Saga (LON:SAGA) is set to take a £4-million charge following the UK government’s decision to change personal-injury damage awards, known as the Ogden rate. The update comes ahead of the cruises-to-insurance group’s full-year results next month.
Saga’s share price has surged in today’s session, as the company reassured investors that the charge would not impact its payout to shareholders. As of 09:16 GMT, the shares were changing hands 1.18 percent higher at 188.20p, outperforming the mid-cap FTSE 250 index which is currently 0.02 percent up at 18,673.87 points. The group’s shares have lost more than one percent of their value over the past year, and are down by nearly four percent in the year-to-date.
Saga announced in a statement this morning that as a result of the change to the Ogden rate, there would a one-off, pre-tax impact on profit of £4 million on the group’s results for the year ended January 31. The government announced yesterday that it will cut the discount rate, used to determine compensation payments in personal injury claims, from 2.5 percent to -0.75 percent.
Saga, which provides cruises-to-insurance services for the over-50s, however, reassured investors that the change to the Ogden rate is not expected to have a material impact on its financial outlook, and that the charge would not impact the group’s dividend.
The nine analysts offering 12-month price targets for Saga for the Financial Times have a median target of 220.00p on the stock, with a high estimate of 250.00p and a low estimate of 200.00p. As of February 25, the consensus forecast amongst nine polled investment analysts covering the lifestyle group has it that the company will outperform the market. Saga is scheduled to update investors on its full-year performance on March 29 when the company will also hold a capital markets event.