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https://www.thetimes.co.uk/article/saga-seeks-to-raise-90m-to-cut-debt-tzjnslkbc
Great article must read
That's fair the over 50s market for Saga is growing. But retail broking and its margins seem to be in decline - the main underwriters such as direct line and aviva e.t.c are dealing with customers more directly and the margins for retail broking will decline also as comarison sites erode the margin. However Saga as a premium brand for more mature people is definitely a winner in my opinion. I do like the private jet holiday that Titan have created - definitely takes all the hastle out of travelling ;-)
So here are the reasons that Saga's biggest businesses - motor and home insurance retail broking remains in decline:
1. Saga Retail broking of Home and Car insurances from last update/results show that the number of policies in this area are falling.
2. Saga Retail broking of Home and Car insurances from last update/results show that the margins on these products are falling.
3. Historical circa £300M goodwill right off of the Saga Insurance due to declining margins in retail broking of home and car insurance policies - due to changing competitive market
4. Last results show a £269M goodwill right off the insurance business due to expected reductions in margin in retail broking of car and home insurance
5. Saga's whole business strategy for the last x years is to switch from the declining margins seen in Retail broking of car and home insurance policies to cruise, travel, saga money, equity release e.t.c. And from my point of view I can see it starting to work quite well.
I am not here to argue or nit pick but provided information for current and potential investors as I felt that some of the comments here need further in depth clarification. Personally I am very bullish on the turnaround plan for Saga.
Regarding the read across from the losses Direct Line got from the December freeze. Although AICL (Saga owned underwriter) does do some underwriting for home insurance they pass on the risk to other underwriters and third party insurance parties. AICL will however take a hit from motor claims.
However I am looking for positive noises for cruises, travel, equity release, travel insurance policies and health insurance plans.
However motor and home insurance retail broking remains Saga's biggest businesses which is in decline
"SAGA
British holiday group Saga in September said it was offering one-off benefits to frontline staff which include an 11% pay rise and a one-off cost-of-living payment.
The cost-of-living payment will be made in the form of two cash payments of 500 pounds each."
My take is that Saga must be doing ok to give out decent pay rises and keep staff
For example, Margaret Armitage, from Tunbridge Wells in Kent, was told her car insurance premium with Saga would be increasing this month from £302 to more than £510 – a jump of nearly 69 per cent. She drives a Vauxhall Corsa and does less than 3,000 miles a year. Margaret, in her early 80s, rang the company to complain about the price hike. She got nowhere. 'I'm a big fan of Saga and have gone on Saga holidays, but I was annoyed, especially when it said it could do nothing to cut the premium I had been offered,' she says.
She then put her insurance details into a comparison website and came up with cover from Saga as a new customer for £394 – a saving of £116 on her renewal quote. She couldn't believe it, although she opted for an even cheaper deal from AA at £273. On Friday, Saga insisted Margaret's renewal price was 'fair and accurate'. It said the increase was down to 'several factors, including the current rate of inflation'. [Note to Saga: inflation is currently running at 9 per cent, not 69 per cent].
On the cheaper price that Margaret was offered as a new Saga customer through website Go Compare, it said this was in part explained by the 'policy cover and terms being different from the renewal quote'.
Saga also said the new customer quote was 'sourced through a different channel' to the one Margaret originally used to buy her Saga cover – she purchased it direct.
Under the FCA rules, insurers are (bizarrely) allowed to vary the premiums for identical policies according to how they are offered – direct, through a comparison website, or under different brands.
Consumer champion James Daley, founder of website Fairer Finance, says this provides a get-out for insurers. 'It shouldn't matter what channel a customer uses,' he says. 'The price should be the same. A renewal price should match that offered to a new customer wanting identical cover, irrespective of what channel they use.'
Saga said that customers should phone its call centre to discuss their renewal. It added: 'We can often help customers save money on their insurance by talking through their policy needs, and we know helping to save money wherever possible is important in the current cost-of-living crisis.' It's what Margaret did. She got nowhere.
Hi BB,
Huge section of article mentioned Saga. So not good press for Saga. But does show that any of the measures brought in by the FCA have had no effect. Shows that there are still huge profits to be made from insurance though
Alnwick & BB,
I agree this is maddness this should not be this low but the market is pricing everything at bargain basement prices. I am still worried however that the trading update is going to disappoint as they always seem to do so in the past. However with my rose tinted spectacles can not see how. They are selling cruises reasonably well and everyone needs car and house insurance so the current SP seems mad. Anyway holding on for dear life at the moment what else can I say
Yes BB,
I too am losing confidence mainly due to the fact so many stocks especially UK ones look super cheap. Can not believe this is so cheap again. It is not like there are no cruises or travel???!!! However reserve my judgement to trading update. I have always been too bullish when it comes to these updates so we shall see.
I hope the reduced car usage means more profits for us:
https://www.ft.com/content/b540a307-e258-412a-8ccd-2dd22ede86a2