Saga hit by strain from Omicron and insurance coverage guidelines

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Saga warned the affect of the Omicron variant and the Ukraine warfare on its journey companies, and a success to its insurance coverage division from adjustments to pricing guidelines, had been hampering its restoration from the pandemic.

The corporate cited a “difficult” atmosphere for its cruise enterprise, though bookings for the approaching yr remained robust. Demand for its different holidays, nonetheless, was 30 per cent under pre-pandemic ranges.

Saga, which specialises in leisure and monetary merchandise for the over-50s, additionally warned that adjustments to insurance coverage guidelines, which require renewal clients to obtain the identical worth as new clients, would scale back its motor and residential income. Although it was “too early to quantify the long term affect”, the group mentioned motor pricing, particularly, had been extremely aggressive for the reason that introduction of the principles in January.

The corporate has been hit hard by the well being disaster and suffered one other 4 per cent decline in its share worth after the discharge of its annual outcomes on Wednesday.

It swung to an underlying pre-tax lack of £6.7mn for the yr ending January 2022, from a £17.1mn revenue within the earlier 12 months, following a suspension of its journey enterprise for many of the first half of the yr.

Steve Kingshott, the group’s head of insurance coverage, informed the Monetary Occasions that inflationary traits on claims would make it laborious for different insurers to take care of any tactical positions of holding costs down. “Driving patterns are returning to pre-Covid ranges . . . after which there may be inflation from elements, labour, vitality,” he added.

On cruises, administration cited the strain on bookings created by the “evolution” of the Omicron variant — which is being closely monitored by authorities — in addition to from Russia’s warfare in Ukraine.

The group has already redirected vessels away from the Baltic Sea and the Black Sea and has taken St Petersburg off its itinerary checklist.

Chief govt Euan Sutherland mentioned the corporate and its clients had been “studying to reside with Covid-19 restrictions”. It accomplished 31 sailings on its two cruise ships between the resumption of operations in June 2021 and the tip of the monetary yr, and solely had one cruise to the Caribbean curtailed after a restricted outbreak.

Saga additionally introduced an enlargement to its river cruise enterprise, with 4 new ships to be added on rivers together with the Rhône and Moselle in Europe.

Given the uncertainties on sentiment, the group declined to offer an earnings forecast for the third yr working.

“There are a whole lot of shifting items in the meanwhile,” mentioned James Quin, Saga’s chief monetary officer.

It’s hedged in opposition to the rise within the oil worth this yr, however administration mentioned that at present costs, hedging subsequent yr’s gasoline prices would value an additional $3mn.

“We had already constructed extra warning in our numbers just lately, however should take a look at our assumptions in opposition to Saga’s cautious outlook once more,” mentioned analysts at Peel Hunt.

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