Saga Confirms Acromas Insurance Sale Talks

Saga PLC (LON: SAGA) on Monday confirmed media reports that the company is in discussions regarding the potential sale of Acromas Insurance Company Limited (AICL).

AICL is the underwriter that is part of Saga's wider insurance business. It currently underwrites around 25% to 30% of Saga's insurance business.

The Times reported over the weekend that Saga was speaking with potential buyers for AICL with the aim of raising up to £90 million to pay down its debt.

“Saga remains committed to providing a best-in-class insurance offer to its customers,” the company said in a statement on Monday. “The Board has looked at the opportunities to optimise Saga'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.”

Saga explained that it has come to the conclusion that the potential disposal of its underwriting business is consistent with the company's strategy and would “crystalise value” and boost long-term returns for shareholders.

Discussions are ongoing, Saga said, adding that there is no certainty that any transaction will occur.

“Any disposal of AICL would require regulatory and shareholder approvals. A further announcement will be made in due course,” the company declared.

Last year, Credit Suisse analyst Alexander Evans downgraded Saga to Neutral from Outperform, assigning the stock a 155p price target.

The analyst told investors at the time that the downgrade was based on inflation and Saga's first half of 2022 results being materially below expectations as pricing continued to lag claims inflation.