Saga (SAGA) made further progress in strengthening its balance sheet and de-risking its business during the first half. Signing a reinsurance agreement with Munich Re in February may have dampened revenue for its motor business, but it means around three-quarters of any loss made will be absorbed by the reinsurer. Without the one-off items that plumped up cash generation last year, group available operating cash flow reduced by 30 per cent to £97m. However, this was still enough for management to continue to pay down debt, which now represents 2.2 times cash profits at the period-end, from 2.4 times a year earlier.
Premium inflation meant increased churn within the motor insurance market, resulting in growth in core motor policies of around a quarter. The recently introduced motor panel meant a greater proportion of higher premium business being placed with third-party underwriters, freeing up capital. High competition in the home insurance market put pressure on premiums, pushing down sales by 6 per cent to £48m.