UK holiday group Saga returns to profit, but insurance unit drags
By Sinchita Mitra
(Reuters) - British holiday group Saga on Tuesday reported a swing to full-year profit on recovering cruise and tour bookings, but weakness in motor and home insurance markets weighed on its shares.
Saga is benefiting from a rebound in the global travel industry after the COVID-19 pandemic pushed the company to losses. However, its insurance unit — which includes its underwriting arm whose potential sale to Australia's Open was terminated last month — has been battling high claims inflation.
The company reported a 27% drop in underlying profit for its insurance unit - the largest business - to 88.2 million pounds ($109.97 million).
Shares in the company were down 8% to 126 pence as at 0810 GMT.
"Its insurance business is still struggling with sales of motor and home insurance policies down 7% versus the prior year, weighing on shares today," said Victoria Scholar, head of investment at interactive investor.
Saga said it remains in discussions over a possible sale of its insurance underwriting business, and expects to conclude the process in the second half of the year.
Claims inflation is expected to taper off in the second half of the year, CEO Euan Sutherland said.
Motor insurers have been battling increasing regulatory scrutiny on renewal rates and car damage valuations, along with rising costs of claims.
Saga said it expects its travel unit to return to a full year profit this year, and also saw a rise in demand for travel insurance, driven by robust demand for long haul travel.
"We are seeing greater number of people wanting to be adventurous and spend more money on longer holidays rather than short term hauls," said Sutherland.
The company reported an underlying profit before tax of 21.5 million pounds for the year, versus a loss of 6.7 million pounds reported a year ago.
($1 = 0.8021 pounds)
(Reporting by Sinchita Mitra in Bengaluru; Editing by Sherry Jacob-Phillips, Uttaresh Venkateshwaran and Christina Fincher)
