Saga Enters ‘Exclusive Negotiations’ with Ageas for Insurance Partnership
Saga has announced that it is currently in “exclusive negotiations” with Ageas regarding a potential tie-up for its insurance arm, alongside agreeing to sell its underwriting business to the Belgian firm. This news has resulted in shares of Saga rising on Friday morning.
The discussions between the two companies began last week, aiming to reach a deal that would assist Saga in easing its debt burden. In an update to its shareholders, Saga disclosed that it is in talks with Ageas to establish a 20-year partnership for motor and home insurance services. Ageas UK is poised to manage Saga’s motor and home insurance products, with gross written premiums exceeding £479 million for the previous year.
As part of the agreement, Ageas will make an initial payment of £80 million, which has the potential to increase based on meeting specific targets. Furthermore, Ageas will acquire Saga’s Acromas insurance underwriting business for £67.5 million, with the completion of the transaction anticipated in the second quarter of the following year.
Mike Hazell, Saga’s chief executive, expressed enthusiasm for the collaborative opportunity, stating, “The coming-together of Saga’s fantastic brand and Ageas’s unrivalled expertise in operating successful affinity insurance partnerships would create a winning combination.” Ant Middle, chief executive of Ageas UK, similarly commented that the proposed deal aligns with their strategy to grow in UK personal lines effectively.
Earlier this year, Ageas withdrew its bid to acquire Direct Line Group after facing rejection multiple times, with the final offer valuing at £3.2 billion. Meanwhile, Saga has encountered challenges within its insurance division due to cost pressures, while the entire business has grappled with substantial debts.
On a financial note, Saga reported widened losses for the first half of the year, reaching £104 million compared to the previous year’s £77.8 million loss. However, revenues surged by 13% to £404.8 million during the same period, propelled by robust performance in its cruise and travel sector. The company also managed to reduce its net debts by 7% to £614.6 million by the end of the reporting period.
Following the news, Saga’s shares experienced a 9% increase to 136.2p on Friday, showing positive investor sentiment towards the potential partnership and business developments.