The over-50s insurer blames new regulations for fall in renewals
Saga reported a sharp gain in motor broking profit for the year to January, despite a fall in its renewal rate.
The over-50s insurer blamed the fall in persistency to 65.4% from 69.2% a year earlier, on the new FCA rules stating that renewal documents must feature the previous year’s rate.
It added that the increase in motor profit was also achieved against the increases in Insurance Premium Tax and a more competitive trading environment in the last quarter of 2017.
Saga reported overall written profit growth in retail broking of 4.3%.
Underwriting showed a pretax profit of £79.2m, driven by “excellent” claims management and a positive experience in small and large personal injury claims.
Overall group pretax profit slipped to £179m, hit by refinancing, cost savings and derivatives losses.
Underlying pretax profit rose 1.4% to £190m.
“In a challenging market we have delivered a set of full year results which is in line with the rebased profit expectations set at the end of 2017,” said chief executive Lance Batchelor.
Batchelor said Saga’s motor performance was bolstered because it “focused on value over volume”, resulting in written profit per core policy up 46.2% to £30.4 and a 3.4% fall in the sale of Saga branded policies.
Motor broking saw a 37.3% increase in profit to £39.0m, which was partially offset by an 8.8% fall in home.
The UK home insurance market has remained competitive, with premiums flat, Batchelor said.
“Where we believe prices in the market are unprofitable we are prepared to lose business and this has resulted in a reduction in the number of core policies sold,” he added.
Core home policies reduced to 1,19 million from 1.25 million, and profit per policy declined by 3.5% to £44.7. Home profit before tax was £56.6m (2017: £61.2m).