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The chief executive of Saga, the UK insurance and travel business focused on customers over 50, is leaving the company as it hunts for ways to repair its balance sheet.
Euan Sutherland will be replaced by Mike Hazell, the group’s chief financial officer, who joined the company only last month, Saga said on Tuesday. Sutherland had told the board earlier this year of his intention to step down, it said.
Saga’s shares fell 2 per cent in early trading, and have lost about half of their value over the past three years.
The latest setbacks for the group come after a turbulent few years as the Covid-19 crisis disrupted its cruise and travel business. Demand has recovered, but its insurance division has since suffered from spiralling inflation in the cost of claims.
The group was pursuing a sale of its underwriting unit but failed to agree terms with a prospective buyer and paused the process earlier this year, citing market conditions.
Saga has appointed Lazard to review its options to reduce debt, according to a person familiar with the matter. That would include restarting the sale of the underwriting division, the person said. Sky News reported the Lazard appointment on Monday.
Sutherland said he was proud of what he had achieved at the group, and chair Sir Roger de Haan praised his “enormous contribution” in stabilising the business.
Hazell said he would focus on the group strategy “to maximise the performance of our existing businesses and reduce debt”.
His appointment was announced in September, with the departure of the former chief financial officer James Quinn, who joined the business in 2019. De Haan said at the time that the change was a result of “carefully managed succession planning”.
Saga reported a pre-tax loss of £77.8mn in the six months to July, though it was a sharp improvement on the previous year as its travel and holidays business recovered. The first-half loss was mostly attributable to a £68.1mn impairment to the goodwill of its insurance broking business, reflecting a fall in sales.
The separate underwriting segment reported a combined ratio — claims and expenses as a proportion of premiums — of 136 per cent on Saga’s policies, much worse than the 113 per cent in the previous comparable period. Anything above 100 per cent represents an underwriting loss.
The bigger problem for Saga is the £657mn of net debt on its balance sheet. Reducing leverage has long been a focus for the group, which was under private equity ownership before its 2014 flotation. Sutherland had previously been critical of Saga’s former owners for leaving it “loaded with debt”.
The group has £150mn of senior bonds maturing next May, which it expects to be able to pay from available cash resources. These resources were boosted by a £85mn loan made to the company by De Haan. Saga has a separate £50mn revolving credit facility that has not yet been drawn down.
