British holidays group and insurer Saga Plc has confirmed discussions to sell Acromas Insurance Co, the underwriting unit of its wider insurance division, to help pay down its debt. The group declined to give details on the potential buyers or selling price.
Saga’s insurance division, the largest business of the group, has been grappling with rising claims, which led to a half-year loss and a warning on full-year earnings in September. According to Reuters, the company’s net debt was £721.3 million as of July 31, 2022.
What is happening with Acromas Insurance?
Acromas currently underwrites about 25-30% of Saga’s insurance business, according to Saga. The underwriting business has been hit by spiking claims inflation (around 13%), increasing costs and hitting profitability.
In a release, Saga said it was “committed to providing a best-in-class insurance offer to its customers” and was looking at opportunities to “optimise [it’s] operational and strategic position in the insurance market, in line with the evolution to a capital-light business model and the stated objective to reduce debt.”
“[The board] has concluded that a potential disposal of its underwriting business is consistent with group strategy and would crystalise value and enhance long-term returns for shareholders,” the release also said.
Saga said the disposal of AICL would still require regulatory and shareholder approvals, and assured stakeholders that a further announcement will be made in due course.
