Specialist tourism and insurance firm Saga warned that older Britons were cutting back on their travel plans because of Brexit as it lowered its profit forecast, sending its shares tumbling by up to 40% today. 

Saga, which serves the over-50s, said profit was liable to fall by as much as £75m this year as it faced margin pressure in its insurance business. 

It cut its final dividend to only one pence per share from six pence last year. 

To help revive its insurance business, Saga plans to offer home and motor policies with three-year fixed pricing and also cut prices for renewals. 

Bookings at the company's tour operations for the coming year were 3.4% lower than a year ago, Saga said, blaming uncertainty around Britain's exit from the European Union. 

This is a change of tone for Saga, whose travel business has been propped up by spending by affluent pensioners, protecting it from a hit to consumer spending power since Britain voted to leave the EU in June 2016. 

Customers had begun to get nervous about booking European holidays by the end of last year, with the trend becoming severe this year, chief executive Lance Batchelor said. 

Bookings for European holidays were about 8% lower. 

"Brexit is a factor and its dragging our holidays business down," he said. 

"If a solution is reached in the next few weeks then we would hope to see some uplift, although the peak holiday booking season is the spring, and the spring is rapidly passing," he said. 

While customers were still booking holidays to other destinations, Europe accounts for more than half of Saga's tour operations.

Budget airline EasyJet also warned this week that European travellers were holding off booking their summer holidays as they wait to see how Brexit will play out. 

Insurance prices have also been pressured by competition in the sector where companies such as Admiral, RSA Insurance, Direct Line and Hastings operate, forcing insurers to sacrifice gains on margins. 

The company warned that it expected underlying profit before tax for the 2019-20 year to be between £105-120m, down from £180m for the previous year ended in January. 

Saga reported a goodwill impairment of £310m related to its insurance business, meaning a loss before tax of £134.6m for 2018.