Morning, everybody, and welcome to Saga's results for the six months ended 31 July 2024 . I'm Mike Hazell, Group CEO, and I'm joined today by Group CFO, Mark Watkins, and Steve Kingshott, the CEO of Saga Insurance. Before I begin, I'd like to thank you for being with us today, particularly after the delay to our results, while our partnership discussions were continuing. On that note, you will have seen that today we released a separate announcement confirming that we are now in exclusive negotiations with Ageas for a proposed transaction. This is a fantastic opportunity for Saga, Ageas, and our customers, creating a low-risk business model for home and motor insurance by combining the capabilities of two great businesses. The move would support our growth ambitions, simplify our business, and move us to a more capital-light model in insurance, in line with our stated strategy.
The first part of this is a sale of our insurance underwriting business, AICL, and the second is a twenty-year affinity partnership with Ageas for motor and home insurance, moving us away from underwriting and risk to a lower-cost, commission-based model. I'll cover these in more detail later. However, we're excited by the opportunity to work with a partner of the pedigree of Ageas, and we believe this partnership will deliver great value for our shareholders and great products to our customers. It's been a busy half of the year and a period that was ultimately resulting in us reporting a strong overall financial performance, while we continued to explore partnership opportunities across our ocean and insurance businesses.
During this period, we grew underlying revenue by 11% and reported underlying profit before tax of GBP 27.2 million pounds, more than three times that of the prior year, reflecting strong growth across travel and cruise, offsetting cyclical challenges in our insurance broking business. In line with the approach we set out in April, we took action in insurance broking to more effectively balance margins and policy volumes. Conditions, however, remain challenging, ultimately hampering the effectiveness of those actions. These market conditions, most notably the net rate environment in home, have impacted insurance broking volumes and profitability this year, resulting in a further goodwill impairment of GBP 138.3 million pounds. The group has therefore reported a loss before tax of GBP 104 million pounds after this impairment.
While insurance broking remained challenged, our insurance underwriting business finished the first half in a strong position, having returned to an underlying profit. Debt reduction continues to be a key strategic priority for the group, and we made good progress in the first six months of the year, having reduced net debt by 42.8 million GBP in the past twelve months and 22.6 million GBP in the last six months. Our group remains highly cash generative, and we delivered 54.4 million GBP of available operating cash flow in the first half. Our focus on driving customer engagement continued, and following enhancements made to our customer websites, we saw a 21% increase in visits alongside the progress with our group customer consent initiative, which saw the number of consented individuals rise by 16% on the same point last year.
Before I hand over to Mark to talk through the financials, I'm gonna cover off some of the highlights from each of our core businesses. Starting with cruise, both our ocean and river offerings continue to go from strength to strength. In ocean cruise, we achieved a load factor of 90% in the first half of the year, which is seven percentage points higher than last year, with a per diem that was 9% higher. It's a similar story for river cruise, with a load factor of 86%, up three percentage points, and a per diem that's 15% higher. Our travel businesses reported first half profit for the first time since the pandemic, with the revenue and passengers 29% and 13% higher than in the prior year on a comparable basis. In insurance, our underwriting business is in a strong position.
Price increases applied over the past couple of years are now flowing through to the result, with average earned premiums 39% higher than in the year before. It's this action that also supported the net combined operating ratio, reducing by 23 percentage points to 102%. The challenging market conditions in insurance broking mean that that business reports 13% fewer policy sales, albeit slightly higher margins. Our money business reports a result consistent with that of the prior year, as we build awareness of our new range of products. And finally, data continues to underpin our strategy, with 9.5 million individuals on our database and growing, and a growing number of these consenting to hear more about our products and services, thanks to the initiatives that we have in flight. I'll now hand you to Mark, who will talk through our financials.
Thanks, Mike. Good morning, everybody. It's a pleasure to be here today. I'll spend the next few minutes covering the financial results for the group for the six month ended thirty-first July, 2024. I'll then follow that with the outlook for the remainder of the year. Saga had a positive start to the year, delivering strong financial performance in the first half. Underlying revenue, which is net of reinsurance premiums and excludes some accounting adjustments and one-off items, increased 11% on the prior year. Underlying PBT of GBP 27.2 million is more than 3x that of the same period last year, largely driven by the growth in our cruise and travel businesses, improved performance in insurance underwriting, and lower central costs, which were only partially offset by lower insurance broking results.
As Mike touched on a moment ago, we reported a statutory loss before tax of GBP 104 million, reflecting a 138.3 million pound impairment of insurance broking goodwill, and we'll cover some of the drivers behind this shortly. We continue to generate strong cash flows, with available operating cash flow of GBP 54.4 million. As expected, this figure was lower than the prior year, largely reflecting the one-off benefit of around GBP 20 million from the river cruise and travel businesses, moving from a 100% trust arrangement for customer deposits to a 70% escrow arrangement, which occurred in the prior year, alongside lower insurance broking earnings and underwriting dividends.
Net debt reduction continued, and the position at 31st of July was GBP 614.6 million, GBP 42.8 million lower than 31st of July 2023, and GBP 22.6 million lower than at the year-end. Alongside strong trading EBITDA, which grew 27%, this supported further deleveraging, with a total leverage ratio now at 4.6 times, compared with 7x at the same point in the prior year. I'll now focus on the headline underlying profit contribution from each of our business units. Our cruise and travel businesses continued to generate strong customer demand, delivering GBP 31.2 million of underlying PBT in the first half, more than double that of the year before. Insurance market continued to be challenging, and as expected, insurance broking reported a materially lower contribution, predominantly driven by the home product.
Insurance underwriting, however, returned to an underlying PBT versus a loss in the prior year. Other businesses also returned to profit in the first half, following the decision to exit some of our smaller loss-making activities. This included Saga Insight and Saga Exceptional, which occurred in the second half of last year. The actions taken to reduce our cost base late last year meant that central costs were 14% lower this year than last, despite slightly higher financing costs. The result of all of this is that underlying PBT increased from GBP 8 million in the prior year to GBP 27.2 million in this current year. I'll now spend some time covering each of our core businesses in a bit more detail, and I'll start with Ocean Cruise.
Our Ocean Cruise business has had an exceptional start to the year, more than doubling its profitability and securing forward bookings that only continue to grow. Revenue grew 17%, supported by increased load factors and per diems. The load factor in the first six months of the year was 90%, which compares with 83% last year, and the per diem was GBP 362, 9% higher than the year before. At the time we purchased the two new ships, we set ourselves a target to deliver GBP 80 million of annualized EBITDA, excluding overheads. We achieved that target for the first time last year, and I'm pleased to report we're tracking in excess of last year's position by GBP 15.7 million in the first half. This places us on track to materially exceed that target for this financial year.
After allowing for the scaling of operating expenses and lower financing costs as we repay the debt, profitability grew 117%. Looking ahead to the full year, the booked position is very strong, with a load factor that is up three percentage points and a per diem that is 8% ahead. Importantly, we launched the 2025-26 season one week later than last year, but despite this, the booked load factor is in line with the same time last year, with the per diem continuing to increase at 7% ahead.... In River C ruise, revenue grew 13% when compared with the prior year, also driven by increased customer demand. The 86% load factor in the first half was three percentage points higher than last year, and the per diem of GBP 340 was 15% higher.
This supported growth and profitability of 93%, from GBP 1.5 million in the prior year to GBP 2.9 million this year. Bookings for the full year are strong. The load factor is 88%, and the per diem of GBP 327 is ahead of the same time last year, albeit lower than H1, reflecting the expected seasonality within the business. Bookings for 2025, 2026 are also in a good position, with strong load factors alongside growing per diems. Another significant milestone for the group was the travel business returning to profitability in the first half. This is the first time it's happened since the pandemic. Revenue grew 13% on a reported basis. However, on a like-for-like basis, so after reflecting the decision to cease our Titan River Cruise operations in the prior year, revenue increased 29%.
Part of this was due to 13% more customers traveling with us, with the remainder due to higher average revenues per customer. As you'll see from our booked position, revenue growth is set to continue into the second half of the year, with current full-year booked revenue 16% higher than prior year, with passengers 8% ahead. Booked revenue and passengers for next year are also currently ahead of the same time last year. Insurance broking continued to be impacted by a range of challenges, some market-wide and some specific to Saga. Mike will provide more context of these within his update. This meant that written insurance broking profitability, so before the impact of written to earned adjustment, of 11.6 million pounds, was significantly lower than the prior year, in line with the guidance we gave at last year-end.
The graph on this slide shows the material drivers of the movement. The motor contribution before overheads increased GBP 1.8 million year on year, driven by higher renewal margins, particularly for our three-year fixed price policies, as market-wide net rates reduced. Home was the most significant driver of the overall decline, with a GBP 6 million lower contribution as net rate inflation, which was more pronounced with our panel, led to a reduced competitiveness and 14% fewer policy sales. Private medical insurance was impacted by market-wide net rate inflation, which resulted in lower margins, particularly for renewing policies. The travel insurance market became particularly competitive in the first half, with many of our peers increasing their advertising and offering greater customer discounts to win business. This impacted our ability to compete, and as a result, new business volumes were impacted.
And offsetting some of this, the first half benefited from reduced operating expenses following the cost efficiencies implemented in the second half of last year. Turning to our insurance underwriting business, with the pricing action over the last couple of years continuing to earn through to the result, gross underlying revenue of GBP 102 million increased 30% when compared with last year. While the number of earned policies was 6% lower, average earned premiums were 39% higher. Our net current year COR also benefited from increased premiums, and the first six months of the year, this was 101.7%, 23 percentage points lower than the prior year. On a reported basis, you'll see that the COR also reduced, despite materially lower positive prior year development.
As a result, the business returned to a profit of GBP 1.9 million, compared with the loss of GBP 3.6 million in the year before. Debt reduction is a clear strategic priority for Saga, and I'll cover this in the next couple of slides. We made good progress in this space during the first half of the year. Net debt at 31 July 2024 was GBP 614.6 million. This was GBP 42.8 million lower than the position twelve months ago, and GBP 22.6 million lower than at the year-end. Available operating cash flow for the first six months was GBP 54.4 million, 37% lower than last year.
This was expected, given that the prior year included the one-off benefit of around GBP 20 million from the river cruise and travel moving from a 100% trust arrangement to a 70% escrow arrangement, alongside lower trading EBIT, EBITDA from insurance broking and no dividends payable from insurance underwriting. This was, however, partially offset by a 15% increase in ocean cruise available operating cash flow, driven by strong trading and some positive working capital phasing within that business. Many of you will be familiar with this graph, which shows the expected deleveraging profile of the group under a range of possible scenarios, represented by the faded area at the top of each bar. Mike touched on the fact that we were in exclusive discussions with Ageas for the sale of AICL and an insurance partnership.
However, as we have yet to sign documentation, these cash flows are not included here. Before we step into the detail, it's important to remember that in May 2024, we repaid the 150 million GBP bond through a combination of available cash and a 75 million GBP drawdown on the loan facility provided by Roger De Haan. While this didn't change net debt, it was a key milestone for the group. Looking ahead to the full year, we're expecting net debt to be slightly higher than at thirty-first of July. This is due to lower cash generation from the insurance business, some unwind of the working capital timing differences in the first half of the year, and continued repayments on our two cruise ship facilities, which total 31.1 million GBP.
At 31st of July, the group held available cash of GBP 86.3 million, which excluded the undrawn GBP 50 million RCF and the GBP 10 million remaining undrawn portion of the loan provided by Roger. We recently concluded discussions with our lenders, which resulted in certain amendments to the RCF facility, which provides us with greater financial flexibility. These included an extension to the facility's maturity from May 2025 to March 2026, alongside a revised definition of the leverage test, which used to exclude the Ocean Cruise business but will now be tested on a total group basis. The level of the covenant has been reset to six times until the maturity of the facility. So let's now turn to the full year. Ocean Cruise had a fantastic start to the year, and bookings for the full year are strong.
We do expect profitability in the second half to be impacted by the Spirit of Adventure Routine Dry dock for 18 nights later this month. In River Cruise, bookings for the full year are also ahead of the same point last year, and we expect the same from profitability. The usual seasonal trends will mean that profitability in the second half is likely to be lower than the first. Peak trading months for our travel businesses are typically August to October, and as a result, we expect that profitability will be meaningfully higher in H2 as we benefit from the operating leverage from higher revenue on the same cost base. In insurance broking, we expect the trends that we saw towards the end of the first half of the year to continue for the second half, and Mike is gonna touch on these shortly.
As insurance underwriting is now on a much stronger footing, we expect further underlying profitability growth in the second half of the year, alongside a continued reduction in the reported net combined operating ratio. What this all means for the group is that while we expect the mix has changed, with more weighting towards cruise and travel, we still expect the full year underlying PBT to be broadly consistent with that of 2023, 2024, in line with our previous guidance. And with that, I'll now hand back to Mike, who's gonna cover our strategic progress.
Thanks, Mark. I'll now turn to look at our broader group strategy, our progress in the first half of the year, and how the potential transaction with Ageas fits into that. As a reminder, this slide clearly sets out our strategic direction. Our vision is to become the most trusted brand for older people in the U.K., and we plan to deliver that through our growth plan, which is focused on three priorities. Those are: maximizing our core businesses, reducing debt through capital-light growth, and growing our customer base and deepening our customer relationships. Mark has already updated you on our progress with debt reduction, and I'll cover the progress we've made on maximizing our core businesses and customer engagement over the next few slides. As you will have seen from our results, the cruise business goes from strength to strength.
Not only did we report an outstanding first half performance, but we also expect this to continue into the full year and beyond. Mark has already been through the latest view of forward bookings, however, they're shown here again for reference. We already have a world-class cruise business that we're very proud of. However, we're continually exploring new ways to further enhance that proposition. Our VIP Chauffeur Service is just one of the things that sets us apart from our competitors, and this year, we made the offering accessible to more customers across the U.K., having expanded that service, and in 2025, we plan to extend that further nationwide. Excitingly, we also recently partnered with BBC Studios, meaning that celebrity guests and experts will join a selection of our cruises, making the customer experience even more memorable.
In River Cruise, as part of our strategy to align onboard experience with that of our ocean cruises, we continue to make enhancements to the guest service, including improvements to our menus, entertainment, and excursions. We continue to see robust demand for river cruise, with our current full-year bookings significantly ahead of the same point in the prior year. It's worth noting that the position for 2025, 2026 includes bookings on board for our new ship, Spirit of the Moselle, which joins the fleet next year. Momentum is continuing to build with our travel business, after having returned to a first half profit for the first time since the pandemic. As you can see from this slide, booked revenue for the full year is currently 16% ahead of that of last year, with the passenger numbers 8% ahead.
This position is supported by enhancements made to our website earlier this year, which improved the customer booking journey. Looking ahead to next year, it's a similar story with both revenue and passengers continuing to grow. In twenty twenty-five, we have plans to expand the number of departures we offer from regional airports, allowing us to bring our fantastic getaways to even more customers. As I touched on briefly earlier, our insurance underwriting business, Acromas Insurance Company Limited, AICL, experienced unprecedented claims inflation from mid-twenty twenty-two. Since then, we've been applying significant increases to net rates to reprice the motor book, and the earn through of this action is now being seen in the financial result. AICL is now in a strong position, and for the first time in eighteen months, reported an underlying profit, driven by a 39% increase in average earned premiums.
If we now turn to insurance broking, as we know, that market has been through a challenging few years. During the first six months, we've been taking action to invest in price and enhance our competitive position, and the results in motor have been encouraging. The left-hand column of this slide highlights some of the trends we saw in the first half of the year. While total motor policy sales were lower than in the prior year, this was in part due to fewer policies being available for renewal following the decline last year. New business sales were, in fact, ahead 6% on last year. Alongside this, market pricing fell faster than we anticipated. While this hampered the effectiveness of our pricing action, it also resulted in higher margins, particularly in our three-year fixed price products.
Conditions in the home market, however, continue to be challenging, and we anticipate the recovery cycle for that product to be further behind that which we are starting to now see in motor. Ongoing elevated levels of claims inflation, alongside some reduced competitiveness among our panel of underwriters, has been driving higher net rates for our home product. This has impacted the profitability of our three-year fixed price home policies and our competitive position, which resulted in fewer policies sold. The travel insurance market generally has seen a slowdown post the pandemic recovery, and we have felt a similar impact on our volumes in that increasingly competitive market. The PMI market is also going through a period of high inflation, and we have chosen to absorb some of this in our margins to make it mitigate its impact on volume.
We set out in April a number of measures we were taking to address the difficult markets we were operating in. I won't repeat them as they are on the screen, but those are seen in the middle column. To remind you, we expected these actions to impact margins and profitability in the near term as we sought to turn around volumes. Alongside these short-term measures, as you know, we have been exploring strategic partnerships which could support long-term growth in a capital-light way, while crystallizing value and reducing our debt. As I've already mentioned, we're in exclusive discussions with Ageas on a potential transaction that could support this ambition, and I'll cover that in more detail shortly. Clearly, this transaction and the move to a lower-risk business model would fit very well with our stated strategy.
Having summarized the trends we have seen in the first half of the year, let's now go through what this means for outlook. I'll start on the left-hand side with the trends we've seen in the first half. We've taken action to return AICL to profitability in the first half that places that business in a strong position. As such, we anticipate further improvement in AICL profitability as we look to the full year. Moving to our broking business, I mentioned the impact of having fewer motor and home policies coming into the year, which has had the inevitable flow through to policies written in year. The trends we have seen in motor are expected to continue, with further net rate reductions benefiting margins, particularly in our three-year fixed price motor product.
We do, however, anticipate some of this benefit to be offset by market price reductions, continuing to exceed those coming through from our panel members with a consequential impact on competitiveness. In home, we expect further net rate pressure to come through as a result of panel insurers responding to market inflation. Combined with the effects of the reduction in our panel numbers, these things will continue to impact our competitiveness and profitability. These factors mean that we expect the trends observed towards the end of the first half of the year to continue for the second half. On the right-hand side of the slide, we've noted for you the improving motor conditions we are experiencing, together with the mitigating actions we are taking to support profitability during this challenging phase of the cycle.
Firstly, we set up a new contact center in South Africa for key parts of our sales and service operation, complementing our U.K. team. This allows us to scale our operations more efficiently and in an agile way, in line with customer demand. We reviewed aspects of our broking price, working with motor panel insurers to improve their pricing models and developing new retail pricing models for our motor and home businesses. All these developments will improve our competitiveness. We also improved our digital marketing capability, making our spend more cost-efficient and enabling us to improve our cross-sell activity. So why does an insurance partnership make sense for Saga? At present, Saga is responsible for the entire value chain for motor and home, which includes sales, marketing, distribution, manufacturing, policy administration, and claims handling.
This is both complex and costly and involves the underwriting risk associated with an end-to-end insurance operation. Over the past few years, we've seen increasingly competitive insurance market conditions. While many of the drivers behind these conditions are cyclical, they have led to declining volumes and falling profitability. We've spoken before about where Saga's strengths lie, being in our strong brand and our customer reach, alongside our data and insights. We are, however, increasingly competing in insurance markets where, irrespective of this, scale and infrastructure are critical. While in the medium term, Saga could address its structural disadvantages in these areas, we believe there are good options to combine our strengths with insurance partners that already have these advantages. In that regard, Ageas, with its extensive expertise in insurance partnerships, was the obvious choice to partner with Saga.
The outcome would ultimately be a less complex, lower-risk business model, delivering the same high-quality products and services that customers enjoy today, but delivered in a more efficient and competitive fashion. On this slide, we look at the parameters of the proposed transaction in a bit more detail. Firstly, Ageas would acquire our insurance underwriting operations for a total consideration of GBP 67.5 million. Of course, the sale of AICL would be subject to regulatory approval, as you would expect. The twenty-year affinity partnership would move us to a lower risk and more efficient commission-based model for motor and home, with our PMI and travel insurance products remaining as they are today. The partnership would leverage the strength of Saga's great brand, marketing reach, and customer base, alongside Ageas' extensive and growing U.K. insurance operations.
Both Ageas and Saga have significant knowledge and experience in what it means to serve older people in the UK and, when combined, would create a powerful partnership designed to return our motor and home insurance operations to growth. Under the proposed arrangement, Ageas would become responsible for the manufacturing, servicing, claims handling, and administration for motor and home. Importantly, this would all be migrated onto their systems. Saga would continue to offer its motor and home insurance proposition through Ageas and be responsible for driving sales and marketing alongside a supportive role in future product development. Touching now on the economics, we would receive an upfront consideration of GBP 80 million. This may be supplemented with bonus considerations of up to GBP 30 million in 2026, and a further GBP 30 million in 2032, subject to certain volume targets being met.
Saga would then receive ongoing commission based on the motor and home gross premiums written. While Saga Money today is small in terms of financial contribution, there is a real opportunity to drive growth here, and we've spent the last year or so building a platform to deliver that. Following the launch of our new range of products towards the end of last year, our focus has been on building awareness, both of our product offering but also of general financial awareness across our customers. In support of this, we've made enhancements to our website, including the launch of Saga Money News, a section dedicated to providing our customers with useful tips and insights, empowering them to take control of their finances.
Alongside our increasingly popular Saga Money Newsletter, which now reaches 800,000 readers weekly, we've also launched a series of webinars, further promoting financial health across a range of products. These webinars are becoming extremely popular. This slide hones in on some of the progress we've made with our customer engagement strategy. The first contact point that many of our customers have with Saga is through our website, so we have taken steps to enhance each of our customer-facing websites. This included a full rebuild for Saga Money, including the launch of the Money News, enhancements to our booking, our bookings system across cruise and travel, and quote optimizations in insurance. The results to date have been exceptionally positive, with website visits in the year 21% higher than that of the prior year, with the number of unique visitors 10% higher.
As part of our data and cross-sell initiatives, we've improved the manner in which we ask customers for consent. For consent to contact them about our full range of products and services. We've continued to make progress in this space, and when comparing the number of consented individuals on our database year on year, we are now 16% higher. Many of you will know I'm very passionate about the Saga publishing business, and the magazine is central to that. Our magazine and newsletters are powerful tools to help us better engage with and understand our customers. I believe there is a real opportunity for us to materially grow the number of readers and also promote our products to an already highly engaged audience. The magazine is celebrating its 40th anniversary this year, which is a very proud moment for us.
Furthermore, we're increasing its accessibility with the print version now available to buy in selected stores across the UK and a more customer-friendly digital experience, and so to wrap up before we move on to Q&A. The group delivered a strong first half result, with underlying PBT more than three times greater than that of the same period last year, driven by outperformance across our cruise and travel businesses. We are now well positioned for growth. We have strong visibility over the trajectory for cruise and travel, both of which are now expected to continue growing, and we are in exclusive discussions with Ageas in relation to a strategic partnership, which is designed to return our insurance business to sustainable growth. On top of this, we're continuing to reduce our debt and have a clear deleveraging path, driven by continued strong business performance.
Alongside this, we continue to focus on driving great customer engagement, enhancing our data and insights, and ultimately growing the number of customers that we serve. Overall, we've had a positive first half to the year, making significant progress and hitting a number of key milestones. I'm excited about the future of Saga as we position the business for long-term sustainable growth. We'll now move to Q&A, first taking questions from the room and then those online. Thank you.
Suba, hi.
Hi, Suba, thanks for taking my questions. It's Nick Johnson from Deutsche Numis. First question is on the partnership deal. Just wondering what the £80 million payment does to the net cash position at go live? Is that accretive to net cash, or is there other offsets from movements as part of the transaction? Secondly, on travel gross margins, can see the growth in booked revenue. Just wondering if you can say what booked gross margins are relative to the current reported position. And then lastly, on policy sales and insurance, I think it was down 13% in the first half year on year? Just wonder what the sort of trajectory of that was through the first half period.
Are there any signs that the rate of decline in policy sales has been slowing in recent months, or has it been fairly consistent at minus 13%? Thanks.
Okay, I think what I'll do is, I'll perhaps take a stand back and just cover a little bit more ground on the Ageas partnership, just to bring that into context. And then, Mark, I'll ask you just talk about the upfront consideration and impact on cash. And perhaps you can have a think about the gross margins on travel question. And then, Steve, I'll ask you to just cover off the trajectory on insurance-
Yeah
... policies. Okay, so, just pausing on the partnership opportunity, clearly a very exciting opportunity. Need to be clear that it, it's not signed. This is ongoing discussions, but clearly discussions are going well, and we're excited about the opportunity. We think it, it's great for Saga, great for Ageas, and really importantly, great for our customers. So it brings together two great businesses. At Saga with its brand, its marketing reach, combines with Ageas, with its first-class insurance operations, experience. Probably, not everybody would know this for those that aren't close to the insurance market, but both businesses, Saga and Ageas, are well-known for delivering great service to customers over fifty. So, I think it's a, it's a match made in heaven in that respect.
And really importantly, Ageas has got strong expertise in delivering partnerships beyond anybody else, and so it really makes sense for us to be partnering with somebody with their credibility. It moves us to a lower-risk model. We benefit from lower operational costs, dramatically simplify our business and eliminate some of the complexities and risks that our current business model impose on us. And jointly, our capabilities, our brand and marketing reach, and their insurance operations means that we're very confident this is a proposition that will deliver growth for both sides. That's an important point to pause on, because clearly we have a strategy to address the things we've laid out already.
In the next 12 months, we'll be refinancing the business, and these are important considerations as we go into that refinance, so I think that's an important step towards that refinance as well, not least because it generates cash, but also because it delivers a lower risk, less complex business model going forward. The AICL sale will deliver 67.5 million GBP of consideration, and we expect that to complete in Q1 next year, so the cash flows would arrive around that time. The affinity partnership deal for motor and home moves us to a commission-based model, where we earn a percentage of GWP rather than the current model, and clearly, a significant proportion of our operational costs would transfer to Ageas at the point that we went live with this partnership.
So we take our brand and marketing reach, we take Ageas' scale and infrastructure, and together we've got a great opportunity. When we go live with the partnership, we would receive GBP 80 million consideration for the affinity partnership, that is, and we would then earn ongoing commission thereafter. We'd earn two bonus payments, GBP 30 million in 2026 and GBP 30 million in 2032. Those are subject to volume and performance targets. It's important to just lay out how we would get to the partnership in the event that we sign the deal. We would expect post-signing for it to take around about twelve months for the partnership to become effective. Clearly, both sides will have to work hard, jointly to build the platform upon which Ageas will then support our motor and home proposition.
So we expect that to be ready towards the back end of next year. It would then take a further 12 months to migrate all of the customers that are currently on our platform over to Ageas, because we would migrate those customers as and when policies renewed over the next 12 months. Clearly, new business would land on the Ageas platform straight away, and that's important when you think about the cash flows that Mark will come on to talk about in a moment. But just to summarize, we think the operational efficiencies and the growth opportunities here put us in a great position to both grow our profits once we are fully mature on their platform, and also deliver stable and growing volumes thereafter. But Mark, do you want to talk...
That's the context, 'cause I think it helps you with the operational flow, but perhaps you can talk about the Affinity Partnership cash flow.
I think there's probably two aspects to the cash flow. The first is the consideration from AICL, which, as Mike has said, flows on completion expected around Q1 next year. There are gonna be some deductions against that, so broadly, they total around 20 million GBP. Around half of that relates to property that we will keep within the Saga group and continue to use. And then the other half relates to effectively pension costs and transaction costs. For the affinity arrangement with Ageas, again, as Mike says, the 80 million GBP flows on go live of the contract. The existing business benefits from a negative working capital profile, where customers...
We receive customer money at the start of their policy and then remit the money to the underwriters between sort of 45 and 90 days later. As that transfers to Ageas, that benefit will unwind over the first three months of the contract, and broadly, the GBP 80 million will net off that working capital outflow.
Perhaps I'll take the insurance question, and then I'll come back to you, Mark, on travel, just to mix it up. So your question was around the 13% policy sales down in the year and the trajectory for the second half. I think it's important just to remember, though, that that 13%, significant proportion of that is driven by the fact we came into the year with fewer policies that clearly weren't then available to renew. So that's an important point to understand. I think it's a tale of two different markets in terms of motor versus home. We're clearly seeing recovery coming through in motor. It's competitive, but the direction of travel is positive in motor. Home is some way behind in terms of that recovery.
We're definitely seeing a difficult net rate environment. Steve, do you wanna just give a bit more color on that?
I think Mike's covered it pretty well. First quarter in motor, we did improve our competitiveness, and that was reflected in retention and conversion and scale. We then saw the direct and aggregator markets start to soften really quickly, and our panel always lags those distribution channels. But we've invested with our partners in risk price models and our retail price models, and as Mike mentioned earlier, our competitiveness should improve in the second half of the year. Home is more challenging because prices, net prices are increasing very rapidly, and our panel similarly is putting through more rate increases than the market. We believe that will stabilize.
And so our view is that trajectory that we've seen in the first half of the year, the -13%, won't be too much different than that, but home is an unknown at the minute.
Do you want to take the travel margins question?
Yeah, sure. So this relates to the SDG business, the land-based business. I think we've seen good progress in terms of the booking position. As that business has grown its booked position, we should see an improved margin come through.
Gross margin.
Yeah, gross margin, yeah. So that probably reflects a couple of things. One, just a bigger business. And then second is a sort of mix shift to higher, effectively higher cost products for customers, which will deliver higher margin.
I don't think there are any more questions from the room. So Emily, any questions online?
Yes, Mike, thank you. Ruchi Gupta from Western Asset Management asks, "Please, can you elaborate on the impact of the ongoing earnings, assuming the Ageas insurance partnership goes through, and would the earnings from the retail broking and underwriting businesses be deconsolidated?
So, no, we won't be deconsolidating the earnings in... Correct me if I'm wrong on that.
We will, the disposal, AICL will obviously-
Sorry, yeah
... be deconsolidated from the group at the point of completion. The earnings, we will continue to own SSL, and therefore, that will form part of the group's earnings. And we will reflect the commissions that we receive from Ageas within our insurance broking business.
Yeah, and in terms of the direction of travel, clearly, given the explanation I gave earlier, it's gonna take 12 months to go live. It's gonna take another 12 months to fully migrate across to Ageas. So you're talking about a couple of years before we're fully mature on the partnership. What we'd expect to see is profits and volumes benefit thereafter from the partnership. And clearly, we're in a lower risk, less complex business model benefiting our overall operations.
Thank you. Marcus Rivaldi from Jefferies asks, "How much of the 2026 maturing debt do you expect to refinance, given the need to repay Roger's facility and the consummation of the partnership, 80 million pounds via working capital?
Do you want to that?
Yeah, sure. So, look, I think the refinancing, if you stand back from what we've announced today, we've got an insurance business that is transitioning to a lower risk, less volatile earnings stream. And we've got a travel business and a money business which are growing strongly. So I think we feel pretty confident from where we are today in terms of refinancing the 2026 maturities.
I think it's worth just looking at that net debt chart that was on the screen earlier. That doesn't include the benefit of this partnership, should it go ahead. There's already significant deleveraging coming through, and I think the combination of the performance of all of our businesses and the partnership benefits we'd get there set us up well for those financing discussions.
Thank you. There are no further questions from online.
Right, well, pleasure to see you all today. Thank you for sticking with us, and we'll see you in due course.