Saga agrees 20-year partnership with Belgian insurance coverage big Ageas

Saga shares jumped on Monday after the over-50s specialist revealed a two-decade partnership with Belgian insurance giant Ageas.

The agreement will see Ageas operate Saga’s home and motor insurance products, including its claims, pricing, underwriting, and price-comparison website activities. 

Saga will oversee its branding and direct marketing and earn commission based on a percentage of the gross written premiums generated.

Ageas will pay the firm £80million upfront, dependent on publishing its interim 2025 accounts without ‘material uncertainty or an auditor qualification’ and the extension or refinancing of a corporate bond maturing in July 2026. 

The Belgian insurance giant will hand Saga up to £30million extra in both 2026 and 2032 if it meets specific policy volume and profit targets. 

Ageas has also agreed to acquire Saga’s Acromas insurance underwriting business for £65million.

Over-50s specialist Saga has struck a two-decade partnership with Ageas 

Saga intends to partly use proceeds from the sale to pay down its sizeable net debt pile, which totalled £614.6million as of July.

Mike Hazell, chief executive of Saga, said: ‘Our joint scale and unrivalled knowledge of the over 50s insurance market represents a strong platform from which we can serve even more customers with relevant, innovative and intuitive products.

‘For Saga, more broadly, this agreement is in line with our stated partnership strategy. It demonstrates clear progress as we move to pay down debt and target long-term sustainable growth – for the benefit of all our stakeholders.’

Shares in Saga jumped 10 per cent before moderating to be 6.8 per cent higher at 132p just before midday.

Saga was in exclusive talks early last year to sell Acromas to Australian firm Open Insurance Technologies, but these ended without a deal. Completion of the deal is expected in the second quarter of 2025.

The Kent-based company’s insurance business has struggled due to increasing cost pressures from home and motor claims.

Car insurance premiums have surged since the loosening of Covid-related curbs led to spare parts shortages, soaring energy prices, and a lower supply of new vehicles.

While inflation has eased, Saga recently revealed its insurance underwriting arm’s net combined operating ratio was 102 per cent in the six months ending July. 

Any number above 100 per cent indicates an underwriting loss.

Russ Mould, investment director at AJ Bell, said: ‘Saga wants to use partnerships to exploit the value of its brand but without having to employ so much capital.

‘In theory, this could increase the scope for growth and should also help trim a hefty debt pile. This seems a sensible approach, and the Ageas deal is an important step forward.

‘However, the business has a long way to go to fix its balance sheet and repair its credibility with the market, with the post-IPO highs for the share price a distant fleck on the horizon.’