Saga rides off with Motorcycle Insurance Firm
Over-50s group says Bennetts will continue to insure younger motorbike drivers after the acquisition ...
More than 200,000 bikers are to become part of the over-50s lifestyle group Saga, which has agreed to buy the motorcycle insurance company Bennetts.
Saga, which makes more than half of its operating profits from motor insurance and is looking for ways to increase this income further, said yesterday that it will pay £26.26m in cash for the business.
Shares in Saga rose more than 10 percent yesterday to 185p, taking the stock back to its original debut price chosen in May 2014 – a price that it has struggled to surpass since the initial public offering.
Bennetts is currently owned by BGL, the financial services group behind Comparethemarket. The insurer will continue to serve all ages of bikers under its new owner, though 43% of its customer base is aged over 50 and more than three-quarters are over 40.
Almost 3,000 Britons aged 50 or over passed their motorbiking test in the year to March 2014, representing about eight percent of all new passes, according to Department for Transport figures.
Saga already insurers 20,000 motorbikes and thinks the acquisition will bring one in five bikers in the UK onto its books. The 85-year-old Bennetts brand will remain in use following the deal.
“This fits with our strategic ambition to drive growth through our insurance broking operations,” said Lance Batchelor, chief executive of Saga.
“Bennetts sits perfectly within our business model: a capital light, cash generative business that will seamlessly integrate with our database to quickly deliver tangible returns.”
Saga has 10.6 million older customers on its database for services including cruise holidays, savings accounts and insurance.
The firm floated last year, with a market value of £2.5bn, but its shares have remained under pressure amid questions over its main focus.
Saga held a capital markets day earlier this month to highlight its insurance arm for analysts and investors, though the firm joined the London market in the consumer services sub-section, which typically comes with a higher share price as a multiple of earnings.
Bennetts reported revenue of £17m and gross written premiums of £31m in the year ended June 2014.