Motor drives Saga's resilience

That was significantly down to a resilient motor insurance result, which was only partially offset by weaker outcomes elsewhere. Motor generates over half of group cash profit. Lower claims costs and flat premium rates helped the motor unit's combined ratio of claims to premiums improve to a profitable 91.8 per cent (from 102 per cent in 2013). While Saga's pricing looks more resilient than that of the sector overall, management still expects rates to remain subdued for some time.

Saga's other insurance operations, whose risk is mostly underwritten by external underwriters, delivered more mixed performances. Growing demand for private medical cover and travel insurance helped drive cash profit up nearly 12 per cent to £18.9m at the so-called 'other financial' unit. But cash profit at the home insurance business fell nearly 8 per cent to £29m, as investments and lower pricing to help retain customers took a toll.

Meanwhile, the healthcare business, which offers domiciliary care services, is struggling. Local authority budgets remain under pressure, even as labour costs are rising. The unit made a £0.1m operating loss after revenue fell 10 per cent. That followed a decision last year to reduce the hours of care delivered.

However, the higher-profile travel business saw cash profit jump two-thirds to £15.2m, benefiting from a significant improvement in volumes and profit margins. That reflects stronger demand for higher-grade cabins at the cruising business and a shift in product mix towards higher-margin offerings, such as river cruises.

Prior to these figures, broker JPMorgan Cazenove was expecting full-year EPS of 11.9p.