A sorry Saga for over-50s insurer

Shares crash by a fifth after shock profit warning

MORE than £400million was wiped off the value of over-50s insurer and holiday firm Saga yesterday after it issued a surprise profit warning.

The company suffered its worst one-day fall since floating on the stock market in 2014, with its shares crashing 21%, as it was caught up in the collapse of airline Monarch.

Bosses said Monarch’s demise would cost it £2m after it was forced to find alternative flights for customers who had booked through its tour operator arm. Saga said it had also been hit by tough competition in its insurance broking business and had to shell out more in marketing to attract new customers.

The combined affect would slow its predicted growth in profits this year and lead to a drop next year.

Lance Batchelor, chief executive of Saga, insisted its investment plans were on track despite recent “challenging trading conditions”.

He added: “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.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The fact that the group feels the need to throw more cash at customer acquisition is less than reassuring.

“Saga’s pitch was always that its huge mailing list means all the clients it could ever want are just a mail drop away – the extra spending suggests it might not be as clean-cut as that.”