British holidays group Saga cut its full-year profit forecast today, after reporting a loss for the first half of the year as its insurance unit struggles with inflationary woes, sending its shares 20% lower.
Saga said its underwriting business has experienced high levels of claims inflation, currently around 13%, increasing the cost of insurance claims and hitting profitability.
"Trading conditions in the UK insurance market continue to be challenging," chief executive Euan Sutherland said in a statement.
The company, which also sells insurance to over 50-year olds, forecasts an underlying pretax profit between £20-30m for the full-year, compared with its previous guidance of £35-50m.
Saga posted a first-half pretax loss of £257.5m, compared to a profit of £0.7m a year earlier.
