Saga set to bank £207m from insurance deal with Ageas

Saga, the debt-laden over-50s cruises and financial services group, is in line to bank up to £207.5 million in cash after disclosing details of a planned deal to hand over its insurance operations to Ageas, the Belgian insurer.
Ageas would buy Saga’s insurance underwriting business for £67.5 million and take on management responsibility for its insurance broking business for an upfront £80 million payment to Saga plus possible performance-based staged payments of £60 million.
The provisional deal, which is not yet signed, would help Saga pay down debts. These amount to £615 million, according to its newly published half-year results.
Mike Hazell, Saga’s chief executive, said he was “hugely excited” by the prospective deal, which he said would provide a “capital-light route to growth”.
Saga, which came to the share market in a blaze of hope in 2014, has been badly blown off course by difficult conditions in insurance, the temporary shutdown of its cruises business in lockdown and years of underinvestment. Investors have lost almost 95 per cent of their money.
It reported a worsening of pre-tax losses to £104 million in the six months to July 31, compared with a £77.8 million deficit last time. The red ink was entirely due to another writedown in its broking business, this time of £138.3 million.
Stripping out non-cash hits and other one-off costs, Saga said its underlying profit before tax improved from £8 million last time to £27.2 million, thanks to “exceptional growth” in its river and ocean cruises businesses.
The broking business would be handed over to Ageas to manage as part of a 20-year partnership deal. Staff would transfer over to Ageas, with no redundancies initially expected, sources said. Existing partnerships with Collinson for travel insurance and Bupa for private medical insurance would be unaffected, it added.
While Saga has agreed to exclusive negotiations, binding documentation still has to be agreed. An earlier deal to sell the underwriting business to Open of Australia fell through last year.
Proceeds from the underwriting sale are expected in the second quarter of next year, while the first broking partnership payment would come towards the end of next year when the arrangement goes live. Further staged payments would be in 2026 and 2032.
Saga is due to repay a £250 million bond in July 2026 and aims to start refinancing talks next year. It is also due to pay back a loan from the chairman and biggest shareholder, Sir Roger De Haan, in April 2026, which stands at about £75 million.
The part-withdrawal from insurance was sensible given the increasing complexity of the business, the growing compliance burden and increasing competition, Hazell said. “Scale players really do have an advantage over smaller insurers,” he said.
Ageas, which this year made an unsolicited and unsuccessful bid for Direct Line, said the deal “aligns perfectly with our strategy to profitably grow in UK personal lines and in creating powerful partnerships to the benefit of our customers”.
The company dwarfs Saga, employing about 44,000 people in operations in Belgium, Portugal, Turkey, China and many other Asian nations. It reported annual inflows last year of €17 billion. In the UK it is the sixth largest motor insurer and boasts four million British policyholders across motor, home, travel, pet and business. Formerly known as Fortis, it partnered with Royal Bank of Scotland in the catastrophic purchase of ABN Amro in 2007 and had to be rescued by Belgian and Dutch taxpayers.
Saga shares closed 11½p higher, or 9.1 per cent, to 136½p. They have rallied by more than 20 per cent in the past ten days, since the talks with Ageas first surfaced.
The underwriting deal is conditional on the broking partnership being cemented, but the broking partnership could in theory go ahead without the underwriting deal.