UK holidays group and insurer Saga Plc (Saga) is in exclusive discussions with Australian insurance group Open Insurance (Open) regarding a potential sale of the UK insurance business’s underwriting arm, Acromas Insurance Co., according to reports.
Acromas currently underwrites around 25% to 30% of the insurance business, making it the largest business in the group. However, it has struggled due to rising claims, leading to a half-year loss and a threat to full-year earnings in September. As of July 31, 2022, the company’s net debt was £721.3 million.
In a statement, Saga said it was “committed to providing a best-in-class insurance offer to its customers” and was looking for ways to “optimise [its] operational and strategic position in the insurance market, in line with the evolution to a capital-light business model and the stated objective to reduce debt.”
It added: “[The board] has concluded that a potential disposal of its underwriting business is consistent with group strategy and would crystalise value and enhance long-term returns for shareholders.”
Saga has not yet released a statement on the value of the proposed sale.
