[ad_1]
Copyright of the image
Saga
Shares in Saga, an insurance and vacation specialist over 50, have fallen by a third after announcing declining profits and warned that their earnings would be affected next year.
A "fundamental" overhaul will see Saga make changes to its insurance business to reduce profit margins.
Saga, which has just over two million customers, has also reduced dividend payments to shareholders.
The company added that it had depreciated the value of its business by £ 310 million.
Saga, which has said it is facing "growing challenges" in its markets, has announced a 5.4% decline in its underlying earnings, to 180 million pounds, as of Jan. 31.
For the current year, profits should fall between 105 and 120 million pounds sterling.
Shares of the company fell 33% Thursday morning.
Saga's insurance industry – along with many other companies in the industry – relied on the sale of low-cost contracts to new customers and the reconstitution of profits as their contracts were renewed.
Customers are increasingly using price comparison websites to purchase insurance policies, in which the price of the product is more important than having strong insurance that effectively "trivializes" the brand.
However, Saga said it would try to get away from cheap introductory offers and offer fixed rates for three years.
Lance Batchelor, managing director of Saga at Saga, told the BBC: "In the last ten years, our insurance industry is in decline, while the other cruises sector is booming.
"We are changing the way we sell insurance, with the launch of our three-year fixed price offer for home and auto insurance."
Saga did better in its travel division, where underlying pre-tax profits rose 2.4% to £ 21.1m, although "Brexit clearly stands in the way of customers' commitment to spend their holiday in 2019 ".
Nicholas Hyett, equity badyst at Hargreaves Lansdown, said Saga's recovery plan for its insurance business might be "too little, too late."
"In a market where insurance has become very commoditized, Saga will have to work hard if it's to give a reason for older drivers to knock directly on his door."
Brand is wasted & # 39;
Saga's actions performed poorly. He only entered the stock market in 2014, while his shares reached 185 pence. They are now trading well under half of that at 67p.
Tom Stevenson, investment director at Fidelity Personal Investing, said: "The company admits that it has been very wrong in recent years.
"The brand has lost its strong notoriety to its target market of more than 50 years, trying not to be competitive in a highly competitive and unmarked insurance market while it should have focused on what she could do differently.
"This is the new approach and investors should hope that after a disastrous start as a publicly traded company, the new Saga ends better than the previous one."
Source link
