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Let’s agree to wait until Jan for results…..I think that positivity on other businesses results is misplaced but it’s a game of opinions I guess.
The facts are the business has had to make another huge tranche of people redundant to reduce costs, has shelved its digital transformation strategy which was launched less than a year ago and has lost both its CFO and CEO in the same year.
I’m actually much more positive now that Euan has gone, I think it’s good news longer term but can’t hide away from the insurance challenges.
I’ll be even more positive when the business gives us something to be positive about……if people turned up to AGMs to show the same passion that they do on these boards It might help just a little bit
My take is they will be selling the business piece by piece and just keeping holidays and cruise……but what do I know? Maybe keep the lifestyle insurance businesses like PMI and travel but I’d get shot of AICL and sell the home and motor insurance books next year.
I mean, Mike joined literally 2/3 months ago so wouldn’t say it’s internal succession planning but as you say it’s been on the cards a while so good that there was a plan!
Euan has been nothing short of shocking the past 2 years so either way it’s a good move. We can stop all the nonsense of £6 share price incentives and start dealing with the cost base and actually running the business properly
That would come when they get their costs under control and actually start making enough profit to pay off the debt without having to get loans from uncle Roger……long long road to recovery unless something significant happens.
Question for those with knowledge, why do we think the SP isn’t motoring with our new investor continuing to load up? Appreciate it actually has risen from the lows of a few weeks ago but still seems strange?
Anyone know anything about the investor?
Nic, the latest results support your view that Saga has some very big challenges with regards to new business sales.
The % of sales coming direct have dropped, which means that many customers are using comparison sites to get the best price, and we know that new business sales have been in decline for years now. Sagas retention has historically been strong but margins are being squeezed so in the end something has to give.
The 3 year fixed price policies are the difficulty here and we won’t know the true retention impact of the inflationary pressures until those 3 year fixed policies have been flushed though the book.
We’re another 12 months away from knowing exactly what the future looks like for insurance but it’s reasonable to be assume that it pricing is right, the book will continue to shrink…..the question is by how much.
On a positive note, the book doesn’t have to grow to be more profitable, we just need to get updated numbers in January to really see if the profit trend is turning
Honestly I don’t know, otherwise I’d be back in already.
The Jan update will be the deciding factor for me, unless it drops to a £1 before then, in which I’d jump in as it will swing up and down by 10% around that level anyway.
I really haven’t got my head around what the business wants to do longer term. Sell AICL, keep AICL, sell the entire insurance book and focus on holidays…..it’s hard to know what’s going on. We already know that the existing strategy of digital content driving additional product acquisitions has been thrown in the bin so what does the future look like?
Travel is great but margins on tour holidays is wafer thin. Cruising is going through a boom so that looks good but there’s no additional scale as they only have 2 cruise ships so profit growth is limited.
If insurance stabilises and travel remains buoyant we could see £1.50 within 12 months, but the numbers need to start stacking up. Uncle Roger won’t be around forever to throw loans at the company to bail it out, so they really do need to start showing they can run a tight ship and generate sustained profit while paying off the debt.
Other reason I jumped out for the time being is the management remuneration is just so far removed from delivering share holder value it’s mind blowing.
Apologies Bat, absolutely if a takeover occurred then yeah who knows what price action would be seen. Other than RDH taking it private I just don’t see a takeover occurring.
For transparency I sold out at a loss and am waiting for the price to drop lower before returning. Premiums may be going up but revenue per policy is dropping and I still think it’s going to be a very rocky road for the next 12 months. The insurance business supported travel during Covid but since then the profit has been decimated so it’s completely reversed. We need to consider that travel has never historically made enough money and the previous valuations of saga have always been underpinned by insurance. Changing that long term is risky so previous valuations are a bit irrelevant.
That In itself makes price predictions very difficult. The key for me is whether the business can control its costs. They’ve just made a whole load redundancies again, with many of those people working in the media department that was heralded as the next big thing only 9 months ago…..quite a turnaround in strategy.
I don’t think the management have control of this business yet and until they do, I will be watching and analysing every update in detail.
With the labour costs and additional redundancy costs, 2023 is not going to look pretty…..the hope is that 2024 will start to look more positive but the insurance results are key.
I don’t understand what you mean? I’m just saying that there will be plenty of holders that would jump ship at £2 in a heartbeat. If you’ve averaged down enough and you can get out with any sort of profit I think that would be the safe thing to do.
Having been called crazy for even suggesting £1, I think any talk of £3.50 or above is pie in the sky at this stage.
Ok, so Saga took a huge risk on the 3 year policies as they get an annual premium from the UW every year. They calculate what they think the premium will be over the 3 years and then add a commission rate to each policy. So on some policies they may well make a profit, but the huge risk was always a spike in inflationary costs. They don’t have the claim risk as that’s on LV but if they have priced for 3 years at let’s say £300 with a net premium from LV in year 1 of say £200 if by year 3 that net premium is £500…..LV are getting £500 and Saga are then losing money on that policy. That’s why 3 year fixed customers whose fixed term end this year are seeing massive increases. When inflation is low and the market is steady, the 3 year fix deals can be a winner…..right now they are a disaster. That’s exactly how it works.
I’m not going to get into the price prediction argument. If you think it’s going to rocket, I’m cool with that, I’ve just articulated why I think there is continued huge risk in the insurance business and the pain will continue until the pre inflation prices have churned….the CFO pretty much said the same thing.
If you have some other insight into the insurance business that I’ve missed, I’d love to hear it