Within its underwriter AICL Saga says it is not seeing the increases in claims frequency reported elsewhere

PPI complaints surge

Saga has reported a trading profit of £116.2m from its insurance operations for the six months to 31 July 2015, an increase of 5% on the £110.7m the same period in 2014

Most of this profit, came from its motor insurance business which reported a trading profit of £66.7m, while home insurance reported a profit of £32.6m.

The performance was driven by the growth of core policy numbers in its motor book during its first six months and additional broking income from the acquisition of motorcycle broker Bennetts in July.

The over-50s insurer also reported a 2.6% increase in trading Ebitda to £68.3m in H1 2015 (H1 2014: £66.6m), while its motor combined operating ratio (COR) of 68.0%, was a slight improvement of 0.1 percentage points on the 68.1% in 2014, as a result of positive claims experience.

However, revenue at £157.2m was 1.8% lower than H1 2014 (£160.0m), driven by the reductions in premium levels over the past year for core underwritten policies.

The insurer said: “The motor market remains highly competitive with the fall in average premiums of the past two years continuing into the start of the period.

“However, our experience across the motor insurance book supports the market view that the price increases seen in the second quarter of 2015 appear to be sustainable.

“Within our underwriter, AICL, we are not seeing the increases in claims frequency or personal injury claims costs reported elsewhere.

“This gives us an advantage in a rising market as we can share some of the resulting margin enhancement with our customers, growing market share while maintaining our prudent approach to underwriting.

“Overall, we are well placed to deliver on our plans in motor insurance this year and into next, with a differentiated retail distribution channel and in‐house underwriter, complemented by the recently launched panel and Bennetts.”

Home insurance

Meanwhile, within its home insurance book, the insurer said the market remained highly competitive with premiums continuing to fall through the first half of the year.

But the insurer said the efficiency of its home panel had largely protected it in this environment leading it to deliver a 16.2% increase in trading Ebitda to £33.7m (H1 2014: 29.0m).

However as a result of less premiums and churn in the marketplace, it saw a 2.6% decrease in core policy numbers against the same period last year.

Saga made an operating profit of £16.9m from broking travel insurance and private medical insurance, down 7.1% on H1 2014.

However the financial services segment reported a 5.2% increase in policy numbers with trading Ebitda 6.9% lower at £17.6m (H1 2014: £18.9m) due to the investment in legal services and Saga Investment Services.