Saga, the over-50s holiday and insurance group, is set to buy two new cruise ships in the next six years after reporting a growth in trading and pre-tax profits.

The Folkestone-based company has signed an agreement with Meyer Werft shipyard in Germany to build the liners, the first ready in 2019 with an option to build a second by 2021.

The group predicts a 43% increase in consumer spending on cruise holidays to £2.2 billion by 2020 and revealed a 140% growth in pre-tax profits to £101.3 million in the first half of this year.

Saga Cruises chief executive Robin Shaw said the first of the new ships will “retain an intimate small-ship feel, for fewer than 1,000 passengers” as well as a high crew to customer ratio and dining to accommodate all guests in a single sitting.

The group is set to pay its first dividend to shareholders – 2.2p a share – saying it is confident it will achieve full-year profit expectations and grow profits going forward.

Earnings before interest, taxes and other charges edged up 0.8% to £130.6 million, with operating cashflow up 0.9% to £139.1 million.

The business grew its number of motor insurance policies by 9.7% to more than 1.1 million in the first six months of the year, helped by its acquisition of motorbike insurance specialist Bennets this year.

Its customer database reached 11 million people in July.

The company, which has three offices in Folkestone and one in Ramsgate, aims to launch its financial planning business Saga Investment Services by the end of the year.

Group chief executive Lance Batchelor said: “I am pleased to report continued momentum in both our financial performance and in the implementation of the strategic initiatives that we announced earlier this year.

“In particular, we have successfully launched our motor panel, reached the decision to invest in replacing our shipping capacity and we are on track to launch Saga Investment Services.

“Continued strong cash generation has allowed us to further reduce our debt ratio and the solid performance in our core businesses of financial services and travel has meant positive growth in underlying profitability.”