Saga in talks to sell insurance underwriting arm
The over-50s group warned over profits in September last year due to difficulties in its insurance arm and the soaring cost of claims.
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Your support makes all the difference.Over-50s group Saga has confirmed talks to sell the underwriting arm of its insurance division to help pay down its debts.
The holiday and financial services firm said it was in discussions over a possible sale of Acromas Insurance Company, which underwrites around 25% to 30% 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 £90 million to help pay down some of its £721 million debt.
Saga did not confirm who it was in talks with or how much any potential deal could be worth.
Shares lifted 3% 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 £257.5 million loss in the six months to July 31 due to a £269 million impairment in its insurance operations.
It said at the time that its underwriting division was seeing claims inflation running at about 13%.
On 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.
Saga has already been cutting the number of its products it underwrites itself.