Saga policy growth hit by FCA renewals rule

Strong growth in new policy sales helped Saga offset a sharp fall in renewals in the year so far.

In a trading statement ahead of its annual meeting today, the over-50s services group said new motor policies were up 30% from a year ago, with new home policies up 14%. However, Saga pointed out that overall policy numbers were up only 1% from a year earlier, which it attributed to the closure in 2017 of its Direct Choice Brand. 

Numis Securities said growth in policy numbers was held back by lower persistency, which the company had earlier disclosed at 65.4% in motor, which followed the new FCA ruling that all policy renewals should highlight the prior year’s price. Numis also cited the increase in Insurance Premium Tax and the competitive environment for the flat numbers.

”The statement highlights that the motor and home markets remain competitive, but that Saga is writing business on attractive terms,” Numis said.

”Motor claims costs are in line with expectations, despite the poor weather conditions at the start of the year.”

“The motor and home markets remain competitive,”Saga said. “However, we continue to write new business on attractive terms with our direct marketing channels representing the majority of our new business volumes.”

Saga said its underwriter continues to perform well. Motor claims costs are in line with the company’s expectations despite the snow and icy weather conditions experienced during the period as its customers are able to defer journeys.

Chief executive Lance Batchelor said: “We have seen good momentum this year across our travel and insurance businesses, particularly in new motor and home insurance policies, underwriting performance and bookings for our new cruise ship, Spirit of Discovery. All of this underpins our confidence that we have put in place the right investment to drive the Saga business forward.”

The Group’s interim results will be announced on 27 September.