(Reuters) – Over-50s tourism and insurance firm Saga Plc <SAGAG.L> posted a 3.2 percent rise in profit for the first half, as the overhaul of its travel business paid off and it saw robust demand from affluent older Britons for trips.
The drop in the pound since Britain’s vote to leave the European Union has hit British consumers’ spending power, but Saga’s customers have continued to travel as most of them plan well in advance, helping the firm report a marginal rise in underlying pre-tax profit in the travel business.
Saga, which is set to have two new ships by 2020, said it had hit over 64 percent of its sales target for the first 19 trips for its new cruise ship ‘Spirit of Discovery’.
The company offers ocean and river cruises, singles holidays and escorted tours.
Underlying pre-tax profit fell 7.7 percent in Saga’s insurance business to 109.3 million pounds in the first six months, as it continues to be hit by a challenging motor insurance market.
That offset strong demand in its travel business. Total pre-tax profit dropped 3.7 percent on an underlying basis.
Saga has had to revamp its travel business following Monarch Airlines’ collapse last year on the back of intense competition for flights and a weaker pound, leading to the cancellation of hundreds of thousands of holidays.
The company reported profit before tax of 109 million pounds for the six months ended July 31, compared with 105.6 million pounds reported a year earlier.
Saga said its solvency capital requirement – a closely watched measure of financial strength that measures a company’s ability to meet its obligations – fell to 71.2 million pounds from 79.9 million pounds reported last year.
But investments in new business and improved retention in its retail broking business have seen the number of insurance policies back to levels posted in the first half of last year, driven by a 19 percent rise in motor and home new business volumes, the company said.
(Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr)