LONDON (Reuters) -Shares in Saga soared 11% on Friday after the British over-50s vacation group and Belgian insurer Ageas mentioned they had been in unique talks to set up a 20-year motor and residential insurance coverage broking partnership and after Saga reported underlying earnings which greater than tripled from a 12 months earlier.
Below their deal, Ageas would additionally purchase Saga’s insurance coverage underwriting enterprise for 67.5 million kilos ($88.1 million).
Ageas, which deserted makes an attempt to take over British insurer Direct Line earlier this 12 months, is trying to construct on its non-life presence in Europe, and deal with merchandise for an ageing inhabitants, it mentioned in an announcement.
“This transaction allows us to grow in a market where we already have real strength and expertise,” mentioned Ageas CEO Hans Cuyper.
Saga additionally reported underlying pre-tax interim revenue surged to 27.2 million kilos on Friday from 8 million kilos the earlier 12 months on robust efficiency in its cruise and journey items. The group mentioned earlier this 12 months that its insurance coverage enterprise was weighing on its outcomes.
The Ageas deal “would create a winning combination,” Saga Chief Government Mike Hazell mentioned in a separate assertion.
The partnership would see Ageas UK function Saga’s motor and residential merchandise broking enterprise, which distributed merchandise with gross written premiums of greater than 479 million kilos within the 12 months to July 31, 2024, the businesses mentioned.
Ageas UK would pay Saga 80 million kilos upfront and Saga might obtain up to 30 million kilos in 2026 and up to 30 million kilos in 2032, topic to quantity and profitability targets.
The deal would have a detrimental influence on Ageas’ solvency place of 5%, Ageas mentioned.
Saga shares rose to their highest since January. The shares already had a raise final week when Saga confirmed a Sky Information report of partnership talks with Ageas, with out giving extra particulars.
KBC analysts mentioned in a word that they anticipated Ageas to pursue additional UK insurance coverage acquisitions, along with the Saga deal.
“Ageas’ current activities in the UK are too small to operate at an acceptable efficiency level,” they mentioned.
Ageas shares had been little modified.
($1 = 0.7666 kilos)