UK motor insurance: inflation gain to follow inflation pain
A steady hand on the wheel is a given for Saga’s cruise ships. But its car insurance business shows signs of veering off-course. The over-50s market specialist slashed its profit guidance by two-fifths as a result of the rising cost of motoring claims on Tuesday.
Shares lost up to a quarter in response. That left them at an all-time low, valuing Saga at just £150mn, from £2bn five years ago. Other motor insurance groups Admiral and Direct Line slid as well.
The rising cost of accident repairs is a reverse for the sector. The group did well when cars were kept off the road during the pandemic. Parts shortages, rising energy and labour costs and high prices for used cars have since hit earnings. Underlying profit before tax would now be between £20mn and £30mn, two-fifths less than previously expected, Saga said. Share prices across the board have fallen between 40 and 60 per cent since the start of the year.
This story originally appeared on: Financial Times - Author:Faqs of Insurances
