Saga reports rebound in travel demand but insurance arm remains under pressure

But the holidays-to-financial services firm confirmed a tougher year for its insurance arm after seeing a 3 per cent drop in policy sales and its underwriting business being hit by surging claims costs.

Its underwriting division is seeing claims inflation running at about 13 per cent as the entire sector is hit by the higher costs of repair bills, but Saga said its underwriting arm was driving through double-digit increases in prices.

The woes in its insurance division saw it warn over profits last autumn, slashing its outlook for full-year pre-tax profits to between £20m and £30m, down from the £35m and £50m for the year previous guidance.

Saga on Monday confirmed it was in talks to sell the underwriting arm of its insurance division, Acromas Insurance Company, to help pay down its debts.

The group is reportedly looking to raise up to £90m from offloading Acromas, which underwrites around 25 per cent to 30 per cent of its insurance business, to reduce some of its £721m debt pile.

Saga said its travel business was set to see revenues increase tenfold from the previous year but that it will report a “small” underlying pre-tax loss due to marketing and administrative expenses, as previously guided.

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