31.

Back in April, Saga predicted a "further step forward" in underlying pretax profit, eyeing growth in Travel and an Insurance Broking outcome "at least" in line with the prior year.

Underlying pretax profit in the year ended January 31 rose 19% to GBP44.2 million. Profit in Travel amounted to GBP87.2 million, and in Insurance Broking it totalled GBP16.5 million. Central costs and net finance costs kept a lid on the bottom line.

In the period to June 29, Travel continued "to trade strongly" as the cruise offering beat expectations, Saga said on Tuesday.

"Trading in Insurance Broking remains in line with expectations and the start of our long-term relationship with Ageas is progressing well," Saga said. "New business, for both motor and home, is now live with Ageas and renewals are expected to follow later this year."

Saga in December said a partnership with the UK unit of insurer Ageas went live. Saga retains responsibility for brand and direct marketing and will earn commission for these services based on a fixed percentage of gross written premium generated over the term of the partnership.

Due to "the strong performance under the motor and home partnership to date", Saga is to receive a GBP10.5 million contingent consideration payment from Ageas. Saga said some "policy volume targets" were outperformed.

It expects to receive the consideration from the Brussels-based insurer "in the coming days".

Saga Chief Executive Officer Mike Hazell said: "Saga has made a strong start to the year, building on the significant growth we achieved last year. Our momentum in Travel has continued, demonstrating the resilience of our customers and our diverse offering, despite the current geopolitical uncertainty.

"At this early stage of our partnership with Ageas, we are already seeing encouraging signs to support our long-term growth ambitions, and the performance in our wider Insurance business continued to benefit from the more simplified and customer focussed operating model we now have.

"Looking ahead, we are focussed on continuing to grow our Travel businesses and completing the transition to our new Insurance model. We remain on track to deliver our full year guidance."

Hazell said the firm is making "clear progress" towards its medium-term aim of GBP100.0 million underlying pretax profit by January 2030.

It is to release half-year results on September 30.

Saga shares were down 4.0% to 577.00 pence each in London on Tuesday morning. Shares have surged more than threefold over the past 12 months.

By Eric Cunha, Alliance News news editor

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