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I hate to be the bearer of bad news but the trading update in January suggests that Saga clearly aren’t seeing the same results as sabre or direct line? We know sales are down, retention is down, margin per policy is down and that the combined ratio will be less than 138%…..how much less we’ll find out but it’s clearly not going to be good otherwise they would have called it out more specifically in the update.
What Sabre and Direct Line are demonstrating is just how bad the saga insurance results are.
Recovery of sorts is obviously possible but I think some balance when looking at other market results is needed.
Hey Rogue
To be fair my team is doing well, so happy on that front!
To be honest I really don’t know. Feels like a bring out your dead year to me, so get any insurance goodwill that needs to be written off done, be realistic and honest about future insurance performance. If the margins have dropped, are they going to drop more? What does a sustainable book look like? A good result for me would just be clarity on what the business looks like in 2-5 years time.
You’re right about the £6 inventive winding me up, it’s just a load of hot air and ridiculous numbers cooked up by a CEO that was so woefully out his depth it was crazy!
Looks like cruise is at max capacity and revenue so not sure how much more can be squeezed out of that but if there some sort of sale and lease back option to help reduce debt that’s fine. Travel isn’t my background so really not sure how those deals work and what the options are.
I hope the business does well as long term holders deserve it, but my investment here is pretty much non existent now so I will watch with much less stress from the sidelines.
Because back then, insurance was still seen to be a cash cow and was generating decent revenue and profits with travel expected to come back to profitability post pandemic.
We now know the insurance business is in dire straits and the group is reliant on Roger bailing it out as it’s been built on a debt mountain.
Previous directors didn’t control costs which have spiralled out of control over the past few years so yeah, the business is probably in a worse position now than it was a few years ago.
Hopefully the new CEO will sort the mess out and the travel partnership talk is interesting but the days of talking about £6 a share are long gone.
I have the net debt figure at £711m…..appreciate it’s obvious but that includes the available cash, which is essentially the bond payment……so the debt figure will remain at £711m after the bond is paid if they use all available cash which they won’t as they’ll be using more credit from Roger…..so the net debt position might increase?
Jokes aside I guess my point is if you sell the ships and lease them back, you can pay off debt but you’d then just be leasing them back. I’m interested to see what deal they’re looking to sort and how that helps long suffering share holders
Cheers Alnwick, good news for you on the price!
I’ll believe the central cost savings when we actually see them…..I’ve read about millions in savings over the last few years and they haven’t happened, wooden dollars from central functions to business units etc but maybe it will be different with the new guy!
I’ll have a look at the numbers but there is no way that saga have ever sold 4 million new business policies in a year….any year.
The key for me is the policies in force number, which has absolutely dropped over the past few years. In a high inflation period, retention is always affected but with that comes the opportunity to balance the book with new acquisitions as customers churn from other insurers.
You’d want to see strong retention numbers from saga because in theory the 3 year policies should be much stickier…..the devil is in the detail but you have to ask why is retention so bad if customers have a fixed priced during high inflation? Why are they going? Or are those fixed price customers staying and everyone else on one year policies are leaving in droves as the price hikes kick in?
What I’m seeing is a perfect storm of huge rate increases affecting new business and standard one year policies which have to go in to potentially subsidise the 3 year policies that were priced incorrectly because they didn’t account for the inflation issues. The problem is obviously the more of your book that is made up of old 3 year polices, the longer the drag on insurance performance overall, both the broking business and AICL.
Clearly I have no numbers from last year yet to back up that theory but as I’ve said previously, the three year policies sold over the last few years will make the insurance recovery much longer and more painful.
Here’s the kicker though boys…..when I looked through the last 2 years of reports and updates, specifically focused on top and emerging risks….i couldn’t see any mention of inflation as a top risk?! The board and senior leaders have been asleep at the wheel…..hopefully the new guy will sort it out but it’s a long road ahead!
But yeah, when I have time I’ll trawl through the numbers but 3 year policies are just counted as a policy in force for that year and the book has been shrinking every year for the past few years.
The fall is because insurance is a disaster, no secret, it’s been reported every time there’s been an update. I can’t see how there won’t be another write and I’d guess that most people will want to see the detail at end of year.
AICLs combined ratios are horrific and the broking business is shrinking with lower retention, lower new business sales and lower margins……hence the business culling yet more people last year.
The only thing that propped up the share price was the Dubai investor, without that this would have dropped further.
The bit we don’t know is what the JV type plans are for cruising. But with so many questions I think the price action is understandable.