11th Oct 2024 09:23
(Alliance News) - Saga PLC on Friday announced a widened half-year loss amid an impairment in Insurance Broking goodwill, as it highlighted exclusive talks for a long-term partnership.
The Kent, England-based provider of services to people aged 50 and over said it is in exclusive negotiations with Brussels-based insurer Ageas SA/NV to establish a 20-year partnership for motor and home insurance.
In addition, a deal could see Ageas acquire Saga's Insurance Underwriting business, Acromas Insurance Co Ltd.
Saga said in the partnership, dubbed Affinity, Ageas would pay GBP80 million upfront and potentially GBP30 million in a contingent consideration in 2026, and up to GBP30 million in 2032.
The additional considerations will be subject to policy volume and profit targets.
To acquire Acromas, Ageas would pay a total of GBP67.5 million, Saga added.
Separately, Saga said its pretax loss in the half-year to July 31 stretched to GBP104.0 million from GBP77.8 million.
Its bottom line was hurt by a GBP138.3 million impairment in Insurance Broking goodwill.
Revenue rose 13% on-year to GBP404.8 million from GBP358.1 million.
Administrative and selling costs reduced to GBP94.9 million from GBP101.8 million. Other costs of sales however increased to GBP157.2 million from GBP143.3 million.
Saga declared no dividend as its priority is reducing net debt.
Looking ahead, the company said: "Insurance Broking remained challenging, particularly towards the end of the first half, with inflationary pressures in home, alongside increased competition in motor. These factors resulted in fewer policy sales in the first six months of the year, a trend that is expected to continue for the second half of the year."
It added: "Looking beyond the full year, while there is no certainty that the proposed transaction with Ageas will occur, Ageas has the scale, infrastructure and expertise to support a powerful partnership with Saga as we take action to return the Insurance Broking business to policy growth. This potential partnership, alongside continued growth in our Cruise, Travel and Money businesses, would leave us well positioned to continue to broaden the range of products and services we offer our customers, while enhancing long-term value for our stakeholders through continued growth and deleveraging."
Saga shares jumped 9.6% to 137.00 pence each on Friday morning in London.
By Tom Budszus, Alliance News slot editor
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