The insurer’s group chief executive says although the business is ’mindful that the external environment remains challenging’ it is confident that Saga is now in a stronger position than it was pre-pandemic

UK-based specialist travel insurer for the over 50’s Saga has returned to underlying profit of £14m before tax, according to its interim financial results for the six months ending 31 July 2022, posted yesterday (29 September 2022).

This is in comparison to the same period the previous year in 2021, when the business made a loss of £2.8m.

Sales of new travel insurance policies returned to similar levels to pre-pandemic, the insurer added.

Meanwhile, the firm’s H1 revenue of £258.3m also saw an increase – during the same period in 2021 this figure was £156.4m.

Euan Sutherland, Saga’s group chief executive, said: “I am pleased to report that, for the first six months of the year, Saga returned to an underlying profit as we were able to resume more normal cruise and travel operations.

“Following our return to service after the pandemic, our Ocean Cruise business secured strong bookings and is on track to achieve our targets for this year and next.”

Saga also made final preparations for its new digital Saga Travel business, which has just launched as the first of a selection of new products.

Challenging trading conditions

However, Sutherland noted that “trading conditions in the UK insurance market continue to be challenging”.

He noted the impact of price walking regulations that came into effect in January 2022 and banned personal lines insurers from charging lower prices to new customers. 

Sutherland said: “While total policies in force grew by 3% compared with the first half of the prior year, this was led by significant growth in travel insurance with motor and home new policy sales behind the prior year.

“Customer retention continued to improve, increasing by a further two percentage points and we continued to remain disciplined with our pricing.”

Claims inflation

Saga’s underwriting business experienced high levels of claims inflation, which it said sat at around 13%.

Meanwhile, sales of new motor and home policies were lower than the prior year – Saga’s customer retention improved and its margin per policy was in line with 2021 to 2022.

Saga also introduced a new range of motor insurance products – a lower-cost standard one-year product as well as electric vehicle and multicar products.

The insurer expects the current high levels of insurance claims inflation to continue and the sales of motor and home insurance policies to be similar to the first half of the year.

Sutherland added: “Looking ahead, while we are mindful that the external environment remains challenging, we are confident that Saga is now in a stronger position than it was before the pandemic. We are determined to build Saga into the largest and fastest-growing commercial network for older people in the UK.”

He said the business is focused on its multi-year three step growth plan and strengthening its leadership team.