Over-50s holiday and insurance business Saga has issued a profit warning days after it told about 100 staff they will lose their jobs.

The Folkestone-based company blamed the administration of Monarch Airlines in October and expects to take a £2 million hit on its tour operations division.

It also said challenging trading in its insurance broking division meant expects underlying pre-tax profits for the year to the end of January 2018 to be down 5% on the previous year.

It expects overall pre-tax profits to grow between 1% and 2% when it reports its annual results in April.

The business expects to make annual savings of about £10 million from next year thanks to a review of its operating structure.

Yet it expects a one off cost of about £4 million as it implements the changes.

At the weekend, it emerged about 100 staff had been told, just before Christmas, that they were being made redundant.

The company employs more than 5,000 staff in offices in Folkestone, Ramsgate and Hastings.

In a statement, it said the job losses were part of a review to make the business “more efficient, customer focused and sustainable in the long term”.

In its trading update today, Saga said a strong performance in its motor insurance had been partially offset by a challenging trading environment in home and travel insurance.

Its holiday business “continues to trade well” and is expected to be “strongly ahead” of the prior year despite the impact of the Monarch Airlines closure.

The company plans to increase spending on attracting customers by £10 million from next year.

Chief executive Lance Batchelor said: “Against a backdrop of some challenging trading conditions in our final quarter, we continue to develop the business for the long term.

“With greater customer insight and a stronger business platform, now is the right time for Saga to invest in growing the customer base and the business.

“We are confident that the actions taken will ultimately see a better quality of earnings and profit growth across the business, supporting our progressive dividend policy for the benefit of our shareholders.”