Monarch collapse costs Saga insurance £2m

Saga, a UK-based specialist insurer for life after 50, has seen its profits impacted by the collapse of Monarch Airlines.

The group's growth in underlying profit before tax (PBT) is expected to be between 1 percent and 2 percent for the year ended Jan. 31, 2018. The results have been impacted by more challenging trading in insurance broking during the period and the Monarch Airlines administration, which has affected the tour operations business, according to a Dec. 6 trading update.

For the full year, the written profit of Saga’s retail broking business is expected to be ahead year on year, with a strong performance in motor partially offset by a challenging trading environment in home and travel insurance. Earned profit for retail broking is expected to be marginally lower than the prior year due to a lower written to earned benefit.

Saga’s in-house underwriter has continued to have an excellent experience in small and large personal injury claims and the company now expects reserve releases to be at a similar level to the previous year.

The travel segment continues to trade well and is expected to be strongly ahead of the prior year. However, the tour operations business has been impacted by the collapse of Monarch Airlines with an approximate one-off cost of £2 million.

Saga has completed a review of the operating structure which will realise approximately £10 million of annualised savings in 2018. The company expects to incur a one-off cost of circa £4 million relating to these changes, excluded from underlying PBT.

"Against a backdrop of some challenging trading conditions in our final quarter, we continue to develop the business for the long term,” said CEO Lance Batchelor.

“With greater customer insight and a stronger business platform, now is the right time for Saga to invest in growing the customer base and the business.

"We are confident that the actions taken will ultimately see a better quality of earnings and profit growth across the business, supporting our progressive dividend policy for the benefit of our shareholders."

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