StockMarketWire.com - Over-50s insurer Saga cut its dividend and announced a change in strategy after warning underlying pre-tax profit for the 2019/20 financial year is expected to be between £105m and £120m.

Saga blamed lower margins in its insurance division, a change in approach to renewal pricing, lower reserve releases and investment in new products.

The company also announced the launch of a new approach to the insurance division by focusing on direct channels and products that offer value.

Saga's board proposed a final dividend per share of 1p and a full year dividend per share of 4p, compared to 6p and 9p, respectively in the prior year.

The company proposed a sustainable payout ratio of around 50% of earnings over the next few years.

Saga also re-assessed the carrying value of goodwill relating to its insurance operations, resulting in a non-cash impairment charge of £310m, representing 22% of the insurance goodwill.

This led to an overall loss before tax for the financial year 2019/20 of £134.6m and a loss after tax of £162m.

FINANCIAL HIGHLIGHTS IN THE YEAR TO 31 JANUARY:

- Underlying pre-tax profit down 5.4% at £180.3m reflecting strong reserve releases but disappointing retail broking result

- Retail broking down 19.1% at £105.8m

- Underwriting up 9.3% at £86.7m, supported by underlying reserve releases of £78m

- Travel up 2.4% at £21.1m, with strong forward bookings in cruise

- Emerging businesses and central costs (excluding finance costs) improved by 21.5% to (£21.6m)

- Loss before tax of (£134.6m) after goodwill impairment of £310m

-Available operating cash flow £180.6m

- Net debt reduced to £391.3m with net debt to trading EBITDA at 1.7x




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