Half Year 2024 Saga PLC Earnings Call Transcript
Key Points
- Saga PLC (FRA:65J) reported a strong overall financial performance with underlying revenue growth of 11% and underlying profit before tax of GBP27.2 million, more than three times that of the prior year.
- The company is in exclusive negotiations with Ageas for a proposed transaction, which includes selling its insurance underwriting business and forming a 20-year affinity partnership, aligning with its strategy to move to a capital-light model.
- Saga's cruise and travel businesses showed significant growth, with ocean cruise achieving a load factor of 90% and river cruise a load factor of 86%, both with higher per diems compared to the previous year.
- Debt reduction remains a strategic priority, with Saga reducing net debt by GBP42.8 million over the past 12 months and GBP22.6 million in the last six months.
- Saga's focus on customer engagement has led to a 21% increase in website visits and a 16% rise in consented individuals, enhancing its customer database and cross-sell opportunities.
- Saga PLC (FRA:65J) reported a statutory loss before tax of GBP104 million due to a GBP138.3 million impairment of insurance broking goodwill.
- The insurance broking business faced cyclical challenges, with a 13% decrease in policy sales and market conditions impacting profitability, particularly in the home insurance segment.
- The travel insurance market became highly competitive, affecting Saga's ability to compete and resulting in lower new business volumes.
- Saga's insurance broking business experienced a decline in competitiveness due to net rate inflation and reduced panel competitiveness, impacting policy sales and profitability.
- The company anticipates net debt to be slightly higher at the end of the year due to lower cash generation from the insurance business and continued repayments on cruise ship facilities.
Good morning, everybody, and welcome to Saga's results for the six months ended July 31, 2024. I'm Mike Hazell, Group CEO; and I'm joined today by Group CFO, Mark Watkins; and Steve Kingshott, the CEO of Saga Insurance.
Before I begin, I'd like to thank you for being with us today, particularly after the delay to our results while our partnership discussions were continuing.
On that note, you will have seen that today, we released a separate announcement confirming that we are now in exclusive negotiations with Ageas for a proposed transaction. This is a fantastic opportunity for Saga, Ageas and our customers, creating a low-risk business model for home and motor insurance by combining the capabilities of two great businesses.
The move would support our growth ambitions, simplify our business and move us to a more capital-light model in insurance, in line with our stated strategy. The first part of this is the sale of our insurance underwriting business, AICL; and the second is a 20-year affinity partnership with Ageas
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