Saga ripped off loyal customers, ruthless US hedge fund comes to rescue
Struggling Saga, which provides insurance for over-50's, has been on the rocks after it emerged loyal customers were being stung with rip-off prices.
But now a ruthless hedge fund has taken a 5% stake in the company and share prices are on the up again, by 13% to be precise.
However, the share price is still 75% down on what it was in 2015.
This is proof, if proof were needed, that punishing loyal customers is an absolutely terrible business move.
Saga was haemorrhaging customers after they clocked onto the fact that they were lured in with cheap deals, only to see their prices hikes year-on-year.
Because the over-50's age group aren't always the most tech-savvy, many of them just blindly renewed their cover online; so they didn't realise they were paying more money, or understand how to switch insurer online.
Essentially, this was a business model designed around extracting as much money as possible from the elderly - is it any wonder it all came crashing down?!
Step forward Elliott Management - a ruthless hedge fund run by Wall Street supremo Paul Singer, who could herald a campaign for major changes in the troubled British insurance and travel group.
Just for some context, Elliott Management once managed to seize an Argentinian warship due to the government's non-payment of debts.
Elliott's 5.1% stake emerged after Saga shares hit all-time lows last month, when bosses warned it was being pummelled by tough competition.
Saga is currently looking for a new chief executive after Lance Batchelor announced his departure last month.
The 55-year-old tried to rebrand the firm to focus on selling a wider range of products to its loyal customers.
Saga has seen a series of senior level departures in the past two years, including those of its chief financial officer and chairman.
Saga said: 'We have good and open relations with all shareholders and expect to be in contact with Elliott shortly.'
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