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Agreed Horse there seems to be a feeling that insurance will be a stinker.
If that's true they might need to impair the £900m of goodwill on the balance sheet. Which is pain upon paid.
Retail makes £70m PBT key metric is margins which have been circa £74 a policy. TU normally have margin information.
Underwriting contributes £50m and reserve releases may be less than previous years.
None of that is catastrophic but the SP seems to be factoring it in. So it's either
1 - the doom mongers on here are bang on and something awful is round the corner.
2 - General market sentiment, very tiny volumes and a perception we are a travel company is driving an incredibly subdued SP.
I've been wrong before on this company but really think on all the evidence the TU will be steady and will boost the SP. A week Tuesday will reveal all
Definitely undervalued.
Cruise now over 80% sold for year - Insurance year after year gives consistently good returns - travel in general l won’t get excited about, still finding its way - streamlining of company will now start to reap rewards - don’t forget to add in travel insurance sales which will be significantly up.
There is a huge downturn, we all know that.
Travel is not fairing well and markets seem to lose sight of this mainly being an insurance company.
I firmly believe however that my two ‘travel’ stocks Jet2 and Saga - are about to provide very positive forward looking announcements and better times.
Most of the American cruise stocks are up between 12 and 15% today. Norwegian, Royal and Carnival.
Guys some intelligent and thoughtful posts on here today
Slightly drunk and down the allotment sheltering from the rain.
- We made £120m pbt on insurance last year if this fell to £80m it would be catastrophic. It would be so out of kilter to other insurance companies. I don't think its even possible.
- Cash wise we added cash last year as insurance is lucrative and covered £7-9m cash burn on travel . Granted ship payments were suspended and that's now £55m a year but that will be covered by 70% cruise occupancy. We know it far exceeds that. So we should add cash last guidance was enough to pay £150m subordinated debt in 2024.
Granted the TU might disappoint but talk of a rights issue based on fundamentals and what we know does not resonate with me
Boulvardier, His answer (that included an estimate of £10m underwriting PBT for 2023/24) was in relation to a question about a marked reduction in insurance profits over the next two years that specifically mentioned reduced reserve releases in 2022/23 and then even further reductions in reserve releases in 2023/24. He further stated that the underwriting PBT for 2022/23 would be somewhere between the underwriting PBT for 2021/22 (which was £54m) and the PBT of £10m for 2023/24. If he was referring to an underwriting profit excluding reserve releases for FY 2021/22 (ie, £12m) then the latter part of his answer was completely redundant.
If anyone subscribes to stockopedia, Paul Scott had a look at saga in response to a subscriber's comments. Seemed to think, on current information, that a rights issue is not on the cards. Interesting reading. Don't want to be that person that posts what he typed behind a paywall.
Lucre, unless we’re listening to answers to different questions, he doesn’t specifically mention prior year reserve releases. Combined Operating Ratio (COR) was 96.3% for FYE22 giving a pure year UW PBT of £12m, so it makes sense that if they’re targeting a COR of 97% going forward (which is slightly worse) then the pure year result would drop slightly to £10m.
Great post Magic.
In your opinion is it still a possibility we may see a rights issue?
My expectation is another rights issue, just hope it’s not worse...
This has all the hallmarks of a sinking ship. I am expecting terrible results.
Lucretius is absolutely right. And it looks like the actual results could be worse than guided by the CFO because "return to normal" is faster giving rising to higher claims frequency and costs due to inflation. Someone should check how close SAGA may be to the covenants on its debt such as Debt to EBITDA or Debt to FCF in case the insurance side was a break even
Boulvardier: I think the CFO was very specific as he said the PBT would be £10m in FY24 and PBT would include reserve releases
Thanks Lucre, just listened to that. The CFO wasn’t specific, but one would assume he’s talking about the pure year insurance result, before prior year reserve releases. Obviously there will be some impact on this as people start driving (and crashing) again after the pandemic.
If anyone wants clarity about what the CFO said about the underwriting profits from FY24 listen to his answer to question 4 in the Saga presentation on 25 March 2022 on the Investor Meet Company platform.
Magic good summary the company is fine.
I do worry about being brought on the cheap.
RDH paid an average of £2.71 for his £100m stake so if there is value as many of us think we would expect a low ball offer of £3 plus.
I really don't think it would come to that but you never know