This appetite for sea-faring holidays has prompted an expansion of its fleet by investing in new vessels, with one to be delivered in 2019 and the option for a second ship two years later.

Group trading profit in the first six months ticked up by 1pc to £117.5m, helped by an 11pc rise in earnings in the travel business and 2.6pc rise in profits from the motor insurance division.

Profit performance

The reported pre-tax profits increased from £42.2m to £101.3m in the first half, but the majority of that difference was explained by £50.8m in costs that were incurred last year when the company listed.

The cashflow was also strong and this reduced net debts to £536m at the end of July, from £596m a year earlier. A maiden interim dividend of 2.2p was declared, and the shares will go ex-dividend on October 7, with the dividend payable on November 19.

Saga has made a promising start to listed life and the shares are now up 11pc from the 185p price at which they listed in May last year.

Lance Batchelor, the chief executive, who was formerly boss of Domino’s Pizza, is confident on the outlook as more insurance groups join the Saga platform, meaning it can offer a wider range of policies, while the launch of Saga Investment Services is still on track for the end of the year.

Reasons for caution

Questor remains more cautious on the outlook. The majority of the revenue growth, and about half the earnings growth in the travel business, came from the £20m purchase of the online luxury tour operator Destinology in August last year.

The cruise business reported falling revenues and profits in the first-half, although Saga is still confident of profit growth for the full year.

The insurance business, which contributes nearly all, or about 90pc of the group’s total trading profit, is a tough sector to operate in right now, with low growth and fierce competition.

The core motor insurance underwriting business reported falling revenues and profits in the first half, but conditions in the market showed signs of improving, with prices rising in recent months. The motor insurance results were helped by a sharp rise in broking profits after the £26m purchase of the motorcycle insurer Bennetts earlier in the year.

The home insurance business was busier across the first half, with a 16pc increase in earnings, and this helped offset a difficult travel insurance market where earnings fell by 7pc.

Given the proportion of growth that came from acquisitions, the shares, trading on 15 times forecast earnings, still look overvalued. The balance sheet, with £536m in net debts against net assets of £1bn, exposes investors to more risk than comparable motor insurers such as Direct Line, where debt levels are less than half that amount.

The debt is a legacy of the previous private equity owners, CVC, Permira, and Charterhouse, who have reduced their stake from 72pc of the shares to 44pc during the past nine months, and who are more than likely to look for a complete exit within the next 12 months. Sell