Saga saw shares fall 3.5% to 245p in early morning trading on Wednesday after the company released a devastating £6.7 million loss due to an increase in motor insurance claims.
The loss represented a 139% fall in profits against Saga’s £17.1 million profit in 2020.
The ‘over-50s’ products and services firm reported higher marketing costs and a rise in motor insurance claims as to the driving factors behind its loss.
Saga noted a £31.2 million decrease in net debt from £760.2 million to £729 million over 2021.
The group also reported an increased retention rate of 2.3% to 82.8%.
Saga suspended its dividend for 2021 and warned shareholders not to expect a payout until 2024 at the earliest.
“Over the last year, Saga has delivered a resilient performance, whilst laying the foundations for future growth,” said Saga CEO Euan Sutherland.
“The Insurance business delivered a robust performance with the second year of policy growth after several years in decline, whilst in travel, we resumed operations, secured positive cruise bookings for 2022/23 and began the restructure of our tour operations business.”
“Looking to the future, I am both confident and excited about the opportunities ahead of us as we emerge stronger from the pandemic than we went in, whilst remaining mindful of the current challenging external environment.”
Analysts focused on the mixed returns of Saga’s financial results and commented on the impact of its marketing strategy.
“Saga has rounded off the year with an underlying loss, which has disappointed the market alongside a lack of forward guidance,” said Hargreaves Lansdown equity analyst Sophie Lund-Yates.
“The money the group’s throwing at a brand refresh seems to be bearing some fruit, with customer retention levels moving in the right direction.”
“But before Saga can focus on the future too much, it needs to concentrate efforts on navigating through the current waters of uncertainty.’’