Shares of Saga PLC (GB:SAGA) surged as the company has decided to sell its insurance underwriting business to Belgium-based insurer Ageas SA/NV (DE:FO4N) and form a 20-year partnership worth £147.5 million. Saga defines this as a milestone transaction that will strengthen its position in the insurance market. Following the announcement, Saga shares gained almost 9% as of writing.
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Saga is a services company with a specific focus on individuals aged 50 and above. Meanwhile, Ageas is a multinational insurance company that operates in around 13 countries.
Saga Teams up with Ageas
Under the agreement, Saga has agreed to sell its insurance underwriting business, Acromas Insurance Company Limited (AICL), to Ageas UK for £67.5 million. The deal includes an additional payment of £2.5 million to be paid after the partnership is fully prepared to start its operations.
Both companies also established an Affinity Partnership, which is set to launch in the fourth quarter of 2025. The Affinity Partnership will merge Saga’s brand and customer base with Ageas’ UK insurance expertise. As part of this partnership, Ageas’ UK subsidiaries will manage Saga’s motor and home insurance products, including selling new policies and renewing existing ones in the country. Meanwhile, Ageas will handle pricing, underwriting, claims processing, and customer service.
Saga Reveals Financial Details of Partnership
For the partnership, Ageas will provide Saga an upfront payment of £80 million, contingent on specific conditions being met. Additionally, up to £30 million in further payments will be made if policy volume and profitability targets are achieved in 2026 and 2032. The UK company will also earn a commission based on a percentage of the gross written premiums generated throughout the partnership. Moreover, Saga will remain responsible for managing its brand and overseeing direct marketing efforts.
Overall, the deal supports Saga’s long-term objectives of debt reduction and boosting shareholder value.
Year-to-date, Saga shares have lost 7.5% in trading.
