REG - Sabre Insurance Grp - Final Results
18/03/2025 07:00
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RNS Number : 0225B Sabre Insurance Group PLC 18 March 2025
Full-year results 2024
Profit doubled - Record premium income
- Profit before tax up 105.9% year-on-year
- Highest ever annual gross written premium - up 5% year-on-year
- Total dividend in respect of 2024 at 13.0p - up 44.4% on 2023
- Share buyback of £5m proposed
- Confident in delivery of our Ambition 2030 growth strategy
Sabre Insurance Group plc (the "Group", or "Sabre"), one of the UK's leading
motor insurance underwriters, reports its results for the year ended 31
December 2024.
SUMMARY OF RESULTS
Year to Year to Change
31 December 2024
31 December 2023
Gross written premium £236.4m £225.1m 5.0%
Net insurance margin 17.6% 10.6% 7.0 ppts
Net loss ratio 58.7% 61.6% (2.9) ppts
Combined operating ratio 84.2% 91.6% (7.4) ppts
IFRS Profit before tax £48.6m £23.6m 105.9%
IFRS Profit after tax £36.0m £18.1m 98.9%
Total dividend per share 13.0p 9.0p 44.4%
Return on tangible equity (annualised) 38.2% 22.7% 15.5 ppts
Solvency coverage ratio (pre-final and special dividend) 216.7% 205.3% 5.6 ppts
Solvency coverage ratio (post-final and special dividend) 171.2% 170.9% 0.2 ppts
Solvency coverage ratio (post-dividend and share buyback*) 163.1% N/A N/A
* = Share buyback subject to regulatory approval
Geoff Carter, Chief Executive Officer of Sabre, said:
"We are extremely pleased with our performance in 2024, demonstrating strong
cycle management over the past twelve months. We grew strongly in the first
half of the year when market conditions were attractive, and we maintained our
strict underwriting discipline despite a steep decline in market prices during
the second half.
This allowed Sabre to deliver a strong financial performance and robust
capital position for the business. We were delighted to announce our Ambition
2030 growth strategy in December last year and are encouraged by the early
progress we have made as we continue to invest in the growth of the business.
Loss ratios on core Motor Vehicle and Motorcycle are excellent and underpin
this strategy, while our complementary growth initiatives are progressing as
planned. Sabre Direct, our in-house Motorcycle brand, is being soft launched
in March, and core Motor Vehicle pricing tests are planned for H2 2025,
in-line with the timeline set out at our recent Capital Markets Event. We
continue to expect profit growth from Ambition 2030 to be weighted towards the
second half of the six-year period as these initiatives gain further traction
and momentum - complementing our core business.
As a result of our strong performance, we have proposed a significantly
increased dividend of 13p per share alongside our first share buyback
programme, through which we intend to distribute a further £5m of excess
capital during 2025. This is an evolution of our existing capital management
framework and reflects our view that the strategic objectives set out in
Ambition 2030 will generate, rather than require, additional capital.
While our plans to deliver sustainable growth will not be a "straight-line"
evolution, the next few years will be exciting as we build on the strong 2024
result and deliver sustainable medium-term growth in GWP, profit and
shareholder returns."
FINANCIAL HIGHLIGHTS
- Profit before tax more than doubled year-on-year - up 105.9% year-on-year
- Highest ever annual gross written premium - up 5% against 2023
- Dividend increased to 13.0p per share - up 44.4% year-on-year
- Announcing the Group's intention to launch a share buyback programme of
£5m, subject to regulatory approval
- Very strong capital position, at 171.2% post-dividend, and 163.2% after
dividend and proposed share buyback
STRATEGIC HIGHLIGHTS
- Underwriting discipline maintained - increased prices in 2024 in-line with
our view of high single-digit claims inflation
- Ambition 2030 growth strategy launched: initiatives on schedule and core
product price testing will begin in H2 2025
- Sabre Direct, our new direct, online-only motorcycle product is being soft
launched in March
- Core Motor Vehicle and Motorcycle products delivered target margins
supported by excellent loss ratios
- More cautious loss picks on 2024 accident year to reflect ongoing
inflationary environment
MARKET
- Clear signs of price reductions across the market in 2024 and into 2025
- Market now appears to have returned to a normal dynamic competitive
environment following more volatile pricing actions seen in recent years
- Slight softening of claims inflation, although still at high single-digit
levels
- Sabre is well-placed to manage through the soft part of the pricing cycle.
Having been strongly priced in 2024, we have headroom to optimise the
volume/margin mix, particularly given the slight softening in claims
inflation. We are comfortable with volumes being written and the margins
achieved at what may be the softest part of the cycle
- We continue to expect market prices will need to increase to reflect current
levels of inflation. Central assumption of market pricing increases later in
2025 as firms look to protect profit in 2026
- Any regulatory developments are expected to have a limited impact on Sabre
given the Group's underwriting profit-focussed business model
2025 OUTLOOK AND BEYOND
- Good volume momentum later in Q1 but against a very high growth comparative
period in 2024
- Anticipate strong underwriting performance and profitability in 2025 as
polices written at good margins in 2024 earn through
- Ambition 2030 growth strategy launched with initiatives on track. As
previously guided, there will be modest impact on premium in H2 2025 with the
more material contribution to premium coming through from 2026 onward
- Sabre will maintain underwriting discipline, whilst maximising absolute
profit as market pricing finds equilibrium, and expect 2025's margin to be
within our target 18% to 22% range
ENQUIRIES
Sabre Insurance
Group
0330 024 4696
Geoff Carter, Chief Executive Officer
Adam Westwood, Chief Financial Officer
Teneo
020 72602700
James Macey White
Ffion Dash
ANALYST PRESENTATION
Event Title: Sabre Insurance - Full Year Results 2024
Time Zone: Dublin, Edinburgh, Lisbon, London
Start Time/Date: 09:30 Tuesday, March 18, 2025
Duration: 60 minutes
Webcast: https://stream.brrmedia.co.uk/broadcast/67b4b6a4118fdd71342f2942
Location Phone Type Phone Number
United Kingdom, Local Local 033 0551 0200
Password, if prompted Quote Sabre Insurance when prompted by the operator
Please join the event 5-10 minutes prior to scheduled start time. When
prompted, provide the confirmation code or event title.
A replay will be made available on the Sabre website following the conclusion
of the presentation.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014.
Webcast: https://stream.brrmedia.co.uk/broadcast/67b4b6a4118fdd71342f2942
Location Phone Type Phone Number
United Kingdom, Local Local 033 0551 0200
Password, if prompted Quote Sabre Insurance when prompted by the operator
Please join the event 5-10 minutes prior to scheduled start time. When
prompted, provide the confirmation code or event title.
A replay will be made available on the Sabre website following the conclusion
of the presentation.
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014.
DIVIDEND TIMETABLE
Ex-dividend date: 17 April 2025
Record date: 22 April 2025
Payment date: 4 June 2025
FORWARD-LOOKING STATEMENTS DISCLAIMER
Cautionary statement
This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts and involve
predictions. Forward-looking statements may and often do differ materially
from actual results. Any forward-looking statements reflect Sabre's current
view with respect to future events and are subject to risks relating to future
events and other risks, uncertainties and assumptions relating to Sabre's
business, results of operations, financial position, prospects, growth or
strategies and the industry in which it operates.
Forward-looking statements speak only as of the date they are made and cannot
be relied upon as a guide to future performance. Save as required by law or
regulation, Sabre disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations or to
reflect events or circumstances after the date of this announcement.
The Sabre Insurance Group plc LEI number is 2138006RXRQ8P8VKGV98.
Chief Executive Officer's Review
"We have delivered some excellent financial results for the year - a doubling
of profit compared to the previous year and growth of over 5%."
Record premium levels, profit doubled and attractive capital returns
In our 2023 Report we outlined our key expectations for 2024:
- Business we wrote in 2023 would earn through at attractive
margins, delivering an increase in profitability in 2024.
- Market pricing discipline would hold, allowing us to grow further.
- We would continue to develop insurer-hosted pricing ("IHP"),
allowing us to deliver increasingly sophisticated pricing.
- Expected to add new Motorcycle distribution partners.
- Continued focus in 2024 would be on 'below the radar' developments
as we continued to invest in our pricing and claims capabilities to maintain
our position as a leading motor insurer.
I am pleased that many of these happened as we hoped. Business written in 2023
and 2024 did indeed earn through at attractive margins, market pricing
discipline held in the first half of the year, facilitating good growth. We
have been able to put our IHP development into context, alongside our
motorcycle development plans, as part of our Ambition 2030 strategy. More
details on these are provided on pages 14 to 17 of the Annual Report.
Reflections on 2024
2024 was a considerably more straight forward year than the recent, turbulent
past. In the past year we have been able to focus fully on developing the
business rather than having to deal with the consequences of generational
shocks such as COVID or extraordinary increases in cost inflation.
We have delivered some excellent financial results for the year - a doubling
of profit before tax compared to the previous year and growth of over 5%
despite market pricing softening in H2. This is clear evidence of a strong
return to form for the business.
Within this result we are particularly pleased with the core Motor Vehicle
performance at a 56.1% loss ratio and that Motorcycle is now delivering the
planned performance at a 58.6% loss ratio.
While Taxi is much improved there are further improvements that are required
if this is to be a long-term product for us.
We have continued to take a differentiated approach compared to the wider
market. We deployed rate increases in line with our view of ongoing high
single digit claims inflation, contrasting to a double-digit rate decrease
across the market. This gives us confidence that strong financial performance
is underpinned well into the medium term.
We were delighted to bring our growth plans together in our Ambition 2030
strategy and to showcase the excellent progress the Sabre team has made in
putting in place the supporting technology stack. Core to the ambition is our
intention to deliver a profit after tax in excess of £80m in 2030. Full
details can be found on our website
(https://sabreplc.co.uk/investors/results-centre/). Some key elements of this
strategic evolution are:
- Flexing margins in a limited and controlled way on our existing
core non-standard Motor Vehicle book to maximise absolute profit in different
market environments.
- Drive growth by optimising the benefits of our IHP development by
additionally targeting a slightly lower risk customer segment at an
appropriately modestly reduced margin.
- Expand our Motorcycle distribution through bringing on new
partners and the launch of a new direct brand.
Nothing here will undermine our ongoing commitment to underwriting and pricing
discipline. Growth will not be linear and will accelerate/decelerate in
different parts of the market cycle, while tracking towards our 2030 target.
We will remain true to our core belief: "Profitability is the target, volume
is an output".
Customers
We have continued to focus on delivering positive customer outcomes in several
ways, which we believe also positions us well in the context of current
regulatory focus.
Our pricing approach has always been to price all customer segments to a
consistent margin requirement, and to minimise our dependency on ancillary
product sales. To support this we have ensured our margins on all ancillary
products are now in line with the margins we earn on the core product. The
margin we earn on providing premium finance to our direct customers is
consistent with this.
Much effort has been expended on enhancing our direct customer service
offering, most specifically on the usability of our online customer service
portal. This will improve the customer experience while reducing cost,
allowing us to reduce premiums.
Regulatory
We believe we have a low exposure to current areas of regulatory focus.
Ancillary income is not a material part of profits and, as outlined above, we
have ensured margins are modest compared to market norms and in line with our
core products.
The change during the year to the Ogden discount rate, used in the valuation
of large value personal injury claims, was welcome. While the direct financial
impact is modest it should be helpful for future reinsurance costs.
Finally, the team has made excellent progress on the emerging operational
resilience requirements.
Market
The UK motor insurance market remains a competitive and dynamic environment
that delivers good value for the customers. We believe the market is still
seeking equilibrium in pricing - it appears that some insurers believe that
the pendulum swung too far with rate increases in late 2023/early 2024.
However, it is clear to us that this has now swung too far the other way, with
the continued price decreases later in 2024.
Our current view is that ongoing claims inflation has softened slightly as we
have come through the year-end, but remains elevated. Our current best
estimate is mid to high single-digit. Given this, our central assumption is
that market rates will remain suppressed in H1, before increasing in H2 to
protect 2026/27 results. Our approach will be unchanged - charge the
appropriate price for our margin requirements. Our Ambition 2030 strategy
outlines how we will flex slightly in different market conditions.
Capital and dividend
Our financial results have resulted in another period of strong capital
generation. This performance has allowed us to declare a total dividend for
the year of 13.0p per share, which is an increase of 44.4% on prior year
total dividend of 9.0p per share.
I have also been pleased to announce our intention to execute our first share
buy-back in 2025, through which we expect to return an additional £5m of
excess capital to shareholders. As we set out in our 'Ambition 2030' strategy,
our medium-term growth plans do not require this capital to be retained within
the business.
People
Our success would clearly not be possible without the dedicated support of the
whole Sabre team. We seek to recognise this hard work by maintaining a
generous reward approach, including paying inflation-linked pay rises, annual
performance-related and Christmas bonuses, employee share plans and free
breakfasts. Moreover, we seek to treat people as individuals and to provide
appropriate support where required.
We continue to operate a hybrid work approach with people expected to be in
the office a minimum of three days a week (many are in much more). This works
well for us, our people and our customers.
Environmental, Social and Governance ("ESG")
We continue to build on our ESG programme, with continued efforts across the
firm to understand, monitor and minimise our impact on the environment. We
have robust Governance in place across the firm and consideration of all
stakeholders is taken into account when making key decisions. With people
being core to Sabre's success, we strive to make Sabre a welcoming and
rewarding workplace for all and value greatly the range of contributions that
can be made through employing a diverse workforce.
Outlook for 2025
We anticipate another strong year for profitability across Motor Vehicle and
Motorcycle. Total gross written premium levels will be influenced by market
dynamics, but we expect we will continue to write a good level of business.
After a relatively slow start we have seen increasing momentum in later Q1 and
are comfortable with the volume of business we are currently writing.
In the second half of 2025 we will start to roll out our Ambition 2030 pricing
developments - we described at our recent Capital Markets Event that this will
be on a cautious, staged basis. We would not expect a meaningful financial
impact this year, but certainly do expect this to enhance growth in profit
into the medium term.
We are genuinely excited by our future prospects, and I would like to extend
my thanks to all my colleagues and the Board for support in these endeavours.
Geoff Carter
Chief Executive Officer
17 March 2025
Chief Financial Officer's Review
"Delivering top and bottom line growth while staying true to our core
strengths."
Highlights
2024 2023
Gross written premium* £236.4m £225.1m
Net insurance margin* 17.6% 10.6%
Net loss ratio* 58.7% 61.6%
Combined operating ratio* 84.2% 91.6%
IFRS profit before tax £48.6m £23.6m
IFRS profit after tax £36.0m £18.1m
Solvency coverage ratio (pre-dividend)* 216.6% 205.3%
Solvency coverage ratio (post-dividend)* 171.1% 170.9%
Return on tangible equity* 38.2% 22.7%
* = Alternative performance metrics are reconciled to IFRS reported figures on
pages 208 to 212 of the Annual Report and Accounts
Gross written premium
£236.4m
2023 | £225.1m
IFRS profit before tax
£48.6m
2023 | £23.6m
Executive summary
Sabre's financial performance in 2024 represents a strong return to form, with
profit before tax - which remains the Group's primary metric and key focus for
Ambition 2030 - having more than doubled since 2023, a result of higher
written premium in 2023 and 2024 earning through and an improved net insurance
margin resulting from stronger underwriting performance. Overall, we are just
a fraction of a percentage point outside the Group's recently restated net
insurance margin target of 18%-22%, with the year's strong improvement in
current-year performance result being slightly offset by a small increase in
prior-year claims costs.
This result is a great stepping-stone towards the Group's ambitious
medium-term target - to reach a profit before tax of at least £80m in 2030.
Alongside this, Sabre has generated significant capital and increased the
total dividend payout by 44.4% while maintaining a very strong balance sheet,
being well positioned to deal with whatever market conditions prevail during
2025 and to keep delivering market-leading profitability.
The Group has announced its intention to execute its first share buyback
programme, worth around £5m, in 2025, subject to regulatory approval. This is
an effective use of excess capital and underlines the Board's confidence in
the Group's balance sheet strength and its capital-light strategic plan.
Insurance revenue
2024 2023
Gross written premium £236.4m £225.1m
Movement in unearned element of liability for remaining coverage £7.2m (£40.6m)
Gross earned premium £243.6m £184.5m
Customer instalment income £4.5m £3.7m
Insurance revenue £248.1m £188.2m
Reinsurance expense (£33.6m) (£28.5m)
Net insurance revenue £214.5m £159.7m
Gross written premium by product
Motor vehicle £209.9m £199.0m
Motorcycle £9.7m £11.8m
Taxi £16.8m £14.3m
Policy counts by product
Motor vehicle ('000) 217 234
Motorcycle ('000) 38 44
Taxi ('000) 11 12
Headline premium growth of 5.0% across 2024 was weighted towards the first
half of the year, with growth being allowed to slow as market conditions
became less favourable from Q2 onwards, representing a cyclical softening of
market prices. Having achieved sufficient growth in the first half, Sabre was
able to avoid chasing market pricing down in the second half, preserving
strong margins across the book while accepting a dip in premium and policy
volumes, exactly in line with the Group's strategy.
The Motorcycle business remained healthy during 2024, with the last policies
written by the Group's previous distribution partner having completely run off
during the year, the gap in policies being completely filled by the Group's
other distribution partner.
The Taxi book remained relatively stable, with further underwriting
enhancements allowing a core of profitable business to be written, while not
yet being ready to accelerate growth in the product given continued
under-pricing in the Taxi segment.
The 'unearned' element of the liability for remaining coverage' represents the
element of written premium covering future periods, which has the effect of
smoothing gross earned premium ("GEP") (and therefore insurance revenue) over
time, so where there is a big change in written premium, insurance revenue
will change more slowly. Customer instalment income reflects the interest
income charged on instalment policies and remains a relatively small
percentage of the Group's total insurance revenue.
Insurance expense
2024 2023
Undiscounted gross claims incurred £136.4m £127.6m
Discounting ((1)) (£6.9m) (£8.2m)
Directly attributable expenses £7.0m £6.1m
Amortisation of insurance acquisition costs £18.2m £14.1m
Insurance service expense £154.7m £139.6m
Undiscounted reinsurance recoveries £42.0m £38.3m
Discounting ((1)) (£8.4m) (£9.8m)
Net insurance expense £188.3m £168.1m
Current-year net loss ratio ((2)) 58.2% 64.3%
Prior-year net loss ratio ((2)) 0.5% (2.7%)
Financial-year net loss ratio 58.7% 61.6%
Net loss ratio by product
Motor vehicle 56.1% 55.0%
Motorcycle 58.6% 73.3%
Taxi 95.7% 117.1%
Discounted ratios
Discounted financial-year net loss ratio 55.4% 56.3%
(1) Includes discounting on Period Payment Orders ("PPOs")
(2) Calculation of undiscounted net loss ratio allows for the impact
of discounting on long-term non-life annuities, Periodic Payment Orders
("PPOs"), consistent with presentation under IFRS 4
2024 saw a continuation of the strong loss ratio improvement trends from 2023,
with Motor Vehicle continuing to perform at a loss ratio in line with our
target and Motorcycle and Taxi both improving, albeit from a weaker position
in the previous year. The current year loss ratio, which is a measure of the
claims experience on policies which were in force during the year has improved
across the board, with an overall improvement of 6.1% The prior year loss
ratio has shown a small outward movement in 2024 - this means that the amount
held for claims on the books at the end of the prior year has increased a
little, whereas in 2023 it decreased (as is usual). This reflects some adverse
experience on open claims within the year and we expect prior year experience
to return to normal negative loss ratios in future years.
Directly attributable and acquisition costs have increased by c24.8% , which
is primarily driven by a proportionate increase in insurance revenue, given
these costs are mostly broker commissions and other directly attributable
variable costs.
Other operating expenditure
2024 2023
Employee expenses £15.4m £13.9m
IT expenses £6.8m £6.0m
Industry levies £6.0m £5.9m
Policy servicing costs £3.2m £2.5m
Other operating expenses £3.9m £4.4m
Before adjustment for directly attributable claims expenses £35.3m £32.7m
Reclassification of directly attributable claims expenses (£7.0m) (£6.1m)
Total operating expenses £28.3m £26.6m
Expense ratio 25.5% 30.0%
The expense ratio has improved significantly, by 4.5ppts, in 2024. This is
mainly due to the recovery in expense leverage following a period of low
premium in the preceding years. Absolute expenses have increased by
approximately 8.0%, which is in part due to the impact of variable expenses,
such as policy administration costs, certain data costs and levies. It is also
a consequence of the high levels of inflation during the past three years,
with the impact of high inflation not being felt immediately as contracts are
renewed at staggered intervals.
Total staff costs, which is Sabre's largest category of expense, has increased
by 10.8% year-on-year. This is partly a function of a 4.3% increase in average
full-time equivalent headcount and an average pay increase of just over 6.7%.
Staff bonuses were increased by approximately 26% in 2024, returning closer to
'normal' (pre-2022) levels, and executive bonuses, which are paid from a pool
calculated as a proportion of profit before tax, also increased (see pages 105
to 117 of the Annual Report for more details of executive remuneration).
Other income
2024 2023
Other technical income £0.7m £1.2m
Interest revenue calculated using the effective interest method £7.9m £3.8m
Insurance finance income/(expense) for insurance contracts issued (£8.4m) (£10.2m)
Reinsurance finance income/(expense) for reinsurance contracts held £3.7m £3.6m
Net insurance financial result (£4.7m) (£6.6m)
Other technical income, related to non-insurance revenue earned such as
product fees (excluding instalment interest) and commissions, remains a very
small element of the Group's income. Interest revenue reflects the yield
achieved across the Group's investment portfolio. The significant increase in
interest revenue reflects the higher yield gained through reinvesting matured
assets as well as an increase in the total assets invested during the year.
The Group's investment strategy remains unchanged, being invested in a
low-risk mix of UK Government bonds, other government-backed securities and
diversified investment-grade corporate bonds.
Fair value gains and losses are taken through other comprehensive income and
largely reflect market movements in the yields of risk-free and low-risk
assets. We do not expect to realise any of these market value movements within
profit, as we continue to hold invested assets to maturity.
Insurance and reinsurance finance income/(expense) reflects the run-off of
discounting applied to insurance liabilities under IFRS 17. As cash flows move
towards settlement, the total level of discounting is reduced and this
reduction is reflected here. The slight reduction in this cost in 2024
reflects the discount rates applied at the point claims were incurred and is a
function of the run-off patterns applied to claims costs when they are
incurred.
Taxation
In 2024 the Group recorded a corporation tax expense of £12.6m (2023:
£5.5m), with an effective tax rate of 25.9%, (2023: 23.5%). The increase in
effective tax rate is primarily due to the increase in the UK rate of
corporation tax in April 2023. It is slightly higher than the current 25% UK
rate of corporation tax because of a small (£0.6m) tax charge in respect of
prior periods, related to the implementation of IFRS 17. The Group has not
entered into any complex or unusual tax arrangements during the year.
Earnings per share
2024 2023
Basic earnings per share 14.48 7.27
Diluted earnings per share 14.37 7.20
Basic earnings per share of 14.48p is proportionate to profit after tax.
Diluted earnings per share is similarly proportionate to profit after tax,
taking into account the potentially dilutive effect of the Group's share
schemes. No shares have been issued or cancelled during the year.
Cash and investments
2024 2023
Government bonds £112.8m £107.0m
Government-backed securities £103.3m £81.9m
Corporate bonds £95.1m £75.7m
Cash and cash equivalents £31.3m £35.1m
Total cash and investment holdings have increased given the growth in the
business across 2024. The level of cash retained reflects Sabre's normal
liquidity requirements and there has been no change in the overall investment
strategy, with gilts and government-backed assets remaining the majority of
the portfolio, with c.30% of invested assets held in investment-grade
corporate bonds.
Insurance liabilities
2024 2023
Gross insurance liabilities £397.9m £374.8m
Reinsurance assets (£160.8m) (£166.7m)
Net insurance liabilities £237.1m £208.1m
The Group's net insurance liabilities continue to reflect the underlying
profitability and volume of business written. Generally, the gross insurance
liabilities are more volatile and impacted by the receipt and settlement of
individually large claims. The level of net insurance liabilities held remains
broadly proportionate to the volume of business written along with the
inflation applied to claims costs.
Leverage
The Group continues to hold no external debt. All of the Group's capital is
considered Tier 1 under the UK regulatory regime. The Directors continue to
hold the view that this allows the greatest operational flexibility for the
Group.
Dividends and solvency
2024 2023
Interim ordinary dividend (paid) 1.7p 0.9p
Final ordinary dividend (proposed) 8.4p 4.2p
Total ordinary dividend (paid and proposed) 10.1p 5.1p
Special dividend (proposed) 2.9p 3.9p
Total dividend for the year (paid and proposed) 13.0p 9.0p
The dividend proposed is in line with the Group's current policy to pay an
ordinary dividend of 70% of profit after tax, and to consider passing excess
capital to shareholders by way of a special dividend.
Along with these financial results, the Group has announced an increase in the
maximum ordinary dividend to 80% of profit after tax, effective from 2025
onwards. This allows for an ordinary dividend much closer to historical levels
of distribution.
Excluding the capital required to pay this dividend, the Group's SCR coverage
ratio at 31 December 2024 is 171.1% .
We have announced this year that the Group intends to operate its first share
buyback programme in 2025, distributing around £5m of excess capital, subject
to regulatory approval. The Group's year-end SCR coverage ratio, excluding the
capital required to fund this buyback, is 163.1%.
Adam Westwood
Chief Financial Officer
17 March 2025
Financial Statements
Consolidated Profit or Loss Account
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
Insurance revenue 248,131 188,246
Insurance service expense (154,661) (139,497)
Insurance service result before reinsurance contracts held 93,470 48,749
Reinsurance expense (33,617) (28,506)
Amounts recoverable from reinsurers for incurred claims 13,026 31,532
Net (expense)/income from reinsurance contracts held (20,591) 3,026
Insurance service result 72,879 51,775
Interest income on financial assets using effective interest rate method 4.5 7,926 3,775
Total investment income 7,926 3,775
Insurance finance expense from insurance contracts issued 3.8 (8,392) (10,170)
Reinsurance finance income from reinsurance contracts held 3.8 3,714 3,588
Net insurance financial result (4,678) (6,582)
Net insurance and investment result 76,127 48,968
Other income 7 740 1,232
Other operating expenses 8 (28,305) (26,587)
Profit before tax 48,562 23,613
Income tax expense 10 (12,601) (5,548)
Profit for the year attributable to ordinary shareholders 35,961 18,065
Basic earnings per share (pence per share) 19 14.48 7.27
Diluted earnings per share (pence per share) 19 14.37 7.20
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
Profit for the year attributable to ordinary shareholders 35,961 18,065
Items that are or may be reclassified subsequently to profit or loss
Unrealised fair value gains on debt securities 4.5 3,774 9,284
Tax charge (944) (2,149)
Debt securities at fair value through other comprehensive income 2,830 7,135
Insurance finance income/(expense) from insurance contracts issued 3.8 6,852 (12,436)
Reinsurance finance (expense)/income from reinsurance contracts held 3.8 (5,880) 5,432
Tax credit 395 1,550
Net insurance financial result 1,367 (5,454)
Items which will not be reclassified to profit or loss
Revaluation gains/(losses) on owner-occupied properties 9 - (800)
Income tax relating to items that will not be reclassified - (31)
- (831)
Total other comprehensive income for the year, net of tax 4,197 850
Total comprehensive income for the year attributable to ordinary shareholders 40,158 18,915
Consolidated Statement of Financial Position
As at 31 December 2024
2024 2023 ((1))
Notes £'k £'k
Assets
Cash and cash equivalents 4.1 31,314 35,079
Debt securities at fair value through other comprehensive income 4.2 311,184 264,679
Receivables 4.3 32 87
Current tax assets 997 1,438
Reinsurance contract assets 3.1 160,758 166,726
Property, plant and equipment 9 4,204 4,388
Deferred tax assets 11 265 688
Other assets 13 778 774
Goodwill 14 156,279 156,279
Total assets 665,811 630,138
Liabilities
Payables 5 6,995 9,700
Insurance contract liabilities 3.1 397,924 374,839
Other liabilities 2,546 3,187
Total liabilities 407,465 387,726
Equity
Issued share capital 15 250 250
Own shares 16 (3,112) (3,121)
Merger reserve 48,525 48,525
FVOCI reserve (3,064) (5,894)
Insurance/Reinsurance finance reserve (1) 3,606 2,239
Share-based payments reserve 2,620 2,686
Retained earnings (1) 209,521 197,727
Total equity 258,346 242,412
Total liabilities and equity 665,811 630,138
(1) Opening balance has been restated - Refer to Note 3.9
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Own shares Merger reserve FVOCI reserve Revaluation reserve Insurance/ Share-based payments reserve Retained earnings (1) Total equity
Reinsurance
finance reserve (1)
£'k £'k £'k £'k £'k £'k £'k £'k £'k
Balance as at 31 December 2022, as previously reported 250 (2,810) 48,525 (13,029) 831 10,244 2,407 182,570 228,988
Discounting model refinements ((1)) - - - - - (2,551) - 2,551 -
Restated balance as at 1 January 2023 ((1)) 250 (2,810) 48,525 (13,029) 831 7,693 2,407 185,121 228,988
Profit for the year attributable to the owners of the Company - - - - - - - 18,065 18,065
Total other comprehensive income for the year, net of tax: Items that are or - - - 7,135 - (5,454) - - 1,681
may be reclassified subsequently to Profit or Loss
Total other comprehensive income for the year, net of tax: Items which will - - - - (831) - - - (831)
not be reclassified to Profit or Loss
Total comprehensive income/(expense) for the year - - - 7,135 (831) (5,454) - 18,065 18,915
Share-based payment expense - - - - - - 279 1,007 1,286
Net movement in own shares - (311) - - - - - - (311)
Dividends paid - - - - - - - (6,466) (6,466)
Restated balance as at 31 December 2023 ((1)) 250 (3,121) 48,525 (5,894) - 2,239 2,686 197,727 242,412
Profit for the year attributable to the owners of the Company - - - - - - - 35,961 35,961
Total other comprehensive income for the year, net of tax: Items that are or - - - 2,830 - 1,367 - - 4,197
may be reclassified subsequently to Profit or Loss
Total comprehensive income/(expense) for the year - - - 2,830 - 1,367 - 35,961 40,158
Share-based payment expense - - - - - - (66) 182 116
Net movement in own shares - 9 - - - - - - 9
Dividends paid - - - - - - - (24,349) (24,349)
Balance as at 31 December 2024 250 (3,112) 48,525 (3,064) - 3,606 2,620 209,521 258,346
(1) Opening balance has been restated - Refer to Note 3.9
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 48,562 23,613
Adjustments for:
Depreciation of property, plant and equipment 9 184 140
Share-based payment - equity-settled schemes 16 1,607 1,606
Investment return (6,458) (3,131)
Expected credit loss 4.4 5 6
Impairment loss on owner-occupied buildings - 333
Operating cash flows before movements in working capital 43,900 22,567
Movements in working capital:
Change in receivables 55 (80)
Change in reinsurance contract assets 88 (24,340)
Change in other assets (4) 504
Change in payables (2,705) 4,592
Change in insurance contract liabilities 29,937 48,062
Change in other liabilities (641) 1,804
Cash generated from operating activities before investment of insurance assets 70,630 53,109
Taxes paid (12,286) (4,658)
Net cash generated from operating activities before investment of insurance 58,344 48,451
assets
Interest and investment income received 5,248 3,818
Proceeds from the sale and maturity of invested assets 98,656 24,089
Purchases of invested assets (140,180) (51,018)
Net cash generated from operating activities 22,068 25,340
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 9 - (1,665)
Net cash used by investing activities - (1,665)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (1,484) (632)
Dividends paid 12 (24,349) (6,466)
Net cash used by financing activities (25,833) (7,098)
Net (decrease)/increase in cash and cash equivalents (3,765) 16,577
Cash and cash equivalents at the beginning of the year 35,079 18,502
Cash and cash equivalents at the end of the year 31,314 35,079
Notes to the Consolidated Financial Statements
For the year ended 31 December 2024
Corporate information
Sabre Insurance Group plc is a company incorporated in the United Kingdom and
registered in England and Wales. The address of the registered office is Sabre
House, 150 South Street, Dorking, Surrey, RH4 2YY, England. The nature of the
Group's operations is the writing of general insurance for motor vehicles,
including taxis and motorcycles. The Company's principal activity is that of a
holding company.
1. Accounting Policies
The principal accounting policies applied in the preparation of these
Consolidated and Company Financial Statements are included in the specific
notes to which they relate. These policies have been consistently applied to
all the years presented, unless otherwise indicated.
1.1. Basis of preparation
The financial statements of the Group have been prepared in accordance with
UK-adopted international accounting standards, comprising International
Accounting Standards ("IAS") and International Financial Reporting Standards
("IFRS"), and the requirements of the Companies Act 2006. Endorsement of
accounting standards is granted by the UK Endorsement Board ("UKEB").
The financial statements are prepared in accordance with the going concern
principle using the historical cost basis, except for those financial assets
and owner-occupied properties that have been measured at fair value. The
preparation of the financial statements necessitates the use of estimates,
assumptions and judgements that affect the reported amounts in the Statement
of Financial Position and the Profit or Loss Account and Statement of
Comprehensive Income. Where appropriate, details of estimates are presented in
the accompanying notes to the Consolidated Financial Statements.
As the full impact of climate change is currently unknown, it is not possible
to consider all possible future outcomes when determining the value of assets,
liabilities and the timing of future cash flows. The Group's view is that any
reasonable impact of climate change would not have a material impact on the
valuation of assets and liabilities at the year-end date.
The financial statements values are presented in pounds sterling (£) rounded
to the nearest thousand (£'k), unless otherwise indicated.
The Group presents its Statement of Financial Position broadly in order of
liquidity. An analysis regarding recovery or settlement within 12 months after
the reporting date (current) and more than 12 months after the reporting date
(non-current) is presented in the respective notes.
Financial assets and financial liabilities are offset and the net amount
reported in the Statement of Financial Position only when there is a legally
enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the assets and settle the liability
simultaneously.
1.2. Going concern
The Consolidated Financial Statements have been prepared on a going concern
basis. The Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for at least 12 months from the date the
Directors approved these Financial Statements and that therefore it is
appropriate to adopt a going concern basis for the preparation of the
Financial Statements. In making their assessment, the Directors took into
account the potential impact of the principal risks that could prevent the
Group from achieving its strategic objectives.
The assessment was based on the Group's Own Risk and Solvency Assessment
("ORSA"), which brings together management's view of current and emerging
risks, with scenario-based analysis and reverse stress testing to form a
conclusion as to the financial stability of the Group. Consideration was also
given to what the Group considers its principal risks which are set out in the
Principal Risks and Uncertainties section on pages 24 to 33 of the Strategic
Report of the Annual Report. The assessment also included consideration of any
scenarios which might cause the Group to breach its solvency requirements
which are not otherwise covered in the risk-based scenario testing.
We have assessed the short, medium and long-term risks associated with climate
change. Given the geographical diversity of the Group's policyholders within
the UK and the Group's reinsurance programme, it is highly unlikely that a
climate event will materially impact Sabre's ability to continue trading. More
likely is that the costs associated with the transition to a low-carbon
economy will impact the Group's indemnity spend, as electric vehicles are
currently relatively expensive to fix. We expect that this is somewhat, or
perhaps completely, offset by advances in technology reducing the frequency of
claims, in particular bodily injury claims which are generally far more
expensive than damage to vehicles. These changes in the costs of claims are
gradual and as such reflected in our claims experience and fed into the
pricing of our policies.
1.3. New and amended standards and interpretations adopted by the Group
Amendments to IFRS
The following amended IFRS standards became effective for the year ended 31
December 2024:
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
- Amendments to IAS 1 Presentation of Financial Statements
o Classification of Liabilities with Covenants
o Non-current Liabilities with Covenants
o Removed the requirement that the right to defer settlement be
unconditional
o Deferral of Effective Date Amendment
- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
None of the amendments have had a material impact to the Group.
1.4. New and amended standards and interpretations not yet effective in 2024
A number of new standards and interpretations adopted by the UK which are not
mandatorily effective, as well as standards' interpretations issued by the
IASB but not yet adopted by the UK, have not been applied in preparing these
financial statements. The Group does not plan to adopt these standards early;
instead, it expects to apply them from their effective dates as determined by
their dates of UK endorsement. The Group is still reviewing the upcoming
standards to determine their impact:
- Lack of Exchangeability (Amendments to IAS 21) - Effective 1
January 2025
- IFRS 18 Presentation and Disclosure in Financial Statements -
Effective 1 January 2027, with retrospective application - IFRS 18, which
replaces IAS 1 "Presentation of Financial Statements", introduces new
requirements for presentation and disclosure in the financial statements, with
a focus on the Profit or Loss Account. Items in the Profit of Loss Account
will be classified into one of five categories: operating, investing,
financing, income taxes and discontinued operations, of which the first three
are new. It also requires the disclosure of newly defined management-derived
performance measures, how these are calculated and why these provide useful
information, reconciled to the IFRS reporting. As a presentation and
disclosure standard, the implementation of IFRS 18 will not affect the Group's
results. The Group is currently working to identify all impacts the amendments
will have on the primary financial statements and notes to the financial
statements.
2. Risk and Capital Management
2.1. Risk management framework
The Sabre Insurance Group plc Board is responsible for prudent oversight of
the Group's business and financial operations, ensuring that they are
conducted in accordance with sound business principles and with applicable
laws and regulations, and ensure fair customer outcomes. This includes
responsibility to articulate and monitor adherence to the Board's appetite for
exposure to all risk types. The Board also ensures that measures are in place
to provide independent and objective assurance on the effective identification
and management of risk and on the effectiveness of the internal controls in
place to mitigate those risks.
The Board has set a robust risk management strategy and framework as an
integral element in its pursuit of business objectives and in the fulfilment
of its obligations to shareholders, regulators, customers and employees.
The Group's risk management framework is proportionate to the risks that we
face. Our assessment of risk is not static; we continually reassess the risk
environment in which the Group operates and ensure that we maintain
appropriate mitigation in order to remain within our risk appetite. The
Group's Management Risk and Compliance Forum gives Management the regular
opportunity to review and discuss the risks which the Group faces, including
but not limited to any breaches, issues or emerging risks. The Forum also
works to ensure that adequate mitigation for the risks the Group is exposed to
are in place.
2.2. Underwriting risk
The principal risk the Group faces under insurance contracts is that the
actual claims and benefit payments, or the timing thereof, differ from
expectations. This is influenced by the frequency of claims, severity of
claims, actual benefits paid and subsequent development of long-term claims.
Therefore, the objective of the Group is to ensure that sufficient reserves
are available to cover these liabilities.
The Group issues only motor insurance contracts, which usually cover a
12-month duration. For these contracts, the most significant risks arise from
under-estimation of the expected costs attached to a policy or a claim, for
example through unexpected inflation of costs or single catastrophic events.
Refer to Note 3.6 for detail on these risks and the way the Group manages
them. Note 3.6 also includes the considerations of climate change. Further
discussion on climate change can be found in the Principal Risks and
Uncertainties section on pages 24 to 33 of the Strategic Report and the
Responsibility and Sustainability section on pages 44 to 64 of the Annual
Report.
2.3. Credit risk
Credit risk reflects the financial impact of the default of one or more of the
Group's counterparties. The Group is exposed to financial risks caused by a
loss in the value of financial assets due to counterparties failing to meet
all or part of their obligations. Key areas where the Group is exposed to
credit default risk are:
- Failure of an asset counterparty to meet their financial
obligations (Note 4.4)
- Reinsurers default on their share of the Group's insurance
liabilities (Note 3.7)
- Default on amounts due from insurance contract intermediaries or
policyholders (Note 3.7)
The following policies and procedures are in place to mitigate the Group's
exposure to credit risk:
- A Group credit risk policy which sets out the assessment and
determination of what constitutes credit risk for the Group. Compliance with
the policy is monitored and exposures and breaches are reported to the Group's
Risk Committee
- Reinsurance is placed with counterparties that have a good credit
rating and concentration of risk is avoided by following policy guidelines in
respect of counterparties' limits that are set each year by the Board of
Directors and are subject to regular reviews. At each reporting date,
management performs an assessment of creditworthiness of reinsurers and
updates the reinsurance purchase strategy, ascertaining a suitable allowance
for impairment
- The Group sets the maximum amounts and limits that may be advanced
to corporate counterparties by reference to their long-term credit ratings
- The credit risk in respect of customer balances incurred on
non-payment of premiums or contributions will only persist during the grace
period specified in the policy document or trust deed until expiry, when the
policy is either paid up or terminated. Commission paid to intermediaries is
netted off against amounts receivable from them to reduce the risk of doubtful
debts
Refer to Notes 3.7 and 4.4 as indicated above for further information on
credit risk.
2.4. Liquidity risk
Liquidity risk is the potential that obligations cannot be met as they fall
due as a consequence of having a timing mismatch or inability to raise
sufficient liquid assets without suffering a substantial loss on realisation.
The Group manages its liquidity risk through both ensuring that it holds
sufficient cash and cash equivalent assets to meet all short-term liabilities,
and matching the maturity profile of its financial investments to the expected
cash outflows.
Refer to Note 6 for further information on liquidity risk.
2.5. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to
concentration risk. The Group has no significant investment in any particular
industrial sector and therefore is unlikely to suffer significant losses
through its investment portfolio as a result of over-exposure to sectors
engaged in similar activities or which have similar economic features that
would cause their ability to meet contractual obligations to be similarly
affected by changes in economic, political or other conditions.
A significant part of the Group's investment portfolio consists primarily of
UK government bonds and government-backed bonds; therefore, the risk of
government default does exist, however the likelihood is extremely remote. The
remainder of the portfolio consists of investment grade corporate bonds. The
Group continues to monitor the strength and security of all bonds.
The Group's portfolio has a significant concentration of UK debt securities
and therefore is exposed to movements in UK interest rates.
Refer to Note 4.2.1 for further information on investment concentration risk.
2.6. Operational risk
Operational risk is the risk of loss arising from system failure, cyber
attack, human error, fraud or external events. When controls fail to perform,
operational risks can cause damage to reputation, have legal or regulatory
implications or can lead to financial loss. The Group cannot expect to
eliminate all operational risks, but by operating a rigorous control framework
and by monitoring and responding to potential risks, the Group is able to
manage the risks. Controls include effective segregation of duties, access
controls, authorisation and reconciliation procedures, staff education and
assessment processes, including the use of internal audit. Business risks such
as changes in environment, technology and the industry are monitored through
the Group's strategic planning and budgeting process.
2.7. Capital management
The Board of Directors has ultimate responsibility for ensuring that the Group
has sufficient funds to meet its liabilities as they fall due. The Group
carries out detailed modelling of its assets and liabilities and the key risks
to which these are exposed. This modelling includes the Group's own assessment
of its capital requirements for solvency purposes.
The Group has continued to manage its solvency with reference to the solvency
capital requirement ("SCR") calculated using the standard formula. The Group
has developed sufficient processes to ensure that the capital requirements
under Solvency II are not breached, including the maintenance of capital at a
level higher than that required through the standard formula. The Group
considers its capital position to be its net assets on a Solvency II basis and
monitors this in the context of the Solvency II SCR.
The Group aims to retain sufficient capital such that in all reasonably
foreseeable scenarios, it will hold regulatory capital in excess of its SCR.
The Directors currently consider that this is achieved through maintaining a
regulatory capital surplus of 140% to 160%. As at 31 December 2024, the Group
holds significant excess Solvency II capital.
The Group's IFRS capital comprised:
As at 31 December
2024 2023
£'k £'k
Share capital 250 250
Own shares (3,112) (3,121)
Merger reserve 48,525 48,525
FVOCI reserve (3,064) (5,894)
Insurance/Reinsurance finance reserve 3,606 2,239
Share-based payments reserve 2,620 2,686
Retained earnings 209,521 197,727
Total 258,346 242,412
The Solvency II position of the Group both before and after proposed final
dividend is given below:
As at 31 December
2024 2023
£'k £'k
Total tier 1 capital - pre-dividend 134,695 121,099
SCR 62,199 58,998
Solvency coverage ratio (%) - pre-dividend 216.6% 205.3%
As at 31 December
2024 2023
£'k £'k
Total tier 1 capital - pre-dividend 134,695 121,099
Less: Final dividend declared (28,250) (20,250)
Total tier 1 capital - post-dividend 106,445 100,849
SCR 62,199 58,998
Solvency coverage ratio (%) 171.1% 170.9%
The following table sets out a reconciliation between IFRS net assets and
Solvency II net assets before proposed final dividend:
As at 31 December
2024 2023
£'k £'k
IFRS net assets 258,346 242,412
Less: Goodwill (156,279) (156,279)
Adjusted IFRS net assets 102,067 86,133
Remove IFRS liability: Liability for remaining coverage (unearned premium 117,245 124,448
element)
Remove IFRS asset: Insurance acquisition cash flow asset (8,472) (8,733)
Remove IFRS liability: Risk adjustment 14,304 12,255
Add Solvency II liability: Risk margin (6,975) (5,904)
Add Solvency II liability: Premium provision (74,613) (76,441)
Changes in valuation differences of technical reserves between IFRS and 2,015 996
Solvency II
Change in deferred tax liability due to difference in net asset position (10,876) (11,655)
Solvency II net assets 134,695 121,099
The adjustments set out in the above table have been made for the following
reasons:
- Adjusted IFRS net assets: Equals Group net assets on an IFRS
basis, less Goodwill.
- Removal of liability for remaining coverage and insurance
acquisition cash flow asset: Liability for remaining coverage is not treated
as a liability under Solvency II.
- Removal of insurance acquisition cash flow asset: Insurance
acquisition cash flow asset is not deferred under Solvency II.
- Removal of IFRS risk adjustment: Solvency II risk margin replaces
IFRS risk adjustment.
- Addition of Solvency II risk margin: The Solvency II risk margin
represents the premium that would be required were the Group to transfer its
technical provisions to a third party, and essentially reflects the SCR
required to cover run-off of claims on existing business. This amount is
calculated by the Group through modelling the discounted SCR on a projected
future balance sheet for each year of claims run-off.
- Addition of Solvency II premium provision: A premium reserve
reflecting the future cash flows in respect of insurance contracts is
calculated and this must be discounted under Solvency II.
- Changes in valuation differences: Valuation differences of
technical differences between IFRS 17 and Solvency II, including discounting.
- Change in deferred tax: As the move to a Solvency II basis balance
sheet increases the net asset position of the Group, a deferred tax liability
is generated to offset the increase.
Sabre Insurance Group plc's SCR, expressed on a risk module basis, is set out
in the following table:
As at 31 December
2024 2023
Notes £'k £'k
Interest rate risk 5,289 4,655
Equity risk - -
Property risk 900 900
Spread risk 3,109 2,739
Currency risk 584 1,058
Concentration risk - -
Correlation impact (3,226) (3,192)
Market risk 6,656 6,160
Counterparty risk 3,325 3,098
Underwriting risk 68,011 63,720
Correlation impact (6,678) (6,219)
Basic SCR 71,314 66,759
Operating risk 8,714 7,650
Loss-absorbing effect of deferred taxes (17,829) (15,411)
Total SCR 62,199 58,998
The total SCR is primarily driven by the underwriting risk element, which is a
function of the Group's net earned premium (or projected net earned premium)
and the level of reserves held. Therefore, the SCR is broadly driven by the
size of the business.
The Group's capital management objectives are:
- To ensure that the Group will be able to continue as a going
concern
- To maximise the income and capital return to its equity
The Board monitors and reviews the broad structure of the Group's capital on
an ongoing basis. This review includes consideration of the extent to which
revenue in excess of that which is required to be distributed should be
retained.
The Group's objectives, policies and processes for managing capital have not
changed during the year.
3. Insurance Liabilities and Reinsurance Assets
ACCOUNTING POLICY
For the purpose of this accounting policy, the term 'motor insurance' covers
all the Group's products, which includes Motor Vehicle, Motorcycle and Taxi
insurance.
A. Insurance and reinsurance contracts classification
The Group issues insurance contracts in the normal course of business, under
which it accepts significant insurance risk from a policyholder
by agreeing to compensate the policyholder if a specified uncertain future
insured event adversely affects the policyholder.
As a general guideline, the Group determines whether it has significant
insurance risk, by comparing benefits payable after an insured event with
benefits payable if the insured event did not occur.
The Group issues only non-life insurance to individuals and businesses.
Non-life insurance products offered by the Group are Motor Vehicle, Motorcycle
and Taxi insurance. These products offer protection of a policyholder's assets
and indemnification of other parties that have suffered damage as a result of
a policyholder's accident.
In the normal course of business, the Group uses reinsurance to mitigate its
risk exposures. A reinsurance contract transfers significant risks if
it transfers substantially all of the insurance risk resulting from the
insured portion of the underlying insurance contacts, even if it does not
expose the reinsurer to the possibility of a significant loss.
B. Insurance and reinsurance contracts accounting treatment
(i) Separating components from insurance and reinsurance contracts
The Group assesses its non-life insurance and reinsurance products to
determine whether they contain distinct components which must be accounted for
under another IFRS instead of under IFRS 17. After separating any distinct
components, the Group applies IFRS 17 to all remaining components of the
(host) insurance contract. Currently, the Group's products do not include any
distinct components that require separation.
(ii) Aggregation and recognition of insurance and reinsurance contracts
Insurance contracts
Insurance contracts are aggregated into groups for measurement purposes.
Groups of insurance contracts are determined by identifying portfolios of
insurance contracts, each comprising contracts subject to similar risks and
managed together, and dividing each portfolio into annual cohorts (i.e. by
year of issue) and each annual cohort into three groups based on the expected
profitability of contracts:
- Any contracts that are onerous on initial recognition
- Any contracts that, on initial recognition, have no significant
possibility of becoming onerous subsequently
- Any remaining contracts in the annual cohort
The Group recognises groups of insurance contracts it issues from the earliest
of:
- The beginning of the coverage period of the group of contracts
- When the first payment from a policyholder in the group becomes
due or when the first payment is received if there is no due date
- When facts and circumstances indicate that the contract is onerous
The Group adds new contracts to the group in the reporting period in which
that contract meets one of the criteria set out above.
The profitability of groups of contracts is assessed by actuarial valuation
models that take into consideration existing and new business. The Group
assumes that no contracts in the portfolio are onerous at initial recognition
unless facts and circumstances indicate otherwise. For contracts that are not
onerous, the Group assesses, at initial recognition, that there is no
significant possibility of becoming onerous subsequently by assessing the
likelihood of changes in applicable facts and circumstances. The Group
considers facts and circumstances to identify whether a group of contracts are
onerous based on:
- Pricing information
- Results of similar contracts it has recognised
- Environmental factors, e.g. a change in market experience or
regulations
Reinsurance contracts
Some reinsurance contracts provide cover for underlying contracts that are
included in different groups. However, the Group concludes that the
reinsurance contract's legal form of a single contract reflects the substance
of the Group's contractual rights and obligations, considering that the
different covers lapse together and are not sold separately. As a result, the
reinsurance contract is not separated into multiple insurance components that
relate to different underlying groups.
The Group recognises a group of reinsurance contracts held at the earlier of
the following:
- The beginning of the coverage period of the group of reinsurance
contracts held
- The date the Group recognises an onerous group of underlying
insurance contracts if the Group entered into the related reinsurance contract
held in the group of reinsurance contracts held at or before that date
The Group adds new contracts to the group in the reporting period in which
that contract meets one of the criteria set out above.
(iii) Measurement
Summary of measurement approaches
The Group uses the following measurement approaches to its insurance and
reinsurance contacts.
Product classification Measurement model
Insurance contracts issued
Motor insurance Insurance contracts issued Premium Allocation Approach ("PAA")
Reinsurance contracts held
Motor insurance - excess of loss reinsurance Reinsurance contracts held Premium Allocation Approach ("PAA")
The Group applies the premium allocation approach to all the insurance
contracts that it issues and reinsurance contracts that it holds, as the
coverage period of each contract in the group is one year or less, including
insurance contract services arising from all premiums within the contract
boundary. The Group does not expect significant variability in the fulfilment
cash flows that would affect the measurement of the liability for remaining
coverage during the period before a claim is incurred.
All the Group's insurance contracts have a coverage period of one year or
less. The Group's reinsurance contracts held are excess of loss contracts and
are loss occurring. The Group does not issue any reinsurance contracts.
Insurance contracts issued
On initial recognition of each group of contracts, the carrying amount of the
liability for remaining coverage ("LRC") is measured at:
- The premiums received on initial recognition
- Minus any insurance acquisition cash flows allocated to the group
at that date
- Adjusted for any amount arising from the derecognition of any
assets or liabilities previously recognised for cash flows related to the
group (including assets for insurance acquisition cash flows)
The Group has chosen not to expense insurance acquisition cash flows when they
are incurred.
Subsequently, the Group measures the carrying amount of the LRC at the end of
each reporting period as the LRC at the beginning of the period:
- Plus premiums received in the period
- Minus insurance acquisition cash flows
- Plus any amounts relating to the amortisation of insurance
acquisition cash flows recognised as an expense in the reporting period
- Minus the amount recognised as insurance revenue for the services
provided in the period
On initial recognition of each group of contracts, the Group expects that the
time between providing each part of the services and the related premium due
date is no more than a year. Accordingly, the Group has chosen not to adjust
the liability for remaining coverage to reflect the time value of money and
the effect of financial risk.
If at any time during the coverage period, facts and circumstances indicate
that a group of contracts is onerous, then the Group recognises a loss in
Profit or Loss and increases the liability for remaining coverage to the
extent that the current estimates of the fulfilment cash flows that relate to
remaining coverage exceed the carrying amount of the liability for remaining
coverage. The fulfilment cash flows are discounted (at current rates) if the
liability for incurred claims is also discounted.
The Group recognises the liability for incurred claims ("LIC") of a group of
insurance contracts at the amount of the fulfilment cash flows ("FCF")
relating to incurred claims. The fulfilment cash flows are discounted (at
current rates) unless they are expected to be paid in one year or less from
the date the claims are incurred.
The carrying amount of a group of insurance contracts issued at the end of
each reporting period is the sum of:
- The LRC
- The LIC
Risk adjustment for non-financial risk
An explicit risk adjustment for non-financial risk is estimated separate from
the other estimates. Unless contracts are onerous, the explicit risk
adjustment for non-financial risk is only estimated for the measurement of the
LIC.
This risk adjustment represents the compensation that the Group requires for
bearing the uncertainty about the amount and timing of cash flows that arise
from non-financial risk. Non-financial risk is risk arising from insurance
contracts other than financial risk, which is included in the estimates of
future cash flows or the discount rate used to adjust the cash flows. The
risks covered by the risk adjustment for non-financial risk are insurance risk
and other non-financial risks such as lapse risk and expense risk.
The risk adjustment for non-financial risk for insurance contracts measures
the compensation that the Group would require to make it indifferent between:
- Fulfilling a liability that has a range of possible outcomes
arising from non-financial risk
- Fulfilling a liability that will generate fixed cash flows with
the same expected present value as the insurance contracts
Reinsurance contracts held
The excess of loss reinsurance contracts held provide coverage on the motor
insurance contracts originated for claims incurred during an accident year and
are accounted for under the PAA. The Group measures its reinsurance assets for
a group of reinsurance contracts that it holds on the same basis as insurance
contracts that it issues. For reinsurance contracts held, on initial
recognition, the Group measures the remaining coverage at the amount of ceding
premiums paid. For reinsurance contracts held, at each of the subsequent
reporting dates, the remaining coverage is:
- Increased for ceding premiums paid in the period
- Decreased for the amounts of ceding premiums recognised as
reinsurance expenses for the services received in the period
Assets for reinsurance contracts consist of the asset for remaining coverage
("ARC") and the asset for incurred claims ("AIC") being the reinsurers' share
of claims that have already been incurred.
For reinsurance contracts held, the risk adjustment for non-financial risk
presents the amount of risk being transferred by the Group to the reinsurer.
Asset for insurance acquisition cash flows
The Group includes the following acquisition cash flows within the insurance
contract boundary that arise from selling, underwriting and starting a group
of insurance contracts and that are:
a. Costs directly attributable to individual contracts and groups of
contracts
b. Costs directly attributable to the portfolio of insurance contracts to
which the group belongs, which are allocated on a reasonable and consistent
basis to measure the group of insurance contracts
Insurance acquisition cash flows arising before the recognition of the related
group of contracts are recognised as an asset. Insurance acquisition cash
flows arise when they are paid or when a liability is required to be
recognised under a standard other than IFRS 17. Such an asset is recognised
for each group of contracts to which the insurance acquisition cash flows are
allocated. The asset is derecognised, fully or partially, when the insurance
acquisition cash flows are included in the measurement of the group of
contracts.
Recoverability assessment
At each reporting date, if facts and circumstances indicate that an asset for
insurance acquisition cash flows may be impaired, then the Group:
a. Recognises an impairment loss in Profit or Loss so that the carrying
amount of the asset does not exceed the expected net cash inflow for the
related group
b. If the asset relates to future renewals, recognises an impairment loss
in Profit or Loss to the extent that it expects those insurance acquisition
cash flows to exceed the net cash inflow for the expected renewals and this
excess has not already been recognised as an impairment loss under (a)
The Group reverses any impairment losses in Profit or Loss and increases the
carrying amount of the asset to the extent that the impairment conditions have
improved.
Modification and derecognition
The Group derecognises insurance contracts when:
- The contract is extinguished (i.e. when the obligation specified
in the insurance contract expires or is discharged or cancelled)
- The contract is modified and certain additional criteria are met
When an insurance contract is modified by the Group as a result of an
agreement with the counterparties or due to a change in regulations, the Group
treats changes in cash flows caused by the modification as changes in
estimates of the FCF, unless the conditions for the derecognition of the
original contract are met. The Group derecognises the original contract and
recognises the modified contract as a new contract if any of the following
conditions are present:
a. If the modified terms had been included at contract inception and the
Group would have concluded that the modified contract:
i. Is not in scope of IFRS 17
ii. Results in different separable components
iii. Results in a different contract boundary
iv. Belongs to a different group of contracts
b. The original contract was accounted for under the PAA, but the
modification means that the contract no longer meets the eligibility criteria
for that approach
When an insurance contract accounted for under the PAA is derecognised,
adjustments to the FCF to remove relating rights and obligations and account
for the effect of the derecognition result in the following amounts being
charged immediately to Profit or Loss:
a. If the contract is extinguished, any net difference between the
derecognised part of the LRC of the original contract and any other cash flows
arising from extinguishment
b. If the contract is transferred to the third party, any net difference
between the derecognised part of the LRC of the original contract and the
premium charged by the third party
c. If the original contract is modified resulting in its derecognition,
any net difference between the derecognised part of the LRC and the
hypothetical premium the entity would have charged had it entered into a
contract with equivalent terms as the new contract at the date of the contract
modification, less any additional premium charged for the modification
(iv) Presentation
The Group has presented separately, in the Statement of Financial Position,
the carrying amount of portfolios of insurance contracts issued and portfolios
of reinsurance contracts held.
The Group has elected to disaggregate part of the movement in LIC resulting
from the changes in discount rates and present this in the Statement of
Comprehensive Income. The Group disaggregates the total amount recognised in
the Profit or Loss Account and the Statement of Comprehensive Income into an
insurance service result, comprising insurance revenue and insurance service
expense, and insurance finance income or expenses.
The Group does not disaggregate the change in risk adjustment for
non-financial risk between a financial and non-financial portion and includes
the entire change as part of the insurance service result.
The Group separately presents income or expenses from reinsurance contracts
held from the expenses or income from insurance contracts issued.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS
Insurance service result from insurance contracts issued
Insurance revenue
As the Group provides insurance contract services under the group of insurance
contracts, it reduces the LRC and recognises insurance revenue. The amount of
insurance revenue recognised in the reporting period depicts the transfer of
promised services at an amount that reflects the portion of consideration that
the Group expects to be entitled to in exchange for those services.
The Group measures all insurance contracts under the PAA and recognises
insurance revenue based on the passage of time over the coverage period of a
group of contracts.
Insurance service expenses
Insurance service expenses include the following:
- Incurred claims and benefits
- Other incurred directly attributable expenses
- Amortisation of insurance acquisition cash flows
- Changes that relate to past service - changes in the FCF relating
to the LIC
- Changes that relate to future service - changes in the FCF that
result in onerous contract losses or reversals of those losses
Amortisation of insurance acquisition cash flows is based on the passage of
time.
Other expenses not meeting the above categories are included in other
operating expenses in the Profit or Loss Account.
Insurance service result from reinsurance contracts held
Net income/(expense) from reinsurance contracts held
The Group presents separately on the face of the Profit or Loss Account and
the Statement of Comprehensive Income, the amounts expected to be recovered
from reinsurers, and an allocation of the reinsurance premiums paid. The net
income/(expense) from reinsurance contract held comprise:
- Reinsurance expenses
- For groups of reinsurance contracts measured under the PAA, broker
fees are included within reinsurance expenses
- Incurred claims recovery
- Other incurred directly attributable expenses
- Changes that relate to past service - changes in the FCF relating
to incurred claims recovery
- Effect of changes in the risk of reinsurers' non-performance
Amounts relating to accounting for onerous groups of underlying insurance
contracts issued
Reinsurance expenses are recognised similarly to insurance revenue. The amount
of reinsurance expenses recognised in the reporting period depicts the
transfer of received insurance contract services at an amount that reflects
the portion of ceding premiums that the Group expects to pay in exchange for
those services. Broker fees are included in reinsurance expenses.
All groups of reinsurance contracts held are measured under the PAA and
reinsurance expenses are recognised based on the passage of time over the
coverage period of a group of contracts.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Insurance finance income or expenses
Insurance finance income or expenses comprise the change in the carrying
amount of the group of insurance contracts arising from:
- The effect of the time value of money and changes in the time
value of money
- The effect of financial risk and changes in financial risk
For contracts measured under the PAA, the main amounts within insurance
finance income or expenses are:
a. Interest accreted on the LIC
b. The effect of changes in interest rates and other financial assumptions
The Company disaggregates insurance finance income or expenses on motor
insurance contracts issued between Profit or Loss and OCI. The Company has
made an accounting policy choice to disaggregate insurance finance income or
expenses for the period to include within OCI an amount which reflects the
difference between the carrying amount of a group of contracts and the amount
that the group would have been measured at using the discount rates in effect
on initial recognition, effectively reflecting the impact of discount rate
changes on the opening liability for incurred claims through other
comprehensive income. The amount recognised in other comprehensive income over
the duration of a group of contracts will always total zero.
The impact of changes in market interest rates on the value of the insurance
assets and liabilities are reflected in OCI in order to minimise accounting
mismatches between the accounting for financial assets and insurance assets
and liabilities. The Company's financial assets backing the motor insurance
portfolios are predominantly measured at fair value through Other
Comprehensive Income ("FVOCI").
RISK MANAGEMENT
Refer to Notes 3.6 and 3.7 for detail on risks relating to insurance
liabilities and reinsurance assets, and the management thereof.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of these consolidated financial statements requires the Group
to select accounting policies and make estimates, assumptions and judgements.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below. The Group based its assumptions
and estimates on information and facts available when the financial statements
were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Group. Such changes are reflected
in the assumptions when they occur. The Group disaggregates information to
disclose major product lines, namely Motor Vehicle, Motorcycle and Taxi.
Accounting judgements
A. Level of aggregation and measurement model for insurance contracts
For measurement purposes, insurance contracts are aggregated into groups based
on an assessment of risks and dividing each portfolio into annual cohorts by
year of issue. Judgement is required in assessing if the contracts have
similar risks that are managed together. Each annual cohort Is then divided
into three groups based on the expected profitability of contracts, being
contracts that are onerous on initial recognition, have no significant
possibility of becoming onerous, or any other contracts which do not fall into
those categories. Judgement is applied to determine the profitability of
contracts at initial recognition. The Group applies the default assumption
that no groups of contracts are onerous unless facts and circumstances
indicate otherwise. Further judgement is applied to determine how contracts
will be measured. The Group applies the PAA to simplify the measurement of all
insurance contracts issued and reinsurance contracts held. The judgement
around the PAA has been disclosed in section B(iii) of the Group's accounting
policies for insurance liabilities and reinsurance assets.
B. Insurance acquisition cash flows
IFRS 17 requires an entity to include a portion of its overhead costs that are
directly attributable in fulfilling the obligations under an insurance
contract, in the fulfilment cash flows of the related liability.
The Group applies judgement in determining the inputs used in the methodology
to systematically and rationally allocate insurance acquisition cash flows to
groups of insurance contracts. This includes judgements about the amounts
allocated to insurance contracts expected to arise from renewals of existing
insurance contracts in a group and the volume of expected renewals from new
contracts issued in the period.
At the end of each reporting period, the Group revisits the assumptions made
to allocate insurance acquisition cash flows to groups, and where necessary,
revises the amounts of assets for insurance acquisition cash flows
accordingly.
C. Discount rates
As there are no referenced asset portfolios backing the LIC, because of the
volatility and uncertainty of claims on short term insurance contracts, the
Group deemed it more appropriate to use the bottom-up approach under IFRS 17
for discounting. This reflects a risk-free yield curve and an illiquidity
premium. The standard does not specify how to calculate the illiquidity
premium.
The Group uses the risk-free curves published by the Bank of England. The
Solvency II GBP risk-free yield curve is based on 6-month SONIA swap rates,
corrected using an adjustment defined by the PRA for credit risk. SONIA-based
yield curves are considered to contain negligible credit risk, according to
the Bank of England, as the contracts that make it up settle overnight.
The Group has performed a number of analyses in determining the choice of the
illiquidity risk component, including using the Solvency II volatility
adjustment ("VA"). The analyses did not identify any material differences in
reserves. Given the nature of the liabilities and that there is no penalty or
surrender value to exit the insurance contracts, the Group applied judgement
in setting the illiquidity risk component and has selected the VA to be an
appropriate proxy for the illiquidity adjustment.
Discount rates applied for discounting of future cash flows are listed below:
31 December 2024 31 December 2023
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
Motor insurance 4.70% 4.39% 4.28% 4.31% 5.05% 3.98% 3.67% 3.67%
See Note 3.6 for the impact of a 1% increase or decrease in the discount rates
used.
D. Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that the Group
requires for bearing the uncertainty about the amount and timing of the cash
flows of groups of insurance contracts. The risk adjustment reflects an amount
that an insurer would rationally pay to remove the uncertainty that future
cash flows could exceed the expected value amount.
The Group has estimated the risk adjustment using a methodology which targets
a confidence level (probability of sufficiency) approach between the 80th and
90th percentile. At 31 December 2024, the net risk adjustment applied equates
to an approximate confidence interval of 80.6% (31 December 2023: 81.3%). That
is, the Group has assessed its indifference to uncertainty for all product
lines (as an indication of the compensation that it requires for bearing
non-financial risk) as being equivalent to the 80th to 90th percentile
confidence level less the mean of an estimated probability distribution of the
future cash flows. The Group has estimated the probability distribution of the
future cash flows, and the additional amount above the expected present value
of future cash flows required to meet the target percentiles.
Sabre uses a 'bootstrapping' method to create a distribution of outcomes for
the outstanding claim amounts. This distribution is assessed to calculate the
risk adjustment at a chosen confidence level. Bootstrapping involves taking
random samples of the data for analysis, rather than using the full dataset.
Multiple random samples are selected, with each random sample selected from
the full dataset.
See Note 3.6 for the impact of moving the confidence interval of the booked
risk adjustment up or down by 5ppts.
Critical accounting estimates
E. Liability for incurred claims ("LIC")
The ultimate cost of outstanding claims is estimated by using a range of
standard actuarial claims projection techniques, such as Chain Ladder and
Bornheutter-Ferguson methods.
The main assumption underlying these techniques is that a Group's past claims
development experience can be used to project future claims development and
hence ultimate claims costs. These methods extrapolate the development of paid
and incurred losses, average costs per claim (including claims handling
costs), and claim numbers based on the observed development of earlier years
and expected loss ratios. Historical claims development is mainly analysed by
accident years, but can also be further analysed by geographical area, as well
as by significant business lines and claim types. Large claims are usually
separately addressed, either by being reserved at the face value of loss
adjuster estimates or separately projected in order to reflect their future
development. In most cases, no explicit assumptions are made regarding future
rates of claims inflation or loss ratios. Instead, the assumptions used are
those implicit in the historical claims development data on which the
projections are based. Additional qualitative judgement is used to assess the
extent to which past trends may not apply in future, (e.g., to reflect one-off
occurrences, changes in external or market factors such as public attitudes to
claiming, economic conditions, levels of claims inflation, judicial decisions
and legislation, as well as internal factors such as portfolio mix, policy
features and claims handling procedures) in order to arrive at the estimated
ultimate cost of claims that present the probability weighted expected value
outcome from the range of possible outcomes, taking account of all the
uncertainties involved.
The Group has the right to pursue third parties for payment of some or all
costs. Estimates of salvage recoveries and subrogation reimbursements are
considered as an allowance in the measurement of ultimate claims costs. Other
key circumstances affecting the reliability of assumptions include variation
in interest rates and delays in settlement.
The key estimates in calculating the LIC are the amount and timing of future
claims payments in relation to claims already incurred. This is primarily
assessed with reference to past performance, including past settlement
patterns, as per the actuarial methodology outlined above. This includes
estimating the likely changes in inflation as relates to claims already
incurred, as well as the expected frequency of claims which have occurred but
which have not yet been reported. The ongoing cost of handling claims already
incurred is estimated with reference to the historical cost-per-claim
calculated over the past 12 months.
See Note 3.6 for the impact of a 5ppts increase in loss ratio and the impact
of a 5% increase in outstanding claims.
3.1. Composition of the Statement of Financial Position
An analysis of the amounts presented on the Statement of Financial Position
for insurance contacts is included in the table below.
As at December
2024 2023
Notes £'k £'k
Insurance contract liabilities
Insurance contract liabilities
Motor Vehicle insurance 334,767 321,720
Motorcycle insurance 34,321 32,370
Taxi insurance 37,308 29,482
Asset for insurance acquisition cash flows
Motor Vehicle insurance 3.3 (6,488) (6,933)
Motorcycle insurance 3.3 (880) (867)
Taxi insurance 3.3 (1,104) (933)
Total insurance contract liabilities 397,924 374,839
Reinsurance contracts assets
Motor Vehicle insurance 133,974 143,364
Motorcycle insurance 15,018 13,502
Taxi insurance 11,766 9,860
Total reinsurance contract assets 160,758 166,726
3.2. Movements in insurance and reinsurance contract balances
3.2.1. Insurance contracts issued
Reconciliation of liability for remaining coverage and the liability for
incurred claims
2024 2023
Liabilities for Remaining Coverage Liabilities for Incurred Claims Total Liabilities for Remaining Coverage Liabilities for Incurred Claims Total
("LRC")
("LIC")
("LRC")
("LIC")
In £'k Estimates of present value of future cash flows Risk adjustment for non-financial risk Estimates of present value of future cash flows Risk adjustment for non-financial risk
Opening insurance contract liabilities 63,008 258,358 53,473 374,839 47,836 221,651 44,854 314,341
Insurance revenue (248,131) - - (248,131) (188,246) - - (188,246)
Insurance service expenses 18,166 132,011 4,484 154,661 14,057 116,821 8,619 139,497
Incurred claims and other directly attributable expenses - 127,787 14,988 142,775 - 110,057 13,605 123,662
Changes that relate to past service - changes in the FCF relating to the LIC - 4,224 (10,504) (6,280) - 6,764 (4,986) 1,778
Amortisation of insurance acquisition cash flows 18,166 - - 18,166 14,057 - - 14,057
Insurance service result (229,965) 132,011 4,484 (93,470) (174,189) 116,821 8,619 (48,749)
Insurance finance expense recognised in Profit or Loss Account - 8,392 - 8,392 - 10,170 - 10,170
Insurance finance (income)/expense recognised in Other Comprehensive Income - (6,852) - (6,852) - 12,436 - 12,436
Total changes in Comprehensive Income (229,965) 133,551 4,484 (91,930) (174,189) 139,427 8,619 (26,143)
Cash flows
Premiums received 254,389 - - 254,389 206,189 - - 206,189
Claims and other insurance services expenses paid - (121,469) - (121,469) - (102,720) - (102,720)
Insurance acquisition cash flows (17,905) - - (17,905) (16,828) - - (16,828)
Total cash flows 236,484 (121,469) - 115,015 189,361 (102,720) - 86,641
Closing insurance contract liabilities 69,527 270,440 57,957 397,924 63,008 258,358 53,473 374,839
3.2.2. Reinsurance contracts held
Reconciliation of assets for remaining coverage and the assets for incurred
claims
2024 2023
Assets for remaining coverage Assets for incurred claims TOTAL Assets for remaining coverage Assets for incurred claims TOTAL
In £'k Estimates of present value of future cash flows Risk adjustment for non-financial risk Estimates of present value of future cash flows Risk adjustment for non-financial risk
Opening reinsurance contract assets 2,075 123,433 41,218 166,726 5,675 97,996 33,283 136,954
Net (expense)/income from reinsurance contracts held (33,617) 10,591 2,435 (20,591) (28,506) 23,597 7,935 3,026
Reinsurance expense (33,617) - - (33,617) (28,506) - - (28,506)
Incurred claims recovery - 10,233 9,205 19,438 - 16,738 9,103 25,841
Changes that relate to past service - 358 (6,770) (6,412) - 6,859 (1,168) 5,691
Reinsurance finance income recognised in Profit or Loss Account - 3,714 - 3,714 - 3,588 - 3,588
Reinsurance finance (expense)/income recognised in Other Comprehensive Income - (5,880) - (5,880) - 5,432 - 5,432
Total changes in Comprehensive Income (33,617) 8,425 2,435 (22,757) (28,506) 32,617 7,935 12,046
Cash flows
Premiums paid 34,992 - - 34,992 24,906 - - 24,906
Recoveries received - (18,203) - (18,203) - (7,180) - (7,180)
Total cash flows 34,992 (18,203) - 16,789 24,906 (7,180) - 17,726
Closing reinsurance contract assets 3,450 113,655 43,653 160,758 2,075 123,433 41,218 166,726
3.3. Assets for insurance acquisition cash flows
£'k
Balance as at 1 January 2023 5,962
Amounts incurred during the year 16,828
Amounts derecognised and included in measurement of insurance contracts (14,057)
Balance as at 31 December 2023 8,733
Amounts incurred during the period 17,905
Amounts derecognised and included in measurement of insurance contracts (18,166)
Balance as at 31 December 2024 8,472
The following table sets out when the Group expects to derecognise assets for
insurance acquisition cash flows after the reporting date:
£'k
31 December 2024
Less than one year 8,410
More than one year 62
8,472
31 December 2023
Less than one year 8,032
More than one year 701
8,733
3.4. Claims development
The presentation of the claims development tables for the Group is based on
the actual date of the event that caused the claim (accident year basis).
These triangles present estimated costs including any risk adjustment and
associated liability related to the future cost of handling claims.
Gross of reinsurance
Accident year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
£'k £'k £'k £'k £'k £'k £'k £'k £'k £'k £'k
Estimates of undiscounted gross cumulative claims
At the end of the accident year 103,599 111,518 165,707 120,077 126,981 101,965 89,233 136,811 133,334 146,677
- One year later 90,133 100,935 131,803 108,089 122,663 97,953 93,309 131,433 134,785
- Two years later 82,537 94,294 123,651 107,988 127,225 93,390 90,941 121,909
- Three years later 79,845 91,336 122,674 113,257 131,254 88,192 95,294
- Four years later 77,095 90,789 124,128 118,600 135,173 89,574
- Five years later 77,038 92,629 137,472 125,038 138,777
- Six years later 77,469 101,655 137,660 132,657
- Seven years later 77,729 101,124 135,674
- Eight years later 77,040 102,797
- Nine years later 76,922
Current estimate of cumulative claims 76,922 102,797 135,674 132,657 138,777 89,574 95,294 121,909 134,785 146,677
Cumulative gross claims paid (76,061) (93,893) (90,207) (113,703) (110,701) (73,102) (65,507) (76,827) (68,036) (47,731)
Undiscounted gross liabilities - accident years from 2015 to 2024 861 8,904 45,467 18,954 28,076 16,472 29,787 45,082 66,749 98,946 359,298
Undiscounted gross liabilities - accident years from 2014 and before 32,055
Effect of discounting (62,956)
Total gross liabilities for incurred claims ("LIC") 328,397
Liabilities for remaining coverage ("LRC") 69,527
Total gross liabilities included in the Statement of Financial Position 397,924
The purple-coloured numbers are undiscounted, but otherwise presented on an
IFRS 17 basis. The blue-coloured numbers have not been restated under IFRS 17
and reflect the numbers as previously reported under IFRS 4. The primary
difference between the IFRS 17 and IFRS 4 numbers presented here relates to
the risk adjustment.
The gross liabilities for incurred claims and gross liabilities for remaining
coverage per product is given below:
LIC LRC Total
Motor Vehicle 269,652 58,628 328,280
Motorcycle 30,288 3,152 33,440
Taxi 28,457 7,747 36,204
Total 328,397 69,527 397,924
Net of reinsurance
Accident year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
£'k £'k £'k £'k £'k £'k £'k £'k £'k £'k £'k
Estimates of undiscounted net cumulative claims
At the end of the accident year 97,288 104,808 106,478 111,433 115,011 85,723 81,161 106,049 102,185 122,858
- One year later 85,814 93,664 96,446 99,649 111,550 81,882 82,487 102,066 99,913
- Two years later 81,164 87,824 91,806 98,641 111,347 80,990 80,146 100,202
- Three years later 77,869 85,243 91,179 99,071 111,342 78,353 80,579
- Four years later 76,409 84,995 88,545 100,893 112,156 78,193
- Five years later 76,254 84,891 92,002 103,254 114,153
- Six years later 76,011 86,784 92,375 103,873
- Seven years later 76,581 86,536 93,897
- Eight years later 76,425 85,464
- Nine years later 76,445
Current estimate of cumulative claims 76,445 85,464 93,897 103,873 114,153 78,193 80,579 100,202 99,913 122,858
Cumulative net claims paid (75,657) (84,089) (85,462) (98,539) (104,853) (70,739) (65,507) (73,666) (65,465) (47,731)
Undiscounted net liabilities - accident years from 2015 to 2024 788 1,375 8,435 5,334 9,300 7,454 15,072 26,536 34,448 75,127 183,869
Undiscounted net liabilities - accident years from 2014 and before 8,703
Effect of discounting (21,483)
Total net liabilities for incurred claims ("LIC") 171,089
Liabilities for remaining coverage ("LRC") 66,077
Total net liabilities included in the Statement of Financial Position 237,166
The purple-coloured numbers are undiscounted, but otherwise presented on an
IFRS 17 basis. The blue-coloured numbers have not been restated under IFRS 17
and reflect the numbers as previously reported under IFRS 4. The primary
difference between the IFRS 17 and IFRS 4 numbers presented here relates to
the risk adjustment.
The net liabilities for incurred claims and net liabilities for remaining
coverage per product is given below:
LIC LRC Total
Motor Vehicle 138,763 55,547 194,310
Motorcycle 15,410 3,010 18,420
Taxi 16,916 7,520 24,436
Total 171,089 66,077 237,166
3.5. Insurance revenue and expenses - Segmental disclosure
An analysis of insurance revenue, insurance service expenses and net expenses
from reinsurance contracts held is included in the tables below. Additional
information on amounts recognised in Profit or Loss and OCI is included in the
movements in insurance and reinsurance contract balances in Note 3.2.
The Group provides short-term motor insurance to clients, which comprises
three lines of business, Motor Vehicle insurance, Motorcycle insurance and
Taxi insurance, which are written solely in the UK. The Group has no other
lines of business, nor does it operate outside of the UK. Other income relates
to auxiliary products and services, including brokerage and administration
fees, all relating to the motor insurance business. The Group does not have a
single client which accounts for more than 10% of revenue.
2024 2023
Motor Vehicles Motorcycle Taxi Total Motor Vehicles Motorcycle Taxi Total
£'k £'k £'k £'k £'k £'k £'k £'k
Insurance revenue
Insurance revenue from contracts measured under the PAA 222,635 10,199 15,297 248,131 158,054 15,363 14,829 188,246
Total insurance revenue 222,635 10,199 15,297 248,131 158,054 15,363 14,829 188,246
Insurance service expense
Incurred claims and other directly attributable expenses (117,752) (6,873) (18,150) (142,775) (91,688) (16,087) (15,887) (123,662)
Changes that relate to past service - changes in the FCF relating to the LIC 1,769 188 4,323 6,280 (861) 1,796 (2,713) (1,778)
Amortisation of insurance acquisition cash flows (14,234) (1,993) (1,939) (18,166) (10,206) (1,953) (1,898) (14,057)
Total insurance service expense (130,217) (8,678) (15,766) (154,661) (102,755) (16,244) (20,498) (139,497)
Net (expense)/income from reinsurance contracts held
Reinsurance expenses - contracts measured under the PAA (30,119) (1,405) (2,093) (33,617) (23,800) (2,444) (2,262) (28,506)
Incurred claims recovery 13,223 944 5,271 19,438 17,367 5,947 2,527 25,841
Changes that relate to past service - changes in the FCF relating to incurred (3,803) 262 (2,871) (6,412) 4,758 (1,184) 2,117 5,691
claims recovery
Total net (expense)/income from reinsurance contracts held (20,699) (199) 307 (20,591) (1,675) 2,319 2,382 3,026
Total insurance service result 71,719 1,322 (162) 72,879 53,624 1,438 (3,287) 51,775
Other than reinsurance assets and insurance liabilities (see Note 3.1), the
Group does not allocate, monitor or report assets and liabilities per business
line and does not consider the information useful in the day-to-day running of
the Group's operations. The Group also does not allocate, monitor, or report
other income and expenses per business line.
3.6. Underwriting risk
The principal risk the Group faces under insurance contracts is that the
actual claims and benefit payments, or the timing thereof, differ from
expectations. This is influenced by the frequency of claims, severity of
claims, actual benefits paid and subsequent development of long-term claims.
Therefore, the objective of the Group is to ensure that sufficient reserves
are available to cover these liabilities.
The Group issues only motor insurance contracts within the UK, which usually
cover a 12-month duration. For these contracts, the most significant risks
arise from severe weather conditions or single catastrophic events. For
longer-tail claims that take some years to settle, there is also inflation
risk.
The above risk exposure is mitigated by diversification across a large
portfolio of policyholders and geographical areas within the UK. The
variability of risks is improved by careful selection and implementation of
underwriting strategies, which are designed to ensure that risks are
diversified in terms of type of risk and level of insured benefits. This is
largely achieved through diversification across policyholders. Furthermore,
strict claim review policies to assess all new and ongoing claims, regular
detailed review of claims handling procedures and frequent investigation of
possible fraudulent claims are all policies and procedures put in place to
reduce the risk exposure of the Group. The Group further enforces a policy of
actively managing and promptly pursuing claims, in order to reduce its
exposure to unpredictable future developments that can negatively impact the
business. Inflation risk is mitigated by taking expected inflation into
account when estimating insurance contract liabilities.
The Group purchases reinsurance as part of its risk mitigation programme.
Reinsurance ceded is placed on a non-proportional basis. This non-proportional
reinsurance is excess-of-loss, designed to mitigate the Group's net exposure
to single large claims or catastrophe losses. The current reinsurance
programme has a retention limit of £1m, with no upper limit. Under this
programme, the Group pays the first £1m of any claim and, from 1 July 2024,
40% of the next £1m (prior to 1 July 2024: 0%). Any amount above £2m, is
covered in full by the panel of reinsurers. All retention levels are subject
to monthly indexation subsequent to the accident date. Amounts recoverable
from reinsurers are estimated in a manner consistent with the outstanding
claims provision and are in accordance with the reinsurance contracts.
Although the Group has reinsurance arrangements, it is not relieved of its
direct obligations to its policyholders and thus a credit exposure exists with
respect to ceded reinsurance, to the extent that any reinsurer is unable to
meet its obligations assumed under such reinsurance agreements. The Group's
placement of reinsurance is diversified such that it is not dependent on a
single reinsurer. There is no single counterparty exposure that exceeds 25% of
total reinsurance assets at the reporting date.
Key assumptions
The principal assumption underlying the liability estimates is that the
Group's future claims development will follow a similar pattern to past claims
development experience. This includes assumptions in respect of average claim
costs, claim handling costs, claim inflation factors and claim numbers for
each accident year. Additional qualitative judgements are used to assess the
extent to which past trends may not apply in the future, for example: one-off
occurrence; changes in market factors such as public attitude to claiming:
economic conditions; and internal factors such as portfolio mix, policy
conditions and claims handling procedures. Judgement is further used to assess
the extent to which external factors such as judicial decisions and government
legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include
variation in interest rates and delays in settlement.
Sensitivities
The motor claim liabilities are primarily sensitive to the reserving
assumptions noted above. It has not been possible to quantify the sensitivity
of individual, specific assumptions such as legislative changes.
The following analysis is performed for reasonably possible movements in key
assumptions with all other assumptions held constant, showing the impact on
profit after tax and equity. The correlation of assumptions will have a
significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be
changed on an individual basis. It should be noted that movements in these
assumptions are non-linear. This sensitivity analysis reflects one-off impacts
at the balance sheet date and should not be interpreted as a forecast.
Increase/(decrease) in profit after tax and equity, gross of reinsurance Increase/(decrease) in profit after tax and equity, net of reinsurance
2024 2023 2024 2023
£'k £'k £'k £'k
Liability for incurred claims ((1) (2))
Impact of 5% increase in insurance contract liabilities (13,921) (13,101) (7,902) (7,013)
Impact of an increase in ultimate loss ratio of 5ppts (22,033) (19,563) (13,256) (11,458)
Discount rates
Impact of 1% increase in the discount rates used in calculating present value 6,282 6,108 2,267 2,244
of future expected cash outflows
Impact of 1% decrease in the discount rates used in calculating present value (7,379) (7,427) (2,604) (2,730)
of future expected cash outflows
Risk adjustment for non-financial risk
Impact of moving the confidence interval of the booked risk adjustment up by (10,103) (9,729) (2,495) (2,180)
5ppts
Impact of moving the confidence interval of the booked risk adjustment down by 8,224 7,740 2,121 1,853
5ppts
(1) The impact of decreases will have a similar but opposite impact.
(2) A substantial increase in individually large claims which are over our
reinsurance retention limit, generally will have no impact on profit after
tax.
Climate change
Management has assessed the short, medium and long-term risks that result from
climate change. The short-term risk is low. Given the geographical diversity
of the Group's policyholders within the UK and the Group's reinsurance
programme, it is highly unlikely that a climate event will materially impact
the Group's financial position, including its assessment of the liability for
incurred claims. More likely is that the costs associated with the transition
to a low-carbon economy will impact the Group's indemnity spend in the medium
term, as electronic vehicles are currently relatively expensive to fix. This
is somewhat, or perhaps completely, offset by advances in technology reducing
the frequency of claims, in particular bodily injury claims which are
generally far more expensive than damage to vehicles. These changes in the
costs of claims are gradual and, as such, reflected in the Group's claims
experience and fed into the pricing of policies. However, if the propensity to
travel by car decreases overall this could impact the Group's income in the
long term.
3.7. Insurance-related credit risk
Key insurance-related areas where the Group is exposed to credit default risk
are:
- Reinsurers default on their share of the Group's insurance
liabilities
- Default on amounts due from insurance contract intermediaries or
policyholders
Sabre uses a large panel of secure reinsurance companies. The credit risk of
reinsurers included in the reinsurance programme is considered annually by
reviewing their credit worthiness. Sabre's largest reinsurance counterparty is
Munich Re. The credit risk exposure is further monitored throughout the year
to ensure that changes in credit risk positions are adequately addressed.
- The following tables demonstrate the Group's exposure to credit
risk in respect of overdue insurance debt and counterparty creditworthiness.
Overdue insurance-related debt
Neither past due nor impaired Past due 1-90 days Past due more than 90 days Assets that have been impaired Carrying value in the balance sheet
At 31 December 2024 £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) 202,231 - - - 202,231
Insurance receivables ((2)) 41,755 22 - - 41,777
Total 243,986 22 - - 244,008
Neither past due nor impaired Past due 1-90 days Past due more than 90 days Assets that have been impaired Carrying value in the balance sheet
At 31 December 2023 £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) 197,591 - - - 197,591
Insurance receivables ((2)) 54,650 62 - - 54,712
Total 252,241 62 - - 252,303
(1) Undiscounted
(2) Included within 'Insurance contract liabilities'
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) - 102,138 100,093 - - - 202,231
Insurance receivables ((2)) - - - - - 41,777 41,777
Total - 102,138 100,093 - - 41,777 244,008
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) - 128,942 68,649 - - - 197,591
Insurance receivables ((2)) - - - - - 54,712 54,712
Total - 128,942 68,649 - - 54,712 252,303
(1) Undiscounted
(2) Included within 'Insurance contract liabilities'
3.8. Net financial result
2024 2023
Insurance Non-insurance related Total Insurance Non-insurance related Total
related
related
Notes £'k £'k £'k £'k £'k £'k
Investment income
Interest income on financial assets using effective interest rate method 4.5 7,501 425 7,926 3,506 269 3,775
Amounts recognised in OCI 4.6 3,774 - 3,774 9,284 - 9,284
Total investment income 11,275 425 11,700 12,790 269 13,059
Insurance finance expenses from insurance contracts issued
Interest accreted (8,392) - (8,392) (10,170) - (10,170)
Effect of changes in interest rates and other financial assumptions 6,852 - 6,852 (12,436) - (12,436)
(1,540) - (1,540) (22,606) - (22,606)
Reinsurance finance income from reinsurance contracts held
Interest accreted 3,714 - 3,714 3,588 - 3,588
Effect of changes in interest rates and other financial assumptions (5,880) - (5,880) 5,432 - 5,432
(2,166) - (2,166) 9,020 - 9,020
Net insurance finance expense (3,706) - (3,706) (13,586) - (13,586)
Net financial results 7,569 425 7,994 (796) 269 (527)
Represented by:
Amounts recognised in Profit or Loss 2,823 425 3,248 (3,076) 269 (2,807)
Amounts recognised in OCI 4,746 - 4,746 2,280 - 2,280
Total 7,569 425 7,994 (796) 269 (527)
3.9. Opening balance restatement - Insurance Finance Reserve
As a result of refinements made to the IFRS 17 discounting model, an amount of
£2.6m has been reclassified between 2023's opening Retained Earnings and
opening Insurance/Reinsurance Finance Reserve. This restatement has no impact
on the total equity or regulatory capital of the Group, and has no impact on
the Consolidated Profit or Loss or Consolidated Statement of Comprehensive
Income for any of the previous periods.
4. FINANCIAL ASSETS
RISK MANAGEMENT
Refer to the following notes for detail on risks relating to financial assets:
Investment concentration risk - Note 4.2.1
Interest rate risk - Note 4.2.2
Credit risk - Note 4.4
Liquidity risk - Note 6
The Group's financial assets are summarised below:
2024 2023
Notes £'k £'k
Cash and cash equivalents 4.1 31,314 35,079
Debt securities held at fair value through other comprehensive income 4.2 311,184 264,679
Receivables 4.3 32 87
Total 342,530 299,845
4.1. Cash and cash equivalents
ACCOUNTING POLICY - CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held on call with
banks and money market funds. Cash and cash equivalents are carried at
amortised cost.
2024 2023
£'k £'k
Cash at bank and on hand 18,174 12,890
Money market funds 13,140 22,189
Total 31,314 35,079
Cash held in money market funds has no notice period for withdrawal.
The carrying value of cash and cash equivalents approximates fair value. The
full value is expected to be realised within 12 months.
4.2. Debt securities held at fair value through other comprehensive income
ACCOUNTING POLICY - FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
Classification
The Group classifies the following financial assets at fair value through
Other Comprehensive Income ("FVOCI"):
- Debt securities
A debt instrument is measured at FVOCI only if it meets both of the following
conditions and is not designated at fair value through the Profit or Loss
Account ("FVTPL"):
- The asset is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial
assets
- The contractual terms of the financial asset give rise to cash
flows that are solely payments of principal and interest ("SPPI") on the
principal amount outstanding on specified dates
Recognition and measurement
At initial recognition, the Group measures debt securities through other
comprehensive income at fair value, plus the transaction costs that are
directly attributable to the acquisition of the financial asset. Debt
securities at FVOCI are subsequently measured at fair value.
Impairment
At each reporting date, the Group assesses debt securities at FVOCI for
impairment. Under IFRS 9, a 'three-stage' model for calculating the expected
credit losses ("ECL") is used, and is based on changes in credit quality since
initial recognition. Refer to Note 4.4.
The Group's debt securities held at fair value through other comprehensive
income are summarised below:
2024 2023
£'k % holdings £'k % holdings
Government bonds 112,793 36.2% 107,040 40.4%
Government-backed securities 103,267 33.2% 81,942 31.0%
Corporate bonds 95,124 30.6% 75,697 28.6%
Total 311,184 100.0% 264,679 100.0%
4.2.1. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to
concentration risk. The Group has no significant investment concentration in
any particular industrial sector and therefore is unlikely to suffer
significant losses through its investment portfolio as a result of
over-exposure to sectors engaged in similar activities or which have similar
economic features that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic, political or
other conditions.
A significant part of the Group's investment portfolio consists primarily of
UK government bonds and government-backed bonds; therefore, the risk of
government default does exist, however the likelihood is extremely remote. The
remainder of the portfolio consists of investment grade corporate bonds. The
Group continues to monitor the strength and security of all bonds. The Group
does not have direct exposure to Ukrainian and Russian assets.
The Group's exposure by geographical area is outlined below:
Government bonds Government-backed securities Corporate bonds Total
At 31 December 2024 £'k £'k £'k £'k % holdings
United Kingdom 112,793 3,038 31,187 147,018 47.2%
Europe - 59,277 37,002 96,279 30.9%
Northern America - 25,761 19,863 45,624 14.7%
Oceania - - 4,973 4,973 1.6%
Asia - 15,191 2,099 17,290 5.6%
Total 112,793 103,267 95,124 311,184 100.0%
Government bonds Government-backed securities Corporate bonds Total
At 31 December 2023 £'k £'k £'k £'k % holdings
United Kingdom 107,040 - 32,364 139,404 52.7%
Europe - 50,982 28,736 79,718 30.1%
Northern America - 28,284 12,643 40,927 15.5%
Oceania - - 1,954 1,954 0.7%
Asia - 2,676 - 2,676 1.0%
Total 107,040 81,942 75,697 264,679 100.0%
The Group's exposure by investment type for government-backed securities and
corporate bonds is outlined below:
Agency Supranational Total
At 31 December 2024 £'k £'k £'k
Government-backed securities 43,921 59,346 103,267
%of holdings 42.5% 57.5% 100.0%
Financial Industrial Utilities Total
At 31 December 2024 £'k £'k £'k £'k
Corporate bonds 51,698 38,873 4,553 95,124
%of holdings 54.3% 40.9% 4.8% 100.0%
Agency Supranational Total
At 31 December 2023 £'k £'k £'k
Government-backed securities 40,310 41,632 81,942
%of holdings 49.2% 50.8% 100.0%
Financial Industrial Utilities Total
At 31 December 2023 £'k £'k £'k £'k
Corporate bonds 40,973 31,117 3,607 75,697
%of holdings 54.1% 41.1% 4.8% 100.0%
4.2.2. Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. Floating rate instruments expose the Group to cash flow interest risk,
whereas fixed interest rate instruments expose the Group to fair value
interest risk.
The Group's interest risk policy requires it to manage the maturities of
interest-bearing financial assets and interest-bearing financial liabilities.
Interest on fixed interest rate instruments is priced at inception of the
financial instrument and is fixed until maturity.
The Group has a concentration of interest rate risk in UK government bonds and
other fixed-income securities.
The analysis that follows is performed for reasonably possible movements in
key variables with all other variables held constant, showing the impact on
profit before tax and equity. The correlation of variables will have a
significant effect in determining the ultimate impact on interest rate risk,
but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis. It should be noted that movements in these
variables are non-linear.
The impact of any movement in market values, such as those caused by changes
in interest rates, is taken through other comprehensive income and has no
impact on profit after tax.
Decrease in profit after tax Decrease in total equity
2024 2023 2024 2023
At 31 December £'k £'k £'k £'k
Interest rate
Impact of a 100-basis point increase in interest rates on debt securities at - - (3,250) (2,758)
FVOCI
Impact of a 200-basis point increase in interest rates on debt securities at - - (6,499) (5,516)
FVOCI
4.2.3. Fair value
ACCOUNTING POLICY
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, or in its absence, the most advantageous market to which
the Group has access at that date.
The Group measures the fair value of an instrument using the quoted bid price
in an active market for that instrument. A market is regarded as active if
transactions for the asset take place with sufficient frequency and volume to
provide pricing information on an ongoing basis.
The fair value of financial instruments traded in active markets is based on
quoted market prices at the Statement of Financial Position date.
A market is regarded as active if quoted prices are readily and regularly
available from the stock exchange or pricing service, and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held by the
Group is the closing bid price.
Fair value measurements are based on observable and unobservable inputs.
Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Group's view of market assumptions in the
absence of observable market information.
IFRS 13 requires certain disclosures which require the classification of
financial assets and financial liabilities measured at fair value using a fair
value hierarchy that reflects the significance of the inputs used in making
the fair value measurement.
Disclosure of fair value measurements by level is according to the following
fair value measurement hierarchy:
Level 1: fair value is based on quoted market prices (unadjusted) in active
markets for identical instruments as measured on reporting date
Level 2: fair value is determined through inputs, other than quoted prices
included in Level 1 that are observable for the assets and liabilities, either
directly (prices) or indirectly (derived from prices)
Level 3: fair value is determined through valuation techniques which use
significant unobservable inputs
Level 1
The fair value of financial instruments traded in active markets is based on
quoted market prices at the Statement of Financial Position date.
A market is regarded as active if quoted prices are readily and regularly
available from the stock exchange or pricing service, and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held by the
Group is the closing bid price. These instruments are included in Level 1 and
comprise only debt securities classified as fair value through other
comprehensive income.
Level 2
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as
little as possible on entity-specific estimates. If all significant input
required to fair value an instrument is observable, the instrument is included
in Level 2. The Group has no Level 2 financial instruments.
Level 3
If one or more of the significant inputs are not based on observable market
data, the instrument is included in Level 3. The Group has no Level 3
financial instruments.
The following table summarises the classification of financial instruments:
Level 1 Level 2 Level 3 Total
At 31 December 2024 £'k £'k £'k £'k
Assets held at fair value
Debt securities held at FVOCI 311,184 - - 311,184
Total 311,184 - - 311,184
Level 1 Level 2 Level 3 Total
At 31 December 2023 £'k £'k £'k £'k
Assets held at fair value
Debt securities held at FVOCI 264,679 - - 264,679
Total 264,679 - - 264,679
Transfers between levels
There have been no transfers between levels during the year (2023: no
transfers).
4.3. Receivables
ACCOUNTING POLICY
Classification
The Group classifies its receivables as at amortised cost only if both of the
following criteria are met:
- The asset is held within a business model whose objective is to
collect the contractual cash flows
- The contractual terms give rise to cash flows that are solely
payments of principle and interest
Recognition and measurement
Receivables are initially recognised at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for
expected credit losses.
Impairment
The Group measures loss allowances at an amount equal to lifetime ECL. To
measure the expected credit losses, receivables have been grouped based on
shared credit risk characteristics and the days past due to create the
categories namely, performing, underperforming and not performing. The
expected loss rates are based on the payment profiles of receivables over a
period of 36 months before year end. The loss rates are adjusted to reflect
current and forward-looking information on macro-economic factors, such as the
socio-economic environment affecting the ability of the debtors to settle the
receivables. Receivables that are 30 days or more past due are considered to
be 'not performing' and the default rebuttable presumption of 90 days
prescribed by IFRS 9 is not applied.
Performing
Customers have a low risk of default and a strong capacity to meet contractual
cash flows.
Underperforming
Receivables for which there is a significant increase in credit risk. A
significant increase in credit risk is presumed if interest and/or principal
repayments are past due.
Not performing
Interest and/or principal repayments are 30 days past due.
The Group's receivables comprise:
2024 2023
Notes £'k £'k
Other debtors 32 87
Total 32 87
The estimated fair values of receivables are the discounted amounts of the
estimated future cash flows expected to be received.
The carrying value of receivables approximates fair value. The provision for
expected credit losses is based on the recoverability of the individual
receivables.
The Group calculated ECL on receivables and has concluded that it is wholly
immaterial and such further disclosure has not been included.
4.4. Credit risk
ACCOUNTING POLICY
Impairment of financial assets
At each reporting date, the Group assesses financial assets measured at
amortised cost and debt securities at FVOCI for impairment. Under IFRS 9 a
'three-stage' model for calculating expected credit losses ("ECL") is used,
and is based on changes in credit quality since initial recognition as
summarised below:
Performing financial assets
Stage 1: From initial recognition of a financial asset to the date on which an
asset has experienced a significant increase in credit risk relative to its
initial recognition, a stage 1 loss allowance is recognised equal to the
credit losses expected to result from its default occurring over the earlier
of the next 12 months or its maturity date ("12-month ECL").
Stage 2: Following a significant increase in credit risk relative to the
initial recognition of the financial asset, a stage 2 loss allowance is
recognised equal to the credit losses expected from all possible default
events over the remaining lifetime of the asset ("Lifetime ECL"). The
assessment of whether there has been a significant increase in credit risk,
such as an actual or significant change in instruments' external credit
rating; significant widening of credit spread; changes in rates or terms of
instrument; existing or forecast adverse change in business, financial or
economic conditions that are expected to cause a significant change in the
counterparty's ability to meet its debt obligations; requires considerable
judgement, based on the lifetime probability of default ("PD"). Stage 1 and 2
allowances are held against performing loans; the main difference between
stage 1 and stage 2 allowances is the time horizon. Stage 1 allowances are
estimated using the PD with a maximum period of 12 months, while stage 2
allowances are estimated using the PD over the remaining lifetime of the
asset.
Impaired financial assets
Stage 3: When a financial asset is considered to be credit-impaired, the
allowance for credit losses ("ACL") continues to represent lifetime expected
credit losses; however, interest income is calculated based on the amortised
cost of the asset, net of the loss allowance, rather than its gross carrying
amount.
Application of the impairment model
The Group applies IFRS 9's ECL model to two main types of financial assets
that are measured at amortised cost or FVOCI:
Other receivables, to which the simplified approach prescribed by IFRS 9 is
applied. This approach requires the recognition of a lifetime ECL allowance on
day one.
Debt securities, to which the general three-stage model (described above) is
applied, whereby a 12-month ECL is recognised initially and the balance is
monitored for significant increases in credit risk which triggers the
recognition of a lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. The probability is
determined by the estimated risk of default which is applied to the cash flow
estimates. On a significant increase in credit risk, from investment grade to
non-investment grade, allowances are recognised without a change in the
expected cash flows (although typically expected cash flows do also change)
and expected credit losses are rebased from 12-month to lifetime expectations.
The measurement of ECLs considers information about past events and current
conditions, as well as supportable information about future events and
economic conditions.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted
from the gross carrying amount of the assets. For debt securities at FVOCI,
the loss allowance is recognised in the Profit or Loss Account and accounted
for as a transfer from OCI to Profit or Loss, instead of reducing the carrying
amount of the asset.
Write-offs
Loans and debt securities are written off (either partially or in full) when
there is no realistic prospect of the amount being recovered. This is
generally the case when the Group concludes that the borrower does not have
assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off.
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
UK government bonds - 112,793 - - - - 112,793
Government-backed securities 98,963 4,304 - - - - 103,267
Corporate bonds 1,127 20,050 57,270 16,677 - - 95,124
Receivables - - - - - 32 32
Cash and cash equivalents 13,140 51 18,123 - - - 31,314
Total 113,230 137,198 75,393 16,677 - 32 342,530
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
UK government bonds - 107,040 - - - - 107,040
Government-backed securities 81,942 - - - - - 81,942
Corporate bonds - 4,153 51,020 20,524 - - 75,697
Receivables - - - - - 87 87
Cash and cash equivalents 22,189 51 12,839 - - - 35,079
Total 104,131 111,244 63,859 20,524 - 87 299,845
With the exception of receivables, all the Group's financial assets are
investment grade (AAA to BBB).
Analysis of credit risk and allowance for ECL
The following table provides an overview of the allowance for ECL provided for
on the types of financial assets held by the Group where credit risk is
prevalent.
Gross carrying amount Allowance for ECL Net amount
At 31 December 2024 £'k £'k £'k
Government bonds 112,793 (3) 112,790
Government-backed securities 103,267 (4) 103,263
Corporate bonds 95,124 (35) 95,089
Receivables 32 - 32
Cash and cash equivalents 31,314 - 31,314
Total 342,530 (42) 342,488
Gross carrying amount Allowance for ECL Net amount
At 31 December 2023 £'k £'k £'k
Government bonds 107,040 (3) 107,037
Government-backed securities 81,942 (4) 81,938
Corporate bonds 75,697 (30) 75,667
Receivables 87 - 87
Cash and cash equivalents 35,079 - 35,079
Total 299,845 (37) 299,808
4.5. Investment income
ACCOUNTING POLICY
Investment income from debt instruments classified as FVOCI are measured using
the effective interest rate which allocates the interest income or interest
expense over the expected life of the asset or liability at the rate that
exactly discounts all estimated future cash flows to equal the instrument's
initial carrying amount. Calculation of the effective interest rate takes into
account fees payable or receivable that are an integral part of the
instrument's yield, premiums or discounts on acquisition or issue, early
redemption fees and transaction costs. All contractual terms of a financial
instrument are considered when estimating future cash flows.
2024 2023
£'k £'k
Interest income on financial assets using effective interest rate method
Interest income from debt securities 6,458 3,131
Interest income from cash and cash equivalents 1,468 644
Total 7,926 3,775
4.6. Net gains/(losses) from fair value adjustments on financial assets
ACCOUNTING POLICY
Movements in the fair value of debt instruments classified as FVOCI are taken
through OCI. When the instruments are derecognised, the cumulative gain or
losses previously recognised in OCI is reclassified to Profit or Loss.
2024 2023
£'k £'k
Other comprehensive income
Unrealised fair value gains on debt securities 3,769 9,278
Expected credit loss 5 6
Unrealised fair value gains on debt securities through Other Comprehensive 3,774 9,284
Income
Net gains from fair value adjustments on financial assets 3,774 9,284
5. PAYABLES
ACCOUNTING POLICY
Payables are recognised when the Group has a contractual obligation to deliver
cash or another financial asset to another entity, or a contractual obligation
to exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavourable to the entity. Payables are
carried at amortised cost.
2024 2023
£'k £'k
Trade and other creditors 951 2,149
Other taxes 6,044 7,551
Total 6,995 9,700
6. LIQUIDITY RISK
Liquidity risk is the potential that obligations cannot be met as they fall
due as a consequence of having a timing mismatch or inability to raise
sufficient liquid assets without suffering a substantial loss on realisation.
The Group manages its liquidity risk through both ensuring that it holds
sufficient cash and cash equivalent assets to meet all short-term liabilities
and matching, as far as possible, the maturity profile of its financial
investments to the expected cash outflows.
The following table analyses the carrying value of cash and cash equivalents
and financial assets, by contractual maturity, which can fund the repayment of
liabilities as they crystallise. It also analyses the undiscounted cash flows
of reinsurance contract assets held, based on the future expected cash flows
to be received in the periods presented.
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Cash and cash equivalents (1) 31,314 - - - - - 31,314
UK government bonds 11,810 32,790 19,855 30,628 17,710 - 112,793
Government-backed securities 39,740 38,861 7,929 6,034 10,703 - 103,267
Corporate bonds 37,546 20,366 11,347 19,091 6,230 544 95,124
Receivables 32 - - - - - 32
Reinsurance contract assets 56,652 31,084 18,558 19,662 15,631 60,644 202,231
Total 177,094 123,101 57,689 75,415 50,274 61,188 544,761
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Cash and cash equivalents (1) 35,079 - - - - - 35,079
UK government bonds 22,008 8,513 32,136 13,374 31,009 - 107,040
Government-backed securities 57,722 13,914 3,327 5,601 1,378 - 81,942
Corporate bonds 8,987 37,000 12,953 10,216 6,541 - 75,697
Receivables 87 - - - - - 87
Reinsurance contract assets 68,215 30,182 23,361 14,267 12,142 49,425 197,592
Total 192,098 89,609 71,777 43,458 51,070 49,425 497,437
(1) Includes money market funds with no notice period for withdrawal
The following table analyses the undiscounted cash flows of insurance
liabilities based on the future cash flows expected to be paid out in the
periods presented, and payables by maturity dates.
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Payables 6,995 - - - - - 6,995
Insurance contract liabilities ((2)) 88,992 74,407 42,761 34,427 25,261 77,787 343,635
Total 95,987 74,407 42,761 34,427 25,261 77,787 350,630
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Payables 9,700 - - - - - 9,700
Insurance contract liabilities (2) 83,152 65,618 45,253 26,746 19,598 60,226 300,593
Total 92,852 65,618 45,253 26,746 19,598 60,226 310,293
(2) Excludes the liability for remaining coverage (unearned premium
element) and effect of discounting
Management has considered the liquidity and cash generation of the Group and
is satisfied that the Group will be able to meet all liabilities as they fall
due.
7. OTHER INCOME
ACCOUNTING POLICY
Other income consists of brokerage fees resulting from the sale of ancillary
products connected to the Group's direct business, and other non-insurance
income such as administrative fees charged on direct business. Such income is
recognised once the related service has been performed. Typically, this will
be at the point of sale of the product.
2024 2023
£'k £'k
Administration fees 182 495
Brokerage and other fee income 558 737
Total 740 1,232
Brokerage and other fee income relates to auxiliary products and services,
including brokerage and administration fees, all relating to the Motor Vehicle
product.
8. OTHER OPERATING EXPENSES
2024 2023
Notes £'k £'k
Employee expenses 8.1 15,426 13,869
Property expenses 500 689
IT expense, including IT depreciation 6,756 5,961
Other depreciation 113 59
Industry levies 5,994 5,936
Policy servicing costs 3,153 2,491
Other operating expenses 3,399 3,328
Movement in expected credit loss on debt securities 5 6
Impairment loss on owner occupied properties - 333
Before adjustment for directly attributable claims expenses 35,346 32,672
Adjusted for:
Reclassification of directly attributable claims expenses (7,041) (6,085)
Total operating expenses 28,305 26,587
8.1. Employee expenses
ACCOUNTING POLICY
A. Pensions
For staff who were employees on 8 February 2002, the Group operates a
non-contributory defined contribution Group personal pension scheme. The
contribution by the Group depends on the age of the employee.
For employees joining since 8 February 2002, the Group operates a matched
contribution Group personal pension scheme where the Group contributes an
amount matching the contribution made by the staff member.
Contributions to defined contribution schemes are recognised in the Profit or
Loss Account in the period in which they become payable.
B. Share-based payments
The fair value of equity instruments granted under share‑based payment plans
are recognised as an expense and spread over the vesting period of the
instrument. The total amount to be expensed is determined by reference to the
fair value of the awards made at the grant date, excluding the impact of any
non‑market vesting conditions. Depending on the plan, the fair value of
equity instruments granted is measured on grant date using an appropriate
valuation model or the market price on grant date. At the date of each
Statement of Financial Position, the Group revises its estimate of the number
of equity instruments that are expected to become exercisable. It recognises
the impact of the revision of original estimates, if any, in the Profit or
Loss Account, and a corresponding adjustment is made to equity over the
remaining vesting period. The fair value of the awards and ultimate expense
are not adjusted on a change in market vesting conditions during the vesting
period.
C. Leave pay
Employee entitlement to annual leave is recognised when it accrues to
employees. An accrual is made for the estimated liability for annual leave as
a result of services rendered by employees up to the Statement of Financial
Position date.
The aggregate remuneration of those employed by the Group's operations
comprised:
2024 2023
£'k £'k
Wages and salaries 11,332 10,079
Social security expenses 1,464 1,276
Contributions to defined contribution plans 598 557
Equity-settled share-based payment 1,607 1,606
Other employee expenses 425 351
Before adjustment for directly attributable claims expenses 15,426 13,869
Adjusted for:
Reclassification of directly attributable claims expenses (4,799) (4,146)
Employee expenses 10,627 9,723
8.2. Number of employees
The table below analyses the average monthly number of persons employed by the
Group's operations.
2024 2023
Operations 134 129
Support 31 28
Total 165 157
8.3. Directors' remuneration
Amounts paid to Directors are disclosed within the Annual Report on Directors'
Remuneration on pages 105 to 117.
8.4. Auditor's remuneration
The table below analyses the Auditor's remuneration in respect of the Group's
operations.
2024 2023
£'k £'k
Audit of these financial statements 205 195
Audit of financial statements of subsidiaries of the Group 253 251
Audit fees in relation to IFRS 17 transition - 190
Total audit fees 458 636
Fees for non-audit services - Audit-related assurance services 89 105
Fees for non-audit services - Other non-audit services - -
Total non-audit fees 89 105
Total auditor remuneration 547 741
The above fees exclude irrecoverable VAT of 20%.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of owned and leased assets that do not
meet the definition of investment property.
2024 2023
£'k £'k
Owner-occupied property 3,600 3,600
Office equipment 539 652
IT equipment 65 136
Total 4,204 4,388
ACCOUNTING POLICY
A. Owner-occupied property
Owner-occupied properties are held by the Group for use in the supply of
services or, for its own administration purposes.
Owner-occupied property is held at fair value. Increases in the carrying
amount of owner-occupied properties as a result of revaluations are credited
to other comprehensive income and accumulated in a revaluation reserve in
equity. To the extent that a revaluation increase reverses a revaluation
decrease that was previously recognised as an expense in Profit or Loss, such
increase is credited to income in Profit or Loss. Decreases in valuation are
charged to Profit or Loss, except to the extent that a decrease reverses the
existing accumulated revaluation reserve and therefore such a decrease is
recognised in other comprehensive income.
A fair value assessment of the owner-occupied property is undertaken at each
reporting date with any material changes in fair value recognised. Valuation
is at highest and best use. Owner-occupied property is also revalued by an
external qualified surveyor, at least every three years. UK properties do not
have frequent and volatile fair value changes and, as such, more frequent
revaluations are considered unnecessary, as only insignificant changes in fair
value is expected.
Owner-occupied land is not depreciated. As the depreciation of owner-occupied
buildings is immaterial and properties are revalued every three years by an
external qualified surveyor, no depreciation is charged on owner-occupied
buildings.
B. Office and IT equipment
Office and IT equipment are stated at historical cost less accumulated
depreciation and impairment charges. Historical cost includes expenditure that
is directly attributable to the acquisition of property and equipment.
Depreciation is calculated on the difference between the cost and residual
value of the asset and is charged to the Profit or Loss Account over the
estimated useful life of each significant part of an item of fixtures,
fittings and IT equipment, using the straight-line basis.
Estimate useful lives are as follows:
Office equipment 3 to 10 years
IT equipment 3 to 5 years
The assets' residual values and useful lives are reviewed at each Statement of
Financial Position date and adjusted if appropriate. An asset's carrying
amount is written down to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing the proceeds with the carrying amount of
the assets and are included in Profit or Loss before tax.
Repairs and maintenance costs are charged to the Profit or Loss Account during
the financial year in which they are incurred. The cost of major renovations
is included in the carrying amount of the asset when it is probable that
future economic benefits from the renovations will flow to the Group.
Owner- occupied Office equipment IT equipment Total
£'k £'k £'k £'k
Cost/Valuation
At 1 January 2024 4,358 720 487 5,565
Additions/Improvements - - - -
Disposals - - - -
Revaluation - - - -
At 31 December 2024 4,358 720 487 5,565
Accumulated depreciation and impairment
At 1 January 2024 758 68 351 1,177
Depreciation charge for the year - 113 71 184
Disposals - - - -
Impairment losses on revaluation - - - -
At 31 December 2024 758 181 422 1,361
Carrying amount
At 31 December 2024 3,600 539 65 4,204
Owner- occupied Office equipment IT equipment Total
£'k £'k £'k £'k
Cost/Valuation
At 1 January 2023 4,250 41 409 4,700
Additions/Improvements 908 679 78 1,665
Disposals - - - -
Revaluation (800) - - (800)
At 31 December 2023 4,358 720 487 5,565
Accumulated depreciation and impairment
At 1 January 2023 425 9 270 704
Depreciation charge for the year - 59 81 140
Disposals - - - -
Impairment losses on revaluation 333 - - 333
At 31 December 2023 758 68 351 1,177
Carrying amount
At 31 December 2023 3,600 652 136 4,388
All items disposed where either donated to charity or recycled at £NIL.
The Group holds two owner-occupied properties, Sabre House and The Old House,
which are both managed by the Group. In accordance with the Group's accounting
policies, owner-occupied buildings are not depreciated. The properties are
measured at fair value which is arrived at on the basis of a valuation carried
out on 16 October 2023 by Hurst Warne and Partners LLP. The valuation was
carried out on an open-market basis in accordance with the Royal Institution
of Chartered Surveyors' requirements, which is deemed to equate to fair value.
While transaction evidence underpins the valuation process, the definition of
market value, including the commentary, in practice requires the valuer to
reflect the realities of the current market. In this context valuers must use
their market knowledge and professional judgement and not rely only upon
historical market sentiment based on historical transactional comparables.
The fair value of the owner-occupied properties was derived using the
investment method supported by comparable evidence. The significant
non-observable inputs used in the valuations are the expected rental values
per square foot and the capitalisation rates. The fair value of the
owner-occupied properties valuation would increase (decrease) if the expected
rental values per square foot were to be higher (lower) and the capitalisation
rates were to be lower (higher).
The fair value measurement of owner-occupied properties of £3,600k (2023:
£3,600k) has been categorised as a Level 3 fair value based on the
non-observable inputs to the valuation technique used.
The following table shows reconciliation to the closing fair value for the
Level 3 owner-occupied property at valuation:
2024 2023
£'k £'k
At 1 January 3,600 3,825
Additions/Improvements - 908
Revaluation losses - (800)
Impairment losses - (333)
At 31 December 3,600 3,600
The fair value of owner-occupied properties includes a revaluation reserve of
£NIL (2023: £NIL) (excluding tax impact) and is not distributable.
Revaluation losses are charged against the related revaluation reserve to the
extent that the decrease does not exceed the amount held in the revaluation
surplus in respect of the same asset. Any additional losses are charged as an
impairment loss in the Profit or Loss Account. Reversal of such impairment
losses in future periods will be credited to the Profit or Loss Account to the
extent losses were previously charged to the Profit or Loss Account.
The table below shows the impact a 15% decrease in property markets will have
on the Group's profit after tax and equity:
Decrease in profit after tax Decrease In total equity
2024 2023 2024 2023
£'k £'k £'k £'k
Owner-occupied property
Impact of a 15% decrease in property markets (405) (309) (405) (309)
Historical cost model values
If owner-occupied properties were carried under the cost model (historical
costs, less accumulated depreciation and impairment losses), the value of
owner-occupied properties in the balance sheet would have been £3,229k (2023:
£3,349k).
10. INCOME TAX EXPENSE
ACCOUNTING POLICY
The income tax expense in the Profit or Loss Account is based on the taxable
profits for the year. It is Group policy to relieve profits where possible by
the surrender of losses from Group companies with payment for value.
2024 2023
£'k £'k
Current taxation
Charge for the year 12,157 4,444
Charge relating to prior periods 570 -
12,727 4,444
Deferred taxation (Note 11)
Origination and reversal of temporary differences (126) 1,104
(126) 1,104
Current taxation 12,727 4,444
Deferred taxation (Note 11) (126) 1,104
Income tax expense 12,601 5,548
Tax recorded in Other Comprehensive Income is as follows:
2024 2023
£'k £'k
Current taxation - 31
Deferred taxation 549 599
549 630
The actual income tax expense differs from the expected income tax expense
computed by applying the standard rate of UK corporation tax of 25.0% (2023:
23.5%) as follows:
2024 2023
£'k £'k
Profit before tax 48,562 23,613
Expected income tax expense 12,141 5,548
Effect of:
Expenses not deductible for tax purposes (86) 12
Adjustment of deferred tax to average rate of 25% - (1)
Adjustment in respect of prior periods 570 -
Other income tax adjustments (24) (11)
Income tax expense for the year 12,601 5,548
Effective income tax rate 25.9% 23.5%
11. DEFERRED TAX
ACCOUNTING POLICY
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more, tax, with the following
exception.
Deferred tax assets are recognised only to the extent that the Directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
Provisions and other temporary differences Depreciation in excess of capital allowances Share-based payments Fair value movements in debt securities at FVOCI Movement in insurance finance reserve Total
£'k £'k £'k £'k £'k £'k
At 1 January 2023 - (20) 253 4,151 (1,993) 2,391
(Debit)/Credit to the Profit or Loss - (160) 215 (6) (1,153) (1,104)
(Debit)/Credit to Other Comprehensive Income - - - (2,149) 1,550 (599)
At 31 December 2023 - (180) 468 1,996 (1,596) 688
(Debit)/Credit to the Profit or Loss - 43 88 (5) - 126
(Debit)/Credit to Other Comprehensive Income - - - (944) 395 (549)
At 31 December 2024 - (137) 556 1,047 (1,201) 265
2024 2023
£'k £'k
Per Statement of Financial Position:
Deferred tax assets 1,603 2,464
Deferred tax liabilities (1,338) (1,776)
265 688
12. DIVIDENDS
ACCOUNTING POLICY
Dividend distribution to the Group's shareholders is recognised as a liability
in the Group's financial statements in the period in which the dividend is
approved.
2024 2023
pence per share £'k pence per share £'k
Amounts recognised as distributions to equity holders in the period
Interim dividend for the current year 1.7 4,227 0.9 2,238
Final dividend for the prior year 8.1 20,122 1.7 4,228
9.8 24,349 2.6 6,466
Proposed dividends
Final dividend (1) 11.3 28,250 8.1 20,250
(1) Subsequent to 31 December 2024, the Directors declared a final
dividend for 2024 of 11.3p per ordinary share subject to approval at Annual
General Meeting. This dividend will be accounted for as an appropriation of
retained earnings in the year ended 31 December 2024 and is not included as a
liability in the Statement of Financial Position as at 31 December 2024.
The trustees of the employee share trusts waived their entitlement to
dividends on shares held in the trusts to meet obligations arising on share
incentive schemes, which reduced the dividends paid for the year ended 31
December 2024 by £151k (2023: £34k).
13. OTHER ASSETS
2024 2023
£'k £'k
Prepayments and accrued income 778 774
Total 778 774
The carrying value of other assets approximates to fair value. There are no
amounts expected to be recovered more than 12 months after the reporting date.
14. GOODWILL
ACCOUNTING POLICY
Goodwill has been recognised in acquisitions of subsidiaries and represents
the difference between the cost of the acquisition and the fair value of the
net identifiable assets acquired. Goodwill is stated at cost less any
accumulated impairment losses.
Impairment of goodwill
The Group performs an annual impairment review which involves comparing the
carrying amount to the estimated recoverable amount and recognising an
impairment loss if the recoverable amount is lower than the carrying amount.
Impairment losses are recognised through the Profit or Loss Account and are
not subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less
costs to sell and the value in use.
The value in use calculations use cash flow projections based on financial
budgets approved by management.
On 3 January 2014, the Group acquired Binomial Group Limited, the parent of
Sabre Insurance Company Limited, for a consideration of £245,485k satisfied
by cash. As from 1 January 2014, the date of transition to IFRS, goodwill was
no longer amortised but is subject to annual impairment testing. Impairment
testing involves comparing the carrying value of the net assets and goodwill
against the recoverable amount.
The goodwill recorded in respect of this transaction at the date of
acquisition was £156,279k. There has been no impairment to goodwill since
this date, and no additional goodwill has been recognised by the Group.
The Group performed its annual impairment test as at 31 December 2024 and 31
December 2023. The Group considers the relationship between the Group's market
capitalisation and the book value of its subsidiary undertakings, among other
factors, when reviewing for indicators of impairment.
Key assumptions
The valuation uses fair value less cost to sell. The key assumption on which
the Group has based this value is:
The market capitalisation of the Group as at 31 December 2024 of £345,000k
(31 December 2023: £378,500k).
The Directors concluded that the recoverable amount of the business unit would
remain in excess of its carrying value even after reasonably possible changes
in the key inputs and assumptions affecting its market value, such as a
significant fall in demand for its products or a significant adverse change in
the volume of claims and increase in other expenses, before the recoverable
amount of the business unit would reduce to less than its carrying value.
Therefore, the Directors are of the opinion that there are no indicators of
impairment as at 31 December 2024.
15. SHARE CAPITAL
2024 2023
£'k £'k
Authorised share capital
250,000,000 Ordinary Shares of £0.001 each 250 250
Issued Ordinary Share capital (fully paid up):
250,000,000 Ordinary Shares of £0.001 each 250 250
All shares are unrestricted and carry equal voting rights.
Own shares
Own shares are shares in Sabre Insurance Group plc that are held by the Sabre
Insurance Group Employee Benefit Trust ("EBT") for the purpose of issuing
shares under the Group's equity-settled share-based schemes (refer to Note 16
for further information).
Shares bought/(sold) on open market
Number of shares £
As at 31 December 2022 1,431,576 2,809,506
Acquisition of shares by the EBT 435,758 631,940
Disposal of shares by the EBT - -
Employee share scheme issue (278,084) (320,912)
As at 31 December 2023 1,589,250 3,120,534
Acquisition of shares by the EBT 986,377 1,483,654
Disposal of shares by the EBT - -
Employee share scheme issue (612,919) (1,491,750)
As at 31 December 2024 1,962,708 3,112,438
In thousands £'k
31 December 2023 3,121
31 December 2024 3,112
Shares issued to employees are recognised on a first-in-first-out basis.
As at 31 December 2024, The Sabre Insurance Group Employee Benefit Trust held
1,962,708(2023:1,589,250) of the 250,000,000 issued Ordinary Shares with a
nominal value of£1,962.71(2023: £1,589.25) in connection with the operation
of the Group's share plans. Refer to Notes 16 and 17 for additional
information on own shares held.
16. SHARE-BASED PAYMENTS
The Group operates equity-settled share-based schemes for all employees in the
form of a Long Term Incentive Plan ("LTIP"), Deferred Bonus Plan ("DBP") and
Share Incentive Plans ("SIP"), including Free Shares and Save As You Earn
("SAYE"). The shares are in the ultimate Parent Company, Sabre Insurance Group
plc.
The Group recognised a total expense in the Profit or Loss for the year ended
31 December 2024 of £1,607k (2023: £1,606k), relating to equity-settled
share-based plans.
Long Term Incentive Plan ("LTIP")
The LTIP is a discretionary share plan, under which the Board may grant
share-based awards ("LTIP Awards") to incentivise and retain eligible
employees.
LTIP Awards - Restricted Share Awards ("RSAs")
From 2021, the Group no longer issues awards under the LTIP Awards with
performance conditions, but instead issues RSAs.
The RSAs are structured as nil-cost rewards, to receive free shares on
vesting. Shares will normally vest three years after grant date, subject to
continued employment and the satisfaction of pre-determined underpins. Awards
are also subject to an additional two-year holding period, so that the total
time prior to any potential share sale (except to meet any tax liabilities
arising from the award) will generally be five years.
The total number of shares awarded under the scheme was 935,780 (2023:
1,244,964) with an estimated fair value at grant date of £1,581k (2023:
£1,484k). The fair value is based on the closing share price on the grant
date.
Future dividends are accrued separately and are not reflected in the fair
value of the grant.
The table below details the movement in the RSA:
Number of shares Weighted Average Exercise Price
Outstanding at 1 January 2023 982,258 NIL
Granted 1,244,964 NIL
Forfeited - NIL
Vested - NIL
Outstanding at 31 December 2023 2,227,222 NIL
Granted 935,780 NIL
Forfeited (40,863) NIL
Vested (441,684) NIL
Outstanding at 31 December 2024 2,680,455 NIL
The average unexpired life of RSAs is 1.3 years (2023: 1.4 years).
Deferred Bonus Plan ("DBP")
To encourage behaviour which does not benefit short-term profitability over
longer-term value, Directors and some key staff were awarded shares in lieu of
a bonus, to be deferred for two years, using the market value at the grant
date. The total number of shares awarded under the scheme was 218,033 (2023:
NIL) with an estimate fair value of £374k (2023: £NIL). Of this award, the
number of shares awarded to Directors and Persons Discharging Managerial
Responsibilities ("PDMRs") was 204,392 (2023: NIL) with an estimated fair
value of £351k (2023: £NIL). Fair values are based on the share price at
grant date. All shares are subject to a two-year service period and are not
subject to performance conditions.
Future dividends are accrued separately and are not reflected in the fair
value of the grant.
The DBP is recognised in the Profit or Loss Account on a straight-line basis
over a period of two years from grant date.
Share Incentive Plans ("SIPs")
The Sabre SIPs provide for the award of free Sabre Insurance Group plc shares,
Partnership Shares (shares bought by employees under the matching scheme),
Matching Shares (free shares given by the employer to match partnership
shares) and Dividend Shares (shares bought for employees with proceeds of
dividends from partnership shares). The shares are owned by the Employee
Benefit Trust to satisfy awards under the plans. These shares are either
purchased on the market and carried at fair value or issued by the Parent
Company to the trust.
Matching Shares
The Group has a Matching Shares scheme under which employees are entitled to
invest between £10 and £150 each month through the share trust from their
pre-tax pay. The Group supplements the number of shares purchased by giving
employees 1 free matching share for every 3 shares purchased up to £1,800.
Matching shares are subject to a three-year service period before the matching
shares are awarded. Dividends are paid on shares, including matching shares,
held in the trust by means of dividends shares. The fair value of such awards
is estimated to be the market value of the awards on grant date.
In the year ended 31 December 2024, 11,464 (2023: 16,017) matching shares were
granted to employees with an estimated fair value of £16k (2023: £24k).
As at 31 December 2024, 48,134 (2023: 40,940) matching shares were held on
behalf of employees with an estimated fair value of £66k (2023: £62k). The
average unexpired life of Matching Share awards is 1.5 years (2023: 1.8
years).
Save as You Earn ("SAYE")
The SAYE scheme allows employees to enter into a regular savings contract of
between £5 and £500 per month over a three-year period, coupled with a
corresponding option over shares. The grant price is equal to 80% of the
quoted market price of the shares on the invitation date. The participants of
the SAYE scheme are not entitled to dividends and therefore dividends are
excluded from the valuation of the SAYE scheme.
Estimated fair value of options at grant date:
SAYE 2022: 40 pence
SAYE 2023: 49 pence
SAYE 2024: 33 pence
The following table lists the inputs to the Black-Scholes model used to value
the awards granted in respect of the 2024 SAYE scheme.
2024 SAYE
Share price at grant date 172.2 pence
Expected term 3 years
Expected volatility((1)) 30.2%
Continuously compounded risk-free rate 1.5%
Continuously compounded dividend yield 6.0%
Strike price at grant date 141.8 pence
(1) Volatility has been estimated using the historical daily average
volatility of the share price of the Group for the year immediately preceding
the grant date.
The table below details the movement in the SAYE scheme:
Number of shares Weighted Average Exercise Price
Outstanding at 1 January 2023 350,231 2.00
Granted 768,616 0.85
Forfeited (260,442) NIL
Vested - NIL
Outstanding at 31 December 2023 858,405 1.33
Granted 102,880 1.42
Forfeited (49,001) NIL
Vested - NIL
Outstanding at 31 December 2024 912,284 0.99
The average unexpired life of SAYE scheme is 1.5 years (2023: 1.5 years)
17. RESERVES
Own shares
Sabre Insurance Group plc established an Employee Benefit Trust ("EBT") in
2017 in connection with the operation of its share plans. The investment in
own shares as at 31 December 2024 was £3,112k (2023: £3,121k). The market
value of the shares in the EBT as at 31 December 2024 was £2,709k (2023:
£2,406k).
Merger reserve
Sabre Insurance Group plc was incorporated as a limited company on 21
September 2017. On 11 December 2017, immediately prior to the Group's listing
on the London Stock Exchange, Sabre Insurance Group plc acquired the entire
share capital of the former ultimate Parent Company of the Group, Barbados
TopCo Limited ("TopCo"). As a result, Sabre Insurance Group plc became the
ultimate parent of the Sabre Insurance Group. The merger reserve resulted from
this corporate reorganisation.
FVOCI reserve
The FVOCI reserve records the unrealised gains and losses arising from changes
in the fair value of debt securities at FVOCI. The movements in this reserve
are detailed in the Consolidated Statement of Comprehensive Income.
Revaluation reserve
The revaluation reserve records the fair value movements of the Group's
owner-occupied properties. Refer to Note 9 for more information on the
revaluation of owner-occupied properties.
Insurance/Reinsurance finance reserve
The insurance finance reserve comprises the cumulative insurance finance
income and expenses recognised in Other Comprehensive Income.
Share-based payments reserve
The Group's share-based payments reserve records the value of equity-settled
share-based payment benefits provided to the Group's employees as part of
their remuneration that has been charged through the income statement. Refer
to Note 16 for more information on share-based payments.
18. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc is the ultimate parent and ultimate controlling
party of the Group. The following entities included below form the Group.
Name Principal business Registered address
Entities in which the Group holds 100% of the issued share capital
Binomial Group Limited Intermediate holding company Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Sabre Insurance Company Limited Motor insurance underwriter Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Other controlled entities
Sabre 2017 Share Incentive Plan Employee Benefit Trust Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
The Sabre Insurance Group Employee Benefit Trust Employee Benefit Trust Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
No single party holds a significant influence (>20%) over Sabre Insurance
Group plc.
Both Employee Benefit Trusts ("EBTs") were established to assist in the
administration of the Group's employee equity-based compensation schemes. The
UK registered EBT holds the all-employee SIP. The Jersey-registered EBT holds
the Long Term incentive Plan ("LTIP") and Deferred Bonus Plan ("DBP").
While the Group does not have legal ownership of the EBTs and the ability of
the Group to influence the actions of the EBTs is limited to a trust deed, the
EBT was set up by the Group with the sole purpose of assisting in the
administration of these schemes, and is in essence controlled by the Group and
therefore consolidated.
During the period ended 31 December 2024, the Group donated no shares to the
EBTs (2023: NIL).
Key management compensation
Key management includes Executive Directors, Non-executive Directors and
Directors of subsidiaries which the Group considers to be senior management
personnel. Further details of Directors' shareholdings and remuneration can be
found in the Annual Report on Directors' Remuneration on pages 105 to 117.
The aggregate amount paid to Directors during the year was as follows.
2024 2023
£'k £'k
Remuneration 3,428 2,660
Contributions to defined contribution pension scheme 10 9
Shares granted under LTIP 954 912
Total 4,392 3,581
19. EARNINGS PER SHARE
Basic earnings per share
2024 2023
After tax Per share After tax Per share
£'k pence £'k pence
Profit for the year attributable to ordinary shareholders 35,961 14.48 18,065 7.27
Diluted earnings per share
2024
After tax Weighted Per share
£'k average number pence
of shares (000s)
Profit for the year attributable to ordinary shareholders 35,961 248,419 14.48
Net share awards allocable for no further consideration 1,880 (0.11)
Total diluted earnings 250,299 14.37
2023
After tax Weighted Per share
£'k average number pence
of shares (000s)
Profit for the year attributable to ordinary shareholders 18,065 248,636 7.27
Net share awards allocable for no further consideration 2,201 (0.07)
Total diluted earnings 250,837 7.20
20. EVENTS AFTER THE BALANCE SHEET DATE
Other than the declaration of a final dividend as disclosed in Note 12, there
have been no material changes in the affairs or financial position of the
Group and its subsidiaries since the Statement of Financial Position date.
Parent Company Statement of Financial Position
As at 31 December 2024
2024 2023
Notes £'k £'k
Assets
Cash and cash equivalents 282 23
Receivables 2 27 41
Other assets 11 32
Investments 3 453,213 451,606
Total assets 453,533 451,702
Liabilities
Payables 4 721 -
Other liabilities 109 380
Total liabilities 830 380
Equity
Share capital 250 250
Own shares (3,112) (3,121)
Merger reserve 236,949 236,949
Share-based payments reserve 2,620 2,686
Retained earnings 215,996 214,558
Total equity 452,703 451,322
Total liabilities and equity 453,533 451,702
No income statement is presented for Sabre Insurance Group plc as permitted by
section 408 of the Companies Act 2006. The profit after tax of the Parent
Company for the period was £25,604k (2023: £7,437k profit after tax).
Parent Company Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Own shares Merger reserve Share-based payments reserve Retained earnings Total equity
£'k £'k £'k £'k £'k £'k
Balance as at 31 December 2022 250 (2,810) 236,949 2,407 212,581 449,377
Profit for the period attributable to the owners of the Company - - - - 7,437 7,437
Share-based payment expense - - - 279 1,006 1,285
Net movement in own shares - (311) - - - (311)
Dividends paid - - - - (6,466) (6,466)
Balance as at 31 December 2023 250 (3,121) 236,949 2,686 214,558 451,322
Profit for the period attributable to the owners of the Company - - - - 25,604 25,604
Share-based payment expense - - - (66) 183 117
Net movement in own shares - 9 - - - 9
Dividends paid - - - - (24,349) (24,349)
Balance as at 31 December 2024 250 (3,112) 236,949 2,620 215,996 452,703
Parent Company Statement of Cash Flows
For the year ended 31 December 2024
2024 2023
£'k £'k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 25,604 7,437
Operating cash flows before movements in working capital 25,604 7,437
Movements in working capital:
Change in receivables 14 (38)
Change in other assets 22 179
Change in payables 721 (1,607)
Change in other liabilities (269) 289
Net cash generated/(used) from operating activities 26,092 6,260
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (1,484) (632)
Dividends paid (24,349) (6,466)
Net cash generated/(used) by financing activities (25,833) (7,098)
Net increase/(decrease) in cash and cash equivalents 259 (838)
Cash and cash equivalents at the beginning of the year 23 861
Cash and cash equivalents at the end of the year 282 23
Notes To The Parent Company Financial Statements
For the year ended 31 December 2024
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
Consolidated and Company Financial Statements are included in the specific
notes to which they relate. These policies have been consistently applied to
all the years presented, unless otherwise indicated.
1.1. Basis of preparation
These financial statements present the Sabre Insurance Group plc Company
financial statements for the period ended 31 December 2024, comprising the
Parent Company Statement of Financial Position, Parent Company Statement of
Changes in Equity, Parent Company Statement of Cash Flows, and related notes.
The financial statements of the Company have been prepared in accordance with
UK-adopted international accounting standards, comprising International
Accounting Standards ("IAS") and International Financial Reporting Standards
("IFRS"), and the requirements of the Companies Act 2006. Endorsement of
accounting standards is granted by the UK Endorsement Board ("UKEB").
In accordance with the exemption permitted under section 408 of the Companies
Act 2006, the Company's Profit or Loss Account and related notes have not been
presented in these separate financial statements.
The financial statements are prepared in accordance with the going concern
principle using the historical cost basis, except for those financial assets
that have been measured at fair value.
The financial statements values are presented in pounds sterling (£) rounded
to the nearest thousand (£'k), unless otherwise indicated.
The accounting policies that are used in the preparation of these separate
financial statements are consistent with the accounting policies used in the
preparation of the consolidated financial statements of Sabre Insurance Group
plc as set out in those financial statements.
As permitted by section 408 of the Companies Act 2006, the Statement of
Comprehensive Income of the Parent Company is not presented. The additional
accounting policies that are specific to the separate financial statements of
the Company are set out below.
2. RECEIVABLES
2024 2023
£'k £'k
Due within one year
Amounts due from Group undertakings - 14
Other debtors 27 27
As at 31 December 27 41
3. INVESTMENTS
The Company's financial assets are summarised below:
2024 2023
£'k £'k
Investment in subsidiary undertakings 453,213 451,606
Total 453,213 451,606
3.1. Investment in subsidiary undertakings
ACCOUNTING POLICY - INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investment in subsidiaries is stated at cost less any impairment.
2024 2023
£'k £'k
As at 1 January 451,606 450,000
Additions 1,607 1,606
As at 31 December 453,213 451,606
The only operating insurance subsidiary of the Company is Sabre Insurance
Company Limited, from which the value of the Group is wholly derived, as there
are no other trading entities within the Group. The Company performed its
annual impairment test as at 31 December 2024 and 31 December 2023. The
Company considers the relationship between the Group's market capitalisation
and the book value of its subsidiary undertakings, among other factors, when
reviewing for indicators of impairment. As at 31 December 2024 and 31 December
2023, the Company's securities were traded on a liquid market; therefore,
market capitalisation could be used as an indicator of value.
Having carried out this assessment, the Board concluded, on the basis of the
cautious assumptions outlined below, that the value in use is higher than the
current carrying value of the investment in subsidiary and no impairment is
necessary.
Key assumptions
We have used a dividend discount model to estimate the value in use, wherein
dividend payments are discounted to the present value. Dividends have been
estimated, based on forecasted financial information, over a four-year
forecast period, with a terminal growth rate applied. The key assumptions used
in the preparation of future cash flows are: plan-period financial
performance, dividend payout ratio, long-term growth rates and discount rate.
The key assumptions used in the calculation for the value in use is set out
below:
- Plan period financial performance set in line with the Group's
expectations
- Dividend payout ratio in line with the Group's strategy
- Long-term growth rate beyond the plan period of 2%
- Discount rate of 8.4%, being a calculated cost of capital using
market rate returns of Sabre and comparable insurers
These calculations use post-tax cash flow projections based on the Group's
capital models. As the value in use exceeds the carrying amount, the
recoverable amount remains supportable.
The Group has conducted sensitivity testing to the recoverable amount, in
order to understand the relevance of these various factors in arriving at the
value in use.
Dividend within the plan period - To assess the impact of reasonable changes
in performance on our base case impairment analysis and headroom, we flexed
the dividend within the plan period by +10% and -10%. In doing so, the value
in use varied by approximately 16% around the central scenario.
Long-term growth rate - To assess the impact of reasonable changes in the
long-term growth rate on our base case impairment analysis and headroom, we
flexed the long-term growth rate by +1% and -1%. In doing so, the value in use
varied by approximately 8% around the central scenario.
Discount rate - To assess the impact of reasonable changes in the dividend
payout ratio on our base case impairment analysis and headroom, we flexed the
average discount rate by +2% and -2%. In doing so, the value in use varied by
approximately 23% around the central scenario.
In all these scenarios there is material headroom over the carrying value of
the investment in subsidiary.
Name of subsidiary Place of incorporation Principal activity
Directly held by the Company
Binomial Group Limited United Kingdom Intermediate holding company
Indirectly held by the Company
Sabre Insurance Company Limited United Kingdom Motor insurance underwriter
The registered office of each subsidiary is disclosed within Note 18 of the
consolidated Group Financial Statement.
4. PAYABLES
2024 2023
£'k £'k
Due within one year
Amounts due to Group undertakings 721 -
As at 31 December 721 -
5. SHARE CAPITAL AND RESERVES
Full details of the share capital and the reserves of the Company are set out
in Note 15 and Note 17 to the consolidated financial statements.
6. DIVIDEND INCOME
ACCOUNTING POLICY - DIVIDEND INCOME
Dividend income from investment in subsidiaries is recognised when the right
to receive payment is established.
7. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc, which is incorporated in the United Kingdom and
registered in England and Wales, is the ultimate parent undertaking of the
Sabre Insurance Group of companies.
The following balances were outstanding with related parties at year end:
2024 2023
£'k £'k
Due (to)/from
Sabre Insurance Company Limited (721) 14
Total (721) 14
The outstanding balance represents cash transactions effected by Sabre
Insurance Company Limited on behalf of its Parent Company, and will be settled
within one year.
8. SHARE-BASED PAYMENTS
Full details of share-based compensation plans are provided in Note 16 to the
consolidated financial statements.
9. RISK MANAGEMENT
The risks faced by the Company, arising from its investment in subsidiaries,
are considered to be the same as those presented by the operations of the
Group. Details of the key risks and the steps taken to manage them are
disclosed in Note 2 to the Consolidated Financial Statements.
10. DIRECTORS' AND KEY MANAGEMENT REMUNERATION
The Directors and key management of the Group and the Company are the same.
The aggregate emoluments of the Directors and the remuneration and pension
benefits payable in respect of the highest paid Director are included in the
Directors' Remuneration Report in the Governance section of the Annual Report
and Accounts.
Financial Reconciliations
GROSS WRITTEN PREMIUM
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Movement in unearned premium (7,203) 40,590 (6,919)
Gross written premium 236,435 225,098 171,257
NET LOSS RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance service expense 154,661 139,497 126,607
Less: Amortisation of insurance acquisition cash flows (18,166) (14,057) (12,942)
Less: Amounts recoverable from reinsurers for incurred claims (13,026) (31,532) (6,304)
Less: Directly attributable claims expenses (7,041) (6,085) (6,210)
Add: Net impact of discounting 6,914 8,201 7,593
Undiscounted net claims incurred 123,342 96,024 108,744
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Net loss ratio 58.7% 61.6% 71.0%
EXPENSE RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Other operating expenses 28,305 26,587 22,815
Add: Amortisation of insurance acquisition cash flows 18,166 14,057 12,942
Add: Directly attributable claims expenses 7,041 6,085 6,210
Total operating expenses 53,512 46,729 41,967
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Expense ratio 25.5% 30.0% 27.4%
COMBINED OPERATING RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net loss ratio 58.7% 61.6% 71.0%
Expense ratio 25.5% 30.0% 27.4%
Combined operating ratio 84.2% 91.6% 98.4%
DISCOUNTED NET LOSS RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance service expense 154,661 139,497 126,607
Less: Amortisation of insurance acquisition cash flows (18,166) (14,057) (12,942)
Less: Amounts recoverable from reinsurers for incurred claims (13,026) (31,532) (6,304)
Less: Directly attributable claims expenses (7,041) (6,085) (6,210)
Net claims incurred 116,428 87,823 101,151
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Discounted net loss ratio 55.4% 56.3% 66.0%
DISCOUNTED COMBINED OPERATING RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net loss ratio 55.4% 56.3% 66.0%
Expense ratio 25.5% 30.0% 27.4%
Discounted combined operating ratio 80.9% 86.3% 93.4%
NET INSURANCE MARGIN
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net claims incurred 123,342 96,024 108,744
Total operating expenses 53,512 46,729 41,967
Total insurance expense 176,854 142,753 150,711
Insurance revenue 248,131 188,246 181,476
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net insurance revenue 214,514 159,740 156,518
Net insurance margin 17.6% 10.6% 3.7%
RETURN ON TANGIBLE EQUITY
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
IFRS net assets at year end 258,346 242,412 228,988
Less: Goodwill at year end (156,279) (156,279) (156,279)
Closing tangible assets 102,067 86,133 72,709
Opening tangible equity 86,133 72,709 93,797
Average tangible equity 94,100 79,421 83,253
Profit after tax 35,961 18,065 11,078
Return on tangible equity 38.2% 22.7% 13.3%
SOLVENCY COVERAGE RATIO - PRE-DIVIDEND
As at 31 December
2024 2023 2022
£'k £'k £'k
Solvency II net assets 134,695 121,099 91,191
Solvency capital requirement 62,199 58,998 56,516
Solvency coverage ratio - pre-dividend 216.6% 205.3% 161.4%
SOLVENCY COVERAGE RATIO - POST-DIVIDEND
As at 31 December
2024 2023 2022
£'k £'k £'k
Solvency II net assets 134,695 121,099 91,191
Less: Interim/Final dividend (28,250) (20,250) (4,250)
Solvency II net assets - post-dividend 106,445 100,849 86,941
Solvency capital requirement 62,199 58,998 56,516
Solvency coverage ratio - post-dividend 171.1% 170.9% 153.8%
* = Alternative performance metrics are reconciled to IFRS reported figures on
pages 208 to 212 of the Annual Report and Accounts
Gross written premium
£236.4m
2023 | £225.1m
IFRS profit before tax
£48.6m
2023 | £23.6m
Executive summary
Sabre's financial performance in 2024 represents a strong return to form, with
profit before tax - which remains the Group's primary metric and key focus for
Ambition 2030 - having more than doubled since 2023, a result of higher
written premium in 2023 and 2024 earning through and an improved net insurance
margin resulting from stronger underwriting performance. Overall, we are just
a fraction of a percentage point outside the Group's recently restated net
insurance margin target of 18%-22%, with the year's strong improvement in
current-year performance result being slightly offset by a small increase in
prior-year claims costs.
This result is a great stepping-stone towards the Group's ambitious
medium-term target - to reach a profit before tax of at least £80m in 2030.
Alongside this, Sabre has generated significant capital and increased the
total dividend payout by 44.4% while maintaining a very strong balance sheet,
being well positioned to deal with whatever market conditions prevail during
2025 and to keep delivering market-leading profitability.
The Group has announced its intention to execute its first share buyback
programme, worth around £5m, in 2025, subject to regulatory approval. This is
an effective use of excess capital and underlines the Board's confidence in
the Group's balance sheet strength and its capital-light strategic plan.
Insurance revenue
2024 2023
Gross written premium £236.4m £225.1m
Movement in unearned element of liability for remaining coverage £7.2m (£40.6m)
Gross earned premium £243.6m £184.5m
Customer instalment income £4.5m £3.7m
Insurance revenue £248.1m £188.2m
Reinsurance expense (£33.6m) (£28.5m)
Net insurance revenue £214.5m £159.7m
Gross written premium by product
Motor vehicle £209.9m £199.0m
Motorcycle £9.7m £11.8m
Taxi £16.8m £14.3m
Policy counts by product
Motor vehicle ('000) 217 234
Motorcycle ('000) 38 44
Taxi ('000) 11 12
Headline premium growth of 5.0% across 2024 was weighted towards the first
half of the year, with growth being allowed to slow as market conditions
became less favourable from Q2 onwards, representing a cyclical softening of
market prices. Having achieved sufficient growth in the first half, Sabre was
able to avoid chasing market pricing down in the second half, preserving
strong margins across the book while accepting a dip in premium and policy
volumes, exactly in line with the Group's strategy.
The Motorcycle business remained healthy during 2024, with the last policies
written by the Group's previous distribution partner having completely run off
during the year, the gap in policies being completely filled by the Group's
other distribution partner.
The Taxi book remained relatively stable, with further underwriting
enhancements allowing a core of profitable business to be written, while not
yet being ready to accelerate growth in the product given continued
under-pricing in the Taxi segment.
The 'unearned' element of the liability for remaining coverage' represents the
element of written premium covering future periods, which has the effect of
smoothing gross earned premium ("GEP") (and therefore insurance revenue) over
time, so where there is a big change in written premium, insurance revenue
will change more slowly. Customer instalment income reflects the interest
income charged on instalment policies and remains a relatively small
percentage of the Group's total insurance revenue.
Insurance expense
2024 2023
Undiscounted gross claims incurred £136.4m £127.6m
Discounting ((1)) (£6.9m) (£8.2m)
Directly attributable expenses £7.0m £6.1m
Amortisation of insurance acquisition costs £18.2m £14.1m
Insurance service expense £154.7m £139.6m
Undiscounted reinsurance recoveries £42.0m £38.3m
Discounting ((1)) (£8.4m) (£9.8m)
Net insurance expense £188.3m £168.1m
Current-year net loss ratio ((2)) 58.2% 64.3%
Prior-year net loss ratio ((2)) 0.5% (2.7%)
Financial-year net loss ratio 58.7% 61.6%
Net loss ratio by product
Motor vehicle 56.1% 55.0%
Motorcycle 58.6% 73.3%
Taxi 95.7% 117.1%
Discounted ratios
Discounted financial-year net loss ratio 55.4% 56.3%
(1) Includes discounting on Period Payment Orders ("PPOs")
(2) Calculation of undiscounted net loss ratio allows for the impact
of discounting on long-term non-life annuities, Periodic Payment Orders
("PPOs"), consistent with presentation under IFRS 4
2024 saw a continuation of the strong loss ratio improvement trends from 2023,
with Motor Vehicle continuing to perform at a loss ratio in line with our
target and Motorcycle and Taxi both improving, albeit from a weaker position
in the previous year. The current year loss ratio, which is a measure of the
claims experience on policies which were in force during the year has improved
across the board, with an overall improvement of 6.1% The prior year loss
ratio has shown a small outward movement in 2024 - this means that the amount
held for claims on the books at the end of the prior year has increased a
little, whereas in 2023 it decreased (as is usual). This reflects some adverse
experience on open claims within the year and we expect prior year experience
to return to normal negative loss ratios in future years.
Directly attributable and acquisition costs have increased by c24.8% , which
is primarily driven by a proportionate increase in insurance revenue, given
these costs are mostly broker commissions and other directly attributable
variable costs.
Other operating expenditure
2024 2023
Employee expenses £15.4m £13.9m
IT expenses £6.8m £6.0m
Industry levies £6.0m £5.9m
Policy servicing costs £3.2m £2.5m
Other operating expenses £3.9m £4.4m
Before adjustment for directly attributable claims expenses £35.3m £32.7m
Reclassification of directly attributable claims expenses (£7.0m) (£6.1m)
Total operating expenses £28.3m £26.6m
Expense ratio 25.5% 30.0%
The expense ratio has improved significantly, by 4.5ppts, in 2024. This is
mainly due to the recovery in expense leverage following a period of low
premium in the preceding years. Absolute expenses have increased by
approximately 8.0%, which is in part due to the impact of variable expenses,
such as policy administration costs, certain data costs and levies. It is also
a consequence of the high levels of inflation during the past three years,
with the impact of high inflation not being felt immediately as contracts are
renewed at staggered intervals.
Total staff costs, which is Sabre's largest category of expense, has increased
by 10.8% year-on-year. This is partly a function of a 4.3% increase in average
full-time equivalent headcount and an average pay increase of just over 6.7%.
Staff bonuses were increased by approximately 26% in 2024, returning closer to
'normal' (pre-2022) levels, and executive bonuses, which are paid from a pool
calculated as a proportion of profit before tax, also increased (see pages 105
to 117 of the Annual Report for more details of executive remuneration).
Other income
2024 2023
Other technical income £0.7m £1.2m
Interest revenue calculated using the effective interest method £7.9m £3.8m
Insurance finance income/(expense) for insurance contracts issued (£8.4m) (£10.2m)
Reinsurance finance income/(expense) for reinsurance contracts held £3.7m £3.6m
Net insurance financial result (£4.7m) (£6.6m)
Other technical income, related to non-insurance revenue earned such as
product fees (excluding instalment interest) and commissions, remains a very
small element of the Group's income. Interest revenue reflects the yield
achieved across the Group's investment portfolio. The significant increase in
interest revenue reflects the higher yield gained through reinvesting matured
assets as well as an increase in the total assets invested during the year.
The Group's investment strategy remains unchanged, being invested in a
low-risk mix of UK Government bonds, other government-backed securities and
diversified investment-grade corporate bonds.
Fair value gains and losses are taken through other comprehensive income and
largely reflect market movements in the yields of risk-free and low-risk
assets. We do not expect to realise any of these market value movements within
profit, as we continue to hold invested assets to maturity.
Insurance and reinsurance finance income/(expense) reflects the run-off of
discounting applied to insurance liabilities under IFRS 17. As cash flows move
towards settlement, the total level of discounting is reduced and this
reduction is reflected here. The slight reduction in this cost in 2024
reflects the discount rates applied at the point claims were incurred and is a
function of the run-off patterns applied to claims costs when they are
incurred.
Taxation
In 2024 the Group recorded a corporation tax expense of £12.6m (2023:
£5.5m), with an effective tax rate of 25.9%, (2023: 23.5%). The increase in
effective tax rate is primarily due to the increase in the UK rate of
corporation tax in April 2023. It is slightly higher than the current 25% UK
rate of corporation tax because of a small (£0.6m) tax charge in respect of
prior periods, related to the implementation of IFRS 17. The Group has not
entered into any complex or unusual tax arrangements during the year.
Earnings per share
2024 2023
Basic earnings per share 14.48 7.27
Diluted earnings per share 14.37 7.20
Basic earnings per share of 14.48p is proportionate to profit after tax.
Diluted earnings per share is similarly proportionate to profit after tax,
taking into account the potentially dilutive effect of the Group's share
schemes. No shares have been issued or cancelled during the year.
Cash and investments
2024 2023
Government bonds £112.8m £107.0m
Government-backed securities £103.3m £81.9m
Corporate bonds £95.1m £75.7m
Cash and cash equivalents £31.3m £35.1m
Total cash and investment holdings have increased given the growth in the
business across 2024. The level of cash retained reflects Sabre's normal
liquidity requirements and there has been no change in the overall investment
strategy, with gilts and government-backed assets remaining the majority of
the portfolio, with c.30% of invested assets held in investment-grade
corporate bonds.
Insurance liabilities
2024 2023
Gross insurance liabilities £397.9m £374.8m
Reinsurance assets (£160.8m) (£166.7m)
Net insurance liabilities £237.1m £208.1m
The Group's net insurance liabilities continue to reflect the underlying
profitability and volume of business written. Generally, the gross insurance
liabilities are more volatile and impacted by the receipt and settlement of
individually large claims. The level of net insurance liabilities held remains
broadly proportionate to the volume of business written along with the
inflation applied to claims costs.
Leverage
The Group continues to hold no external debt. All of the Group's capital is
considered Tier 1 under the UK regulatory regime. The Directors continue to
hold the view that this allows the greatest operational flexibility for the
Group.
Dividends and solvency
2024 2023
Interim ordinary dividend (paid) 1.7p 0.9p
Final ordinary dividend (proposed) 8.4p 4.2p
Total ordinary dividend (paid and proposed) 10.1p 5.1p
Special dividend (proposed) 2.9p 3.9p
Total dividend for the year (paid and proposed) 13.0p 9.0p
The dividend proposed is in line with the Group's current policy to pay an
ordinary dividend of 70% of profit after tax, and to consider passing excess
capital to shareholders by way of a special dividend.
Along with these financial results, the Group has announced an increase in the
maximum ordinary dividend to 80% of profit after tax, effective from 2025
onwards. This allows for an ordinary dividend much closer to historical levels
of distribution.
Excluding the capital required to pay this dividend, the Group's SCR coverage
ratio at 31 December 2024 is 171.1% .
We have announced this year that the Group intends to operate its first share
buyback programme in 2025, distributing around £5m of excess capital, subject
to regulatory approval. The Group's year-end SCR coverage ratio, excluding the
capital required to fund this buyback, is 163.1%.
Adam Westwood
Chief Financial Officer
17 March 2025
Financial Statements
Consolidated Profit or Loss Account
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
Insurance revenue 248,131 188,246
Insurance service expense (154,661) (139,497)
Insurance service result before reinsurance contracts held 93,470 48,749
Reinsurance expense (33,617) (28,506)
Amounts recoverable from reinsurers for incurred claims 13,026 31,532
Net (expense)/income from reinsurance contracts held (20,591) 3,026
Insurance service result 72,879 51,775
Interest income on financial assets using effective interest rate method 4.5 7,926 3,775
Total investment income 7,926 3,775
Insurance finance expense from insurance contracts issued 3.8 (8,392) (10,170)
Reinsurance finance income from reinsurance contracts held 3.8 3,714 3,588
Net insurance financial result (4,678) (6,582)
Net insurance and investment result 76,127 48,968
Other income 7 740 1,232
Other operating expenses 8 (28,305) (26,587)
Profit before tax 48,562 23,613
Income tax expense 10 (12,601) (5,548)
Profit for the year attributable to ordinary shareholders 35,961 18,065
Basic earnings per share (pence per share) 19 14.48 7.27
Diluted earnings per share (pence per share) 19 14.37 7.20
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
Profit for the year attributable to ordinary shareholders 35,961 18,065
Items that are or may be reclassified subsequently to profit or loss
Unrealised fair value gains on debt securities 4.5 3,774 9,284
Tax charge (944) (2,149)
Debt securities at fair value through other comprehensive income 2,830 7,135
Insurance finance income/(expense) from insurance contracts issued 3.8 6,852 (12,436)
Reinsurance finance (expense)/income from reinsurance contracts held 3.8 (5,880) 5,432
Tax credit 395 1,550
Net insurance financial result 1,367 (5,454)
Items which will not be reclassified to profit or loss
Revaluation gains/(losses) on owner-occupied properties 9 - (800)
Income tax relating to items that will not be reclassified - (31)
- (831)
Total other comprehensive income for the year, net of tax 4,197 850
Total comprehensive income for the year attributable to ordinary shareholders 40,158 18,915
Consolidated Statement of Financial Position
As at 31 December 2024
2024 2023 ((1))
Notes £'k £'k
Assets
Cash and cash equivalents 4.1 31,314 35,079
Debt securities at fair value through other comprehensive income 4.2 311,184 264,679
Receivables 4.3 32 87
Current tax assets 997 1,438
Reinsurance contract assets 3.1 160,758 166,726
Property, plant and equipment 9 4,204 4,388
Deferred tax assets 11 265 688
Other assets 13 778 774
Goodwill 14 156,279 156,279
Total assets 665,811 630,138
Liabilities
Payables 5 6,995 9,700
Insurance contract liabilities 3.1 397,924 374,839
Other liabilities 2,546 3,187
Total liabilities 407,465 387,726
Equity
Issued share capital 15 250 250
Own shares 16 (3,112) (3,121)
Merger reserve 48,525 48,525
FVOCI reserve (3,064) (5,894)
Insurance/Reinsurance finance reserve (1) 3,606 2,239
Share-based payments reserve 2,620 2,686
Retained earnings (1) 209,521 197,727
Total equity 258,346 242,412
Total liabilities and equity 665,811 630,138
(1) Opening balance has been restated - Refer to Note 3.9
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Own shares Merger reserve FVOCI reserve Revaluation reserve Insurance/ Share-based payments reserve Retained earnings (1) Total equity
Reinsurance
finance reserve (1)
£'k £'k £'k £'k £'k £'k £'k £'k £'k
Balance as at 31 December 2022, as previously reported 250 (2,810) 48,525 (13,029) 831 10,244 2,407 182,570 228,988
Discounting model refinements ((1)) - - - - - (2,551) - 2,551 -
Restated balance as at 1 January 2023 ((1)) 250 (2,810) 48,525 (13,029) 831 7,693 2,407 185,121 228,988
Profit for the year attributable to the owners of the Company - - - - - - - 18,065 18,065
Total other comprehensive income for the year, net of tax: Items that are or - - - 7,135 - (5,454) - - 1,681
may be reclassified subsequently to Profit or Loss
Total other comprehensive income for the year, net of tax: Items which will - - - - (831) - - - (831)
not be reclassified to Profit or Loss
Total comprehensive income/(expense) for the year - - - 7,135 (831) (5,454) - 18,065 18,915
Share-based payment expense - - - - - - 279 1,007 1,286
Net movement in own shares - (311) - - - - - - (311)
Dividends paid - - - - - - - (6,466) (6,466)
Restated balance as at 31 December 2023 ((1)) 250 (3,121) 48,525 (5,894) - 2,239 2,686 197,727 242,412
Profit for the year attributable to the owners of the Company - - - - - - - 35,961 35,961
Total other comprehensive income for the year, net of tax: Items that are or - - - 2,830 - 1,367 - - 4,197
may be reclassified subsequently to Profit or Loss
Total comprehensive income/(expense) for the year - - - 2,830 - 1,367 - 35,961 40,158
Share-based payment expense - - - - - - (66) 182 116
Net movement in own shares - 9 - - - - - - 9
Dividends paid - - - - - - - (24,349) (24,349)
Balance as at 31 December 2024 250 (3,112) 48,525 (3,064) - 3,606 2,620 209,521 258,346
(1) Opening balance has been restated - Refer to Note 3.9
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
2024 2023
Notes £'k £'k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 48,562 23,613
Adjustments for:
Depreciation of property, plant and equipment 9 184 140
Share-based payment - equity-settled schemes 16 1,607 1,606
Investment return (6,458) (3,131)
Expected credit loss 4.4 5 6
Impairment loss on owner-occupied buildings - 333
Operating cash flows before movements in working capital 43,900 22,567
Movements in working capital:
Change in receivables 55 (80)
Change in reinsurance contract assets 88 (24,340)
Change in other assets (4) 504
Change in payables (2,705) 4,592
Change in insurance contract liabilities 29,937 48,062
Change in other liabilities (641) 1,804
Cash generated from operating activities before investment of insurance assets 70,630 53,109
Taxes paid (12,286) (4,658)
Net cash generated from operating activities before investment of insurance 58,344 48,451
assets
Interest and investment income received 5,248 3,818
Proceeds from the sale and maturity of invested assets 98,656 24,089
Purchases of invested assets (140,180) (51,018)
Net cash generated from operating activities 22,068 25,340
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 9 - (1,665)
Net cash used by investing activities - (1,665)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (1,484) (632)
Dividends paid 12 (24,349) (6,466)
Net cash used by financing activities (25,833) (7,098)
Net (decrease)/increase in cash and cash equivalents (3,765) 16,577
Cash and cash equivalents at the beginning of the year 35,079 18,502
Cash and cash equivalents at the end of the year 31,314 35,079
Notes to the Consolidated Financial Statements
For the year ended 31 December 2024
Corporate information
Sabre Insurance Group plc is a company incorporated in the United Kingdom and
registered in England and Wales. The address of the registered office is Sabre
House, 150 South Street, Dorking, Surrey, RH4 2YY, England. The nature of the
Group's operations is the writing of general insurance for motor vehicles,
including taxis and motorcycles. The Company's principal activity is that of a
holding company.
1. Accounting Policies
The principal accounting policies applied in the preparation of these
Consolidated and Company Financial Statements are included in the specific
notes to which they relate. These policies have been consistently applied to
all the years presented, unless otherwise indicated.
1.1. Basis of preparation
The financial statements of the Group have been prepared in accordance with
UK-adopted international accounting standards, comprising International
Accounting Standards ("IAS") and International Financial Reporting Standards
("IFRS"), and the requirements of the Companies Act 2006. Endorsement of
accounting standards is granted by the UK Endorsement Board ("UKEB").
The financial statements are prepared in accordance with the going concern
principle using the historical cost basis, except for those financial assets
and owner-occupied properties that have been measured at fair value. The
preparation of the financial statements necessitates the use of estimates,
assumptions and judgements that affect the reported amounts in the Statement
of Financial Position and the Profit or Loss Account and Statement of
Comprehensive Income. Where appropriate, details of estimates are presented in
the accompanying notes to the Consolidated Financial Statements.
As the full impact of climate change is currently unknown, it is not possible
to consider all possible future outcomes when determining the value of assets,
liabilities and the timing of future cash flows. The Group's view is that any
reasonable impact of climate change would not have a material impact on the
valuation of assets and liabilities at the year-end date.
The financial statements values are presented in pounds sterling (£) rounded
to the nearest thousand (£'k), unless otherwise indicated.
The Group presents its Statement of Financial Position broadly in order of
liquidity. An analysis regarding recovery or settlement within 12 months after
the reporting date (current) and more than 12 months after the reporting date
(non-current) is presented in the respective notes.
Financial assets and financial liabilities are offset and the net amount
reported in the Statement of Financial Position only when there is a legally
enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the assets and settle the liability
simultaneously.
1.2. Going concern
The Consolidated Financial Statements have been prepared on a going concern
basis. The Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for at least 12 months from the date the
Directors approved these Financial Statements and that therefore it is
appropriate to adopt a going concern basis for the preparation of the
Financial Statements. In making their assessment, the Directors took into
account the potential impact of the principal risks that could prevent the
Group from achieving its strategic objectives.
The assessment was based on the Group's Own Risk and Solvency Assessment
("ORSA"), which brings together management's view of current and emerging
risks, with scenario-based analysis and reverse stress testing to form a
conclusion as to the financial stability of the Group. Consideration was also
given to what the Group considers its principal risks which are set out in the
Principal Risks and Uncertainties section on pages 24 to 33 of the Strategic
Report of the Annual Report. The assessment also included consideration of any
scenarios which might cause the Group to breach its solvency requirements
which are not otherwise covered in the risk-based scenario testing.
We have assessed the short, medium and long-term risks associated with climate
change. Given the geographical diversity of the Group's policyholders within
the UK and the Group's reinsurance programme, it is highly unlikely that a
climate event will materially impact Sabre's ability to continue trading. More
likely is that the costs associated with the transition to a low-carbon
economy will impact the Group's indemnity spend, as electric vehicles are
currently relatively expensive to fix. We expect that this is somewhat, or
perhaps completely, offset by advances in technology reducing the frequency of
claims, in particular bodily injury claims which are generally far more
expensive than damage to vehicles. These changes in the costs of claims are
gradual and as such reflected in our claims experience and fed into the
pricing of our policies.
1.3. New and amended standards and interpretations adopted by the Group
Amendments to IFRS
The following amended IFRS standards became effective for the year ended 31
December 2024:
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
- Amendments to IAS 1 Presentation of Financial Statements
o Classification of Liabilities with Covenants
o Non-current Liabilities with Covenants
o Removed the requirement that the right to defer settlement be
unconditional
o Deferral of Effective Date Amendment
- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
None of the amendments have had a material impact to the Group.
1.4. New and amended standards and interpretations not yet effective in 2024
A number of new standards and interpretations adopted by the UK which are not
mandatorily effective, as well as standards' interpretations issued by the
IASB but not yet adopted by the UK, have not been applied in preparing these
financial statements. The Group does not plan to adopt these standards early;
instead, it expects to apply them from their effective dates as determined by
their dates of UK endorsement. The Group is still reviewing the upcoming
standards to determine their impact:
- Lack of Exchangeability (Amendments to IAS 21) - Effective 1
January 2025
- IFRS 18 Presentation and Disclosure in Financial Statements -
Effective 1 January 2027, with retrospective application - IFRS 18, which
replaces IAS 1 "Presentation of Financial Statements", introduces new
requirements for presentation and disclosure in the financial statements, with
a focus on the Profit or Loss Account. Items in the Profit of Loss Account
will be classified into one of five categories: operating, investing,
financing, income taxes and discontinued operations, of which the first three
are new. It also requires the disclosure of newly defined management-derived
performance measures, how these are calculated and why these provide useful
information, reconciled to the IFRS reporting. As a presentation and
disclosure standard, the implementation of IFRS 18 will not affect the Group's
results. The Group is currently working to identify all impacts the amendments
will have on the primary financial statements and notes to the financial
statements.
2. Risk and Capital Management
2.1. Risk management framework
The Sabre Insurance Group plc Board is responsible for prudent oversight of
the Group's business and financial operations, ensuring that they are
conducted in accordance with sound business principles and with applicable
laws and regulations, and ensure fair customer outcomes. This includes
responsibility to articulate and monitor adherence to the Board's appetite for
exposure to all risk types. The Board also ensures that measures are in place
to provide independent and objective assurance on the effective identification
and management of risk and on the effectiveness of the internal controls in
place to mitigate those risks.
The Board has set a robust risk management strategy and framework as an
integral element in its pursuit of business objectives and in the fulfilment
of its obligations to shareholders, regulators, customers and employees.
The Group's risk management framework is proportionate to the risks that we
face. Our assessment of risk is not static; we continually reassess the risk
environment in which the Group operates and ensure that we maintain
appropriate mitigation in order to remain within our risk appetite. The
Group's Management Risk and Compliance Forum gives Management the regular
opportunity to review and discuss the risks which the Group faces, including
but not limited to any breaches, issues or emerging risks. The Forum also
works to ensure that adequate mitigation for the risks the Group is exposed to
are in place.
2.2. Underwriting risk
The principal risk the Group faces under insurance contracts is that the
actual claims and benefit payments, or the timing thereof, differ from
expectations. This is influenced by the frequency of claims, severity of
claims, actual benefits paid and subsequent development of long-term claims.
Therefore, the objective of the Group is to ensure that sufficient reserves
are available to cover these liabilities.
The Group issues only motor insurance contracts, which usually cover a
12-month duration. For these contracts, the most significant risks arise from
under-estimation of the expected costs attached to a policy or a claim, for
example through unexpected inflation of costs or single catastrophic events.
Refer to Note 3.6 for detail on these risks and the way the Group manages
them. Note 3.6 also includes the considerations of climate change. Further
discussion on climate change can be found in the Principal Risks and
Uncertainties section on pages 24 to 33 of the Strategic Report and the
Responsibility and Sustainability section on pages 44 to 64 of the Annual
Report.
2.3. Credit risk
Credit risk reflects the financial impact of the default of one or more of the
Group's counterparties. The Group is exposed to financial risks caused by a
loss in the value of financial assets due to counterparties failing to meet
all or part of their obligations. Key areas where the Group is exposed to
credit default risk are:
- Failure of an asset counterparty to meet their financial
obligations (Note 4.4)
- Reinsurers default on their share of the Group's insurance
liabilities (Note 3.7)
- Default on amounts due from insurance contract intermediaries or
policyholders (Note 3.7)
The following policies and procedures are in place to mitigate the Group's
exposure to credit risk:
- A Group credit risk policy which sets out the assessment and
determination of what constitutes credit risk for the Group. Compliance with
the policy is monitored and exposures and breaches are reported to the Group's
Risk Committee
- Reinsurance is placed with counterparties that have a good credit
rating and concentration of risk is avoided by following policy guidelines in
respect of counterparties' limits that are set each year by the Board of
Directors and are subject to regular reviews. At each reporting date,
management performs an assessment of creditworthiness of reinsurers and
updates the reinsurance purchase strategy, ascertaining a suitable allowance
for impairment
- The Group sets the maximum amounts and limits that may be advanced
to corporate counterparties by reference to their long-term credit ratings
- The credit risk in respect of customer balances incurred on
non-payment of premiums or contributions will only persist during the grace
period specified in the policy document or trust deed until expiry, when the
policy is either paid up or terminated. Commission paid to intermediaries is
netted off against amounts receivable from them to reduce the risk of doubtful
debts
Refer to Notes 3.7 and 4.4 as indicated above for further information on
credit risk.
2.4. Liquidity risk
Liquidity risk is the potential that obligations cannot be met as they fall
due as a consequence of having a timing mismatch or inability to raise
sufficient liquid assets without suffering a substantial loss on realisation.
The Group manages its liquidity risk through both ensuring that it holds
sufficient cash and cash equivalent assets to meet all short-term liabilities,
and matching the maturity profile of its financial investments to the expected
cash outflows.
Refer to Note 6 for further information on liquidity risk.
2.5. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to
concentration risk. The Group has no significant investment in any particular
industrial sector and therefore is unlikely to suffer significant losses
through its investment portfolio as a result of over-exposure to sectors
engaged in similar activities or which have similar economic features that
would cause their ability to meet contractual obligations to be similarly
affected by changes in economic, political or other conditions.
A significant part of the Group's investment portfolio consists primarily of
UK government bonds and government-backed bonds; therefore, the risk of
government default does exist, however the likelihood is extremely remote. The
remainder of the portfolio consists of investment grade corporate bonds. The
Group continues to monitor the strength and security of all bonds.
The Group's portfolio has a significant concentration of UK debt securities
and therefore is exposed to movements in UK interest rates.
Refer to Note 4.2.1 for further information on investment concentration risk.
2.6. Operational risk
Operational risk is the risk of loss arising from system failure, cyber
attack, human error, fraud or external events. When controls fail to perform,
operational risks can cause damage to reputation, have legal or regulatory
implications or can lead to financial loss. The Group cannot expect to
eliminate all operational risks, but by operating a rigorous control framework
and by monitoring and responding to potential risks, the Group is able to
manage the risks. Controls include effective segregation of duties, access
controls, authorisation and reconciliation procedures, staff education and
assessment processes, including the use of internal audit. Business risks such
as changes in environment, technology and the industry are monitored through
the Group's strategic planning and budgeting process.
2.7. Capital management
The Board of Directors has ultimate responsibility for ensuring that the Group
has sufficient funds to meet its liabilities as they fall due. The Group
carries out detailed modelling of its assets and liabilities and the key risks
to which these are exposed. This modelling includes the Group's own assessment
of its capital requirements for solvency purposes.
The Group has continued to manage its solvency with reference to the solvency
capital requirement ("SCR") calculated using the standard formula. The Group
has developed sufficient processes to ensure that the capital requirements
under Solvency II are not breached, including the maintenance of capital at a
level higher than that required through the standard formula. The Group
considers its capital position to be its net assets on a Solvency II basis and
monitors this in the context of the Solvency II SCR.
The Group aims to retain sufficient capital such that in all reasonably
foreseeable scenarios, it will hold regulatory capital in excess of its SCR.
The Directors currently consider that this is achieved through maintaining a
regulatory capital surplus of 140% to 160%. As at 31 December 2024, the Group
holds significant excess Solvency II capital.
The Group's IFRS capital comprised:
As at 31 December
2024 2023
£'k £'k
Share capital 250 250
Own shares (3,112) (3,121)
Merger reserve 48,525 48,525
FVOCI reserve (3,064) (5,894)
Insurance/Reinsurance finance reserve 3,606 2,239
Share-based payments reserve 2,620 2,686
Retained earnings 209,521 197,727
Total 258,346 242,412
The Solvency II position of the Group both before and after proposed final
dividend is given below:
As at 31 December
2024 2023
£'k £'k
Total tier 1 capital - pre-dividend 134,695 121,099
SCR 62,199 58,998
Solvency coverage ratio (%) - pre-dividend 216.6% 205.3%
As at 31 December
2024 2023
£'k £'k
Total tier 1 capital - pre-dividend 134,695 121,099
Less: Final dividend declared (28,250) (20,250)
Total tier 1 capital - post-dividend 106,445 100,849
SCR 62,199 58,998
Solvency coverage ratio (%) 171.1% 170.9%
The following table sets out a reconciliation between IFRS net assets and
Solvency II net assets before proposed final dividend:
As at 31 December
2024 2023
£'k £'k
IFRS net assets 258,346 242,412
Less: Goodwill (156,279) (156,279)
Adjusted IFRS net assets 102,067 86,133
Remove IFRS liability: Liability for remaining coverage (unearned premium 117,245 124,448
element)
Remove IFRS asset: Insurance acquisition cash flow asset (8,472) (8,733)
Remove IFRS liability: Risk adjustment 14,304 12,255
Add Solvency II liability: Risk margin (6,975) (5,904)
Add Solvency II liability: Premium provision (74,613) (76,441)
Changes in valuation differences of technical reserves between IFRS and 2,015 996
Solvency II
Change in deferred tax liability due to difference in net asset position (10,876) (11,655)
Solvency II net assets 134,695 121,099
The adjustments set out in the above table have been made for the following
reasons:
- Adjusted IFRS net assets: Equals Group net assets on an IFRS
basis, less Goodwill.
- Removal of liability for remaining coverage and insurance
acquisition cash flow asset: Liability for remaining coverage is not treated
as a liability under Solvency II.
- Removal of insurance acquisition cash flow asset: Insurance
acquisition cash flow asset is not deferred under Solvency II.
- Removal of IFRS risk adjustment: Solvency II risk margin replaces
IFRS risk adjustment.
- Addition of Solvency II risk margin: The Solvency II risk margin
represents the premium that would be required were the Group to transfer its
technical provisions to a third party, and essentially reflects the SCR
required to cover run-off of claims on existing business. This amount is
calculated by the Group through modelling the discounted SCR on a projected
future balance sheet for each year of claims run-off.
- Addition of Solvency II premium provision: A premium reserve
reflecting the future cash flows in respect of insurance contracts is
calculated and this must be discounted under Solvency II.
- Changes in valuation differences: Valuation differences of
technical differences between IFRS 17 and Solvency II, including discounting.
- Change in deferred tax: As the move to a Solvency II basis balance
sheet increases the net asset position of the Group, a deferred tax liability
is generated to offset the increase.
Sabre Insurance Group plc's SCR, expressed on a risk module basis, is set out
in the following table:
As at 31 December
2024 2023
Notes £'k £'k
Interest rate risk 5,289 4,655
Equity risk - -
Property risk 900 900
Spread risk 3,109 2,739
Currency risk 584 1,058
Concentration risk - -
Correlation impact (3,226) (3,192)
Market risk 6,656 6,160
Counterparty risk 3,325 3,098
Underwriting risk 68,011 63,720
Correlation impact (6,678) (6,219)
Basic SCR 71,314 66,759
Operating risk 8,714 7,650
Loss-absorbing effect of deferred taxes (17,829) (15,411)
Total SCR 62,199 58,998
The total SCR is primarily driven by the underwriting risk element, which is a
function of the Group's net earned premium (or projected net earned premium)
and the level of reserves held. Therefore, the SCR is broadly driven by the
size of the business.
The Group's capital management objectives are:
- To ensure that the Group will be able to continue as a going
concern
- To maximise the income and capital return to its equity
The Board monitors and reviews the broad structure of the Group's capital on
an ongoing basis. This review includes consideration of the extent to which
revenue in excess of that which is required to be distributed should be
retained.
The Group's objectives, policies and processes for managing capital have not
changed during the year.
3. Insurance Liabilities and Reinsurance Assets
ACCOUNTING POLICY
For the purpose of this accounting policy, the term 'motor insurance' covers
all the Group's products, which includes Motor Vehicle, Motorcycle and Taxi
insurance.
A. Insurance and reinsurance contracts classification
The Group issues insurance contracts in the normal course of business, under
which it accepts significant insurance risk from a policyholder
by agreeing to compensate the policyholder if a specified uncertain future
insured event adversely affects the policyholder.
As a general guideline, the Group determines whether it has significant
insurance risk, by comparing benefits payable after an insured event with
benefits payable if the insured event did not occur.
The Group issues only non-life insurance to individuals and businesses.
Non-life insurance products offered by the Group are Motor Vehicle, Motorcycle
and Taxi insurance. These products offer protection of a policyholder's assets
and indemnification of other parties that have suffered damage as a result of
a policyholder's accident.
In the normal course of business, the Group uses reinsurance to mitigate its
risk exposures. A reinsurance contract transfers significant risks if
it transfers substantially all of the insurance risk resulting from the
insured portion of the underlying insurance contacts, even if it does not
expose the reinsurer to the possibility of a significant loss.
B. Insurance and reinsurance contracts accounting treatment
(i) Separating components from insurance and reinsurance contracts
The Group assesses its non-life insurance and reinsurance products to
determine whether they contain distinct components which must be accounted for
under another IFRS instead of under IFRS 17. After separating any distinct
components, the Group applies IFRS 17 to all remaining components of the
(host) insurance contract. Currently, the Group's products do not include any
distinct components that require separation.
(ii) Aggregation and recognition of insurance and reinsurance contracts
Insurance contracts
Insurance contracts are aggregated into groups for measurement purposes.
Groups of insurance contracts are determined by identifying portfolios of
insurance contracts, each comprising contracts subject to similar risks and
managed together, and dividing each portfolio into annual cohorts (i.e. by
year of issue) and each annual cohort into three groups based on the expected
profitability of contracts:
- Any contracts that are onerous on initial recognition
- Any contracts that, on initial recognition, have no significant
possibility of becoming onerous subsequently
- Any remaining contracts in the annual cohort
The Group recognises groups of insurance contracts it issues from the earliest
of:
- The beginning of the coverage period of the group of contracts
- When the first payment from a policyholder in the group becomes
due or when the first payment is received if there is no due date
- When facts and circumstances indicate that the contract is onerous
The Group adds new contracts to the group in the reporting period in which
that contract meets one of the criteria set out above.
The profitability of groups of contracts is assessed by actuarial valuation
models that take into consideration existing and new business. The Group
assumes that no contracts in the portfolio are onerous at initial recognition
unless facts and circumstances indicate otherwise. For contracts that are not
onerous, the Group assesses, at initial recognition, that there is no
significant possibility of becoming onerous subsequently by assessing the
likelihood of changes in applicable facts and circumstances. The Group
considers facts and circumstances to identify whether a group of contracts are
onerous based on:
- Pricing information
- Results of similar contracts it has recognised
- Environmental factors, e.g. a change in market experience or
regulations
Reinsurance contracts
Some reinsurance contracts provide cover for underlying contracts that are
included in different groups. However, the Group concludes that the
reinsurance contract's legal form of a single contract reflects the substance
of the Group's contractual rights and obligations, considering that the
different covers lapse together and are not sold separately. As a result, the
reinsurance contract is not separated into multiple insurance components that
relate to different underlying groups.
The Group recognises a group of reinsurance contracts held at the earlier of
the following:
- The beginning of the coverage period of the group of reinsurance
contracts held
- The date the Group recognises an onerous group of underlying
insurance contracts if the Group entered into the related reinsurance contract
held in the group of reinsurance contracts held at or before that date
The Group adds new contracts to the group in the reporting period in which
that contract meets one of the criteria set out above.
(iii) Measurement
Summary of measurement approaches
The Group uses the following measurement approaches to its insurance and
reinsurance contacts.
Product classification Measurement model
Insurance contracts issued
Motor insurance Insurance contracts issued Premium Allocation Approach ("PAA")
Reinsurance contracts held
Motor insurance - excess of loss reinsurance Reinsurance contracts held Premium Allocation Approach ("PAA")
The Group applies the premium allocation approach to all the insurance
contracts that it issues and reinsurance contracts that it holds, as the
coverage period of each contract in the group is one year or less, including
insurance contract services arising from all premiums within the contract
boundary. The Group does not expect significant variability in the fulfilment
cash flows that would affect the measurement of the liability for remaining
coverage during the period before a claim is incurred.
All the Group's insurance contracts have a coverage period of one year or
less. The Group's reinsurance contracts held are excess of loss contracts and
are loss occurring. The Group does not issue any reinsurance contracts.
Insurance contracts issued
On initial recognition of each group of contracts, the carrying amount of the
liability for remaining coverage ("LRC") is measured at:
- The premiums received on initial recognition
- Minus any insurance acquisition cash flows allocated to the group
at that date
- Adjusted for any amount arising from the derecognition of any
assets or liabilities previously recognised for cash flows related to the
group (including assets for insurance acquisition cash flows)
The Group has chosen not to expense insurance acquisition cash flows when they
are incurred.
Subsequently, the Group measures the carrying amount of the LRC at the end of
each reporting period as the LRC at the beginning of the period:
- Plus premiums received in the period
- Minus insurance acquisition cash flows
- Plus any amounts relating to the amortisation of insurance
acquisition cash flows recognised as an expense in the reporting period
- Minus the amount recognised as insurance revenue for the services
provided in the period
On initial recognition of each group of contracts, the Group expects that the
time between providing each part of the services and the related premium due
date is no more than a year. Accordingly, the Group has chosen not to adjust
the liability for remaining coverage to reflect the time value of money and
the effect of financial risk.
If at any time during the coverage period, facts and circumstances indicate
that a group of contracts is onerous, then the Group recognises a loss in
Profit or Loss and increases the liability for remaining coverage to the
extent that the current estimates of the fulfilment cash flows that relate to
remaining coverage exceed the carrying amount of the liability for remaining
coverage. The fulfilment cash flows are discounted (at current rates) if the
liability for incurred claims is also discounted.
The Group recognises the liability for incurred claims ("LIC") of a group of
insurance contracts at the amount of the fulfilment cash flows ("FCF")
relating to incurred claims. The fulfilment cash flows are discounted (at
current rates) unless they are expected to be paid in one year or less from
the date the claims are incurred.
The carrying amount of a group of insurance contracts issued at the end of
each reporting period is the sum of:
- The LRC
- The LIC
Risk adjustment for non-financial risk
An explicit risk adjustment for non-financial risk is estimated separate from
the other estimates. Unless contracts are onerous, the explicit risk
adjustment for non-financial risk is only estimated for the measurement of the
LIC.
This risk adjustment represents the compensation that the Group requires for
bearing the uncertainty about the amount and timing of cash flows that arise
from non-financial risk. Non-financial risk is risk arising from insurance
contracts other than financial risk, which is included in the estimates of
future cash flows or the discount rate used to adjust the cash flows. The
risks covered by the risk adjustment for non-financial risk are insurance risk
and other non-financial risks such as lapse risk and expense risk.
The risk adjustment for non-financial risk for insurance contracts measures
the compensation that the Group would require to make it indifferent between:
- Fulfilling a liability that has a range of possible outcomes
arising from non-financial risk
- Fulfilling a liability that will generate fixed cash flows with
the same expected present value as the insurance contracts
Reinsurance contracts held
The excess of loss reinsurance contracts held provide coverage on the motor
insurance contracts originated for claims incurred during an accident year and
are accounted for under the PAA. The Group measures its reinsurance assets for
a group of reinsurance contracts that it holds on the same basis as insurance
contracts that it issues. For reinsurance contracts held, on initial
recognition, the Group measures the remaining coverage at the amount of ceding
premiums paid. For reinsurance contracts held, at each of the subsequent
reporting dates, the remaining coverage is:
- Increased for ceding premiums paid in the period
- Decreased for the amounts of ceding premiums recognised as
reinsurance expenses for the services received in the period
Assets for reinsurance contracts consist of the asset for remaining coverage
("ARC") and the asset for incurred claims ("AIC") being the reinsurers' share
of claims that have already been incurred.
For reinsurance contracts held, the risk adjustment for non-financial risk
presents the amount of risk being transferred by the Group to the reinsurer.
Asset for insurance acquisition cash flows
The Group includes the following acquisition cash flows within the insurance
contract boundary that arise from selling, underwriting and starting a group
of insurance contracts and that are:
a. Costs directly attributable to individual contracts and groups of
contracts
b. Costs directly attributable to the portfolio of insurance contracts to
which the group belongs, which are allocated on a reasonable and consistent
basis to measure the group of insurance contracts
Insurance acquisition cash flows arising before the recognition of the related
group of contracts are recognised as an asset. Insurance acquisition cash
flows arise when they are paid or when a liability is required to be
recognised under a standard other than IFRS 17. Such an asset is recognised
for each group of contracts to which the insurance acquisition cash flows are
allocated. The asset is derecognised, fully or partially, when the insurance
acquisition cash flows are included in the measurement of the group of
contracts.
Recoverability assessment
At each reporting date, if facts and circumstances indicate that an asset for
insurance acquisition cash flows may be impaired, then the Group:
a. Recognises an impairment loss in Profit or Loss so that the carrying
amount of the asset does not exceed the expected net cash inflow for the
related group
b. If the asset relates to future renewals, recognises an impairment loss
in Profit or Loss to the extent that it expects those insurance acquisition
cash flows to exceed the net cash inflow for the expected renewals and this
excess has not already been recognised as an impairment loss under (a)
The Group reverses any impairment losses in Profit or Loss and increases the
carrying amount of the asset to the extent that the impairment conditions have
improved.
Modification and derecognition
The Group derecognises insurance contracts when:
- The contract is extinguished (i.e. when the obligation specified
in the insurance contract expires or is discharged or cancelled)
- The contract is modified and certain additional criteria are met
When an insurance contract is modified by the Group as a result of an
agreement with the counterparties or due to a change in regulations, the Group
treats changes in cash flows caused by the modification as changes in
estimates of the FCF, unless the conditions for the derecognition of the
original contract are met. The Group derecognises the original contract and
recognises the modified contract as a new contract if any of the following
conditions are present:
a. If the modified terms had been included at contract inception and the
Group would have concluded that the modified contract:
i. Is not in scope of IFRS 17
ii. Results in different separable components
iii. Results in a different contract boundary
iv. Belongs to a different group of contracts
b. The original contract was accounted for under the PAA, but the
modification means that the contract no longer meets the eligibility criteria
for that approach
When an insurance contract accounted for under the PAA is derecognised,
adjustments to the FCF to remove relating rights and obligations and account
for the effect of the derecognition result in the following amounts being
charged immediately to Profit or Loss:
a. If the contract is extinguished, any net difference between the
derecognised part of the LRC of the original contract and any other cash flows
arising from extinguishment
b. If the contract is transferred to the third party, any net difference
between the derecognised part of the LRC of the original contract and the
premium charged by the third party
c. If the original contract is modified resulting in its derecognition,
any net difference between the derecognised part of the LRC and the
hypothetical premium the entity would have charged had it entered into a
contract with equivalent terms as the new contract at the date of the contract
modification, less any additional premium charged for the modification
(iv) Presentation
The Group has presented separately, in the Statement of Financial Position,
the carrying amount of portfolios of insurance contracts issued and portfolios
of reinsurance contracts held.
The Group has elected to disaggregate part of the movement in LIC resulting
from the changes in discount rates and present this in the Statement of
Comprehensive Income. The Group disaggregates the total amount recognised in
the Profit or Loss Account and the Statement of Comprehensive Income into an
insurance service result, comprising insurance revenue and insurance service
expense, and insurance finance income or expenses.
The Group does not disaggregate the change in risk adjustment for
non-financial risk between a financial and non-financial portion and includes
the entire change as part of the insurance service result.
The Group separately presents income or expenses from reinsurance contracts
held from the expenses or income from insurance contracts issued.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS
Insurance service result from insurance contracts issued
Insurance revenue
As the Group provides insurance contract services under the group of insurance
contracts, it reduces the LRC and recognises insurance revenue. The amount of
insurance revenue recognised in the reporting period depicts the transfer of
promised services at an amount that reflects the portion of consideration that
the Group expects to be entitled to in exchange for those services.
The Group measures all insurance contracts under the PAA and recognises
insurance revenue based on the passage of time over the coverage period of a
group of contracts.
Insurance service expenses
Insurance service expenses include the following:
- Incurred claims and benefits
- Other incurred directly attributable expenses
- Amortisation of insurance acquisition cash flows
- Changes that relate to past service - changes in the FCF relating
to the LIC
- Changes that relate to future service - changes in the FCF that
result in onerous contract losses or reversals of those losses
Amortisation of insurance acquisition cash flows is based on the passage of
time.
Other expenses not meeting the above categories are included in other
operating expenses in the Profit or Loss Account.
Insurance service result from reinsurance contracts held
Net income/(expense) from reinsurance contracts held
The Group presents separately on the face of the Profit or Loss Account and
the Statement of Comprehensive Income, the amounts expected to be recovered
from reinsurers, and an allocation of the reinsurance premiums paid. The net
income/(expense) from reinsurance contract held comprise:
- Reinsurance expenses
- For groups of reinsurance contracts measured under the PAA, broker
fees are included within reinsurance expenses
- Incurred claims recovery
- Other incurred directly attributable expenses
- Changes that relate to past service - changes in the FCF relating
to incurred claims recovery
- Effect of changes in the risk of reinsurers' non-performance
Amounts relating to accounting for onerous groups of underlying insurance
contracts issued
Reinsurance expenses are recognised similarly to insurance revenue. The amount
of reinsurance expenses recognised in the reporting period depicts the
transfer of received insurance contract services at an amount that reflects
the portion of ceding premiums that the Group expects to pay in exchange for
those services. Broker fees are included in reinsurance expenses.
All groups of reinsurance contracts held are measured under the PAA and
reinsurance expenses are recognised based on the passage of time over the
coverage period of a group of contracts.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Insurance finance income or expenses
Insurance finance income or expenses comprise the change in the carrying
amount of the group of insurance contracts arising from:
- The effect of the time value of money and changes in the time
value of money
- The effect of financial risk and changes in financial risk
For contracts measured under the PAA, the main amounts within insurance
finance income or expenses are:
a. Interest accreted on the LIC
b. The effect of changes in interest rates and other financial assumptions
The Company disaggregates insurance finance income or expenses on motor
insurance contracts issued between Profit or Loss and OCI. The Company has
made an accounting policy choice to disaggregate insurance finance income or
expenses for the period to include within OCI an amount which reflects the
difference between the carrying amount of a group of contracts and the amount
that the group would have been measured at using the discount rates in effect
on initial recognition, effectively reflecting the impact of discount rate
changes on the opening liability for incurred claims through other
comprehensive income. The amount recognised in other comprehensive income over
the duration of a group of contracts will always total zero.
The impact of changes in market interest rates on the value of the insurance
assets and liabilities are reflected in OCI in order to minimise accounting
mismatches between the accounting for financial assets and insurance assets
and liabilities. The Company's financial assets backing the motor insurance
portfolios are predominantly measured at fair value through Other
Comprehensive Income ("FVOCI").
RISK MANAGEMENT
Refer to Notes 3.6 and 3.7 for detail on risks relating to insurance
liabilities and reinsurance assets, and the management thereof.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of these consolidated financial statements requires the Group
to select accounting policies and make estimates, assumptions and judgements.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed below. The Group based its assumptions
and estimates on information and facts available when the financial statements
were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Group. Such changes are reflected
in the assumptions when they occur. The Group disaggregates information to
disclose major product lines, namely Motor Vehicle, Motorcycle and Taxi.
Accounting judgements
A. Level of aggregation and measurement model for insurance contracts
For measurement purposes, insurance contracts are aggregated into groups based
on an assessment of risks and dividing each portfolio into annual cohorts by
year of issue. Judgement is required in assessing if the contracts have
similar risks that are managed together. Each annual cohort Is then divided
into three groups based on the expected profitability of contracts, being
contracts that are onerous on initial recognition, have no significant
possibility of becoming onerous, or any other contracts which do not fall into
those categories. Judgement is applied to determine the profitability of
contracts at initial recognition. The Group applies the default assumption
that no groups of contracts are onerous unless facts and circumstances
indicate otherwise. Further judgement is applied to determine how contracts
will be measured. The Group applies the PAA to simplify the measurement of all
insurance contracts issued and reinsurance contracts held. The judgement
around the PAA has been disclosed in section B(iii) of the Group's accounting
policies for insurance liabilities and reinsurance assets.
B. Insurance acquisition cash flows
IFRS 17 requires an entity to include a portion of its overhead costs that are
directly attributable in fulfilling the obligations under an insurance
contract, in the fulfilment cash flows of the related liability.
The Group applies judgement in determining the inputs used in the methodology
to systematically and rationally allocate insurance acquisition cash flows to
groups of insurance contracts. This includes judgements about the amounts
allocated to insurance contracts expected to arise from renewals of existing
insurance contracts in a group and the volume of expected renewals from new
contracts issued in the period.
At the end of each reporting period, the Group revisits the assumptions made
to allocate insurance acquisition cash flows to groups, and where necessary,
revises the amounts of assets for insurance acquisition cash flows
accordingly.
C. Discount rates
As there are no referenced asset portfolios backing the LIC, because of the
volatility and uncertainty of claims on short term insurance contracts, the
Group deemed it more appropriate to use the bottom-up approach under IFRS 17
for discounting. This reflects a risk-free yield curve and an illiquidity
premium. The standard does not specify how to calculate the illiquidity
premium.
The Group uses the risk-free curves published by the Bank of England. The
Solvency II GBP risk-free yield curve is based on 6-month SONIA swap rates,
corrected using an adjustment defined by the PRA for credit risk. SONIA-based
yield curves are considered to contain negligible credit risk, according to
the Bank of England, as the contracts that make it up settle overnight.
The Group has performed a number of analyses in determining the choice of the
illiquidity risk component, including using the Solvency II volatility
adjustment ("VA"). The analyses did not identify any material differences in
reserves. Given the nature of the liabilities and that there is no penalty or
surrender value to exit the insurance contracts, the Group applied judgement
in setting the illiquidity risk component and has selected the VA to be an
appropriate proxy for the illiquidity adjustment.
Discount rates applied for discounting of future cash flows are listed below:
31 December 2024 31 December 2023
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
Motor insurance 4.70% 4.39% 4.28% 4.31% 5.05% 3.98% 3.67% 3.67%
See Note 3.6 for the impact of a 1% increase or decrease in the discount rates
used.
D. Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is the compensation that the Group
requires for bearing the uncertainty about the amount and timing of the cash
flows of groups of insurance contracts. The risk adjustment reflects an amount
that an insurer would rationally pay to remove the uncertainty that future
cash flows could exceed the expected value amount.
The Group has estimated the risk adjustment using a methodology which targets
a confidence level (probability of sufficiency) approach between the 80th and
90th percentile. At 31 December 2024, the net risk adjustment applied equates
to an approximate confidence interval of 80.6% (31 December 2023: 81.3%). That
is, the Group has assessed its indifference to uncertainty for all product
lines (as an indication of the compensation that it requires for bearing
non-financial risk) as being equivalent to the 80th to 90th percentile
confidence level less the mean of an estimated probability distribution of the
future cash flows. The Group has estimated the probability distribution of the
future cash flows, and the additional amount above the expected present value
of future cash flows required to meet the target percentiles.
Sabre uses a 'bootstrapping' method to create a distribution of outcomes for
the outstanding claim amounts. This distribution is assessed to calculate the
risk adjustment at a chosen confidence level. Bootstrapping involves taking
random samples of the data for analysis, rather than using the full dataset.
Multiple random samples are selected, with each random sample selected from
the full dataset.
See Note 3.6 for the impact of moving the confidence interval of the booked
risk adjustment up or down by 5ppts.
Critical accounting estimates
E. Liability for incurred claims ("LIC")
The ultimate cost of outstanding claims is estimated by using a range of
standard actuarial claims projection techniques, such as Chain Ladder and
Bornheutter-Ferguson methods.
The main assumption underlying these techniques is that a Group's past claims
development experience can be used to project future claims development and
hence ultimate claims costs. These methods extrapolate the development of paid
and incurred losses, average costs per claim (including claims handling
costs), and claim numbers based on the observed development of earlier years
and expected loss ratios. Historical claims development is mainly analysed by
accident years, but can also be further analysed by geographical area, as well
as by significant business lines and claim types. Large claims are usually
separately addressed, either by being reserved at the face value of loss
adjuster estimates or separately projected in order to reflect their future
development. In most cases, no explicit assumptions are made regarding future
rates of claims inflation or loss ratios. Instead, the assumptions used are
those implicit in the historical claims development data on which the
projections are based. Additional qualitative judgement is used to assess the
extent to which past trends may not apply in future, (e.g., to reflect one-off
occurrences, changes in external or market factors such as public attitudes to
claiming, economic conditions, levels of claims inflation, judicial decisions
and legislation, as well as internal factors such as portfolio mix, policy
features and claims handling procedures) in order to arrive at the estimated
ultimate cost of claims that present the probability weighted expected value
outcome from the range of possible outcomes, taking account of all the
uncertainties involved.
The Group has the right to pursue third parties for payment of some or all
costs. Estimates of salvage recoveries and subrogation reimbursements are
considered as an allowance in the measurement of ultimate claims costs. Other
key circumstances affecting the reliability of assumptions include variation
in interest rates and delays in settlement.
The key estimates in calculating the LIC are the amount and timing of future
claims payments in relation to claims already incurred. This is primarily
assessed with reference to past performance, including past settlement
patterns, as per the actuarial methodology outlined above. This includes
estimating the likely changes in inflation as relates to claims already
incurred, as well as the expected frequency of claims which have occurred but
which have not yet been reported. The ongoing cost of handling claims already
incurred is estimated with reference to the historical cost-per-claim
calculated over the past 12 months.
See Note 3.6 for the impact of a 5ppts increase in loss ratio and the impact
of a 5% increase in outstanding claims.
3.1. Composition of the Statement of Financial Position
An analysis of the amounts presented on the Statement of Financial Position
for insurance contacts is included in the table below.
As at December
2024 2023
Notes £'k £'k
Insurance contract liabilities
Insurance contract liabilities
Motor Vehicle insurance 334,767 321,720
Motorcycle insurance 34,321 32,370
Taxi insurance 37,308 29,482
Asset for insurance acquisition cash flows
Motor Vehicle insurance 3.3 (6,488) (6,933)
Motorcycle insurance 3.3 (880) (867)
Taxi insurance 3.3 (1,104) (933)
Total insurance contract liabilities 397,924 374,839
Reinsurance contracts assets
Motor Vehicle insurance 133,974 143,364
Motorcycle insurance 15,018 13,502
Taxi insurance 11,766 9,860
Total reinsurance contract assets 160,758 166,726
3.2. Movements in insurance and reinsurance contract balances
3.2.1. Insurance contracts issued
Reconciliation of liability for remaining coverage and the liability for
incurred claims
2024 2023
Liabilities for Remaining Coverage Liabilities for Incurred Claims Total Liabilities for Remaining Coverage Liabilities for Incurred Claims Total
("LRC")
("LIC")
("LRC")
("LIC")
In £'k Estimates of present value of future cash flows Risk adjustment for non-financial risk Estimates of present value of future cash flows Risk adjustment for non-financial risk
Opening insurance contract liabilities 63,008 258,358 53,473 374,839 47,836 221,651 44,854 314,341
Insurance revenue (248,131) - - (248,131) (188,246) - - (188,246)
Insurance service expenses 18,166 132,011 4,484 154,661 14,057 116,821 8,619 139,497
Incurred claims and other directly attributable expenses - 127,787 14,988 142,775 - 110,057 13,605 123,662
Changes that relate to past service - changes in the FCF relating to the LIC - 4,224 (10,504) (6,280) - 6,764 (4,986) 1,778
Amortisation of insurance acquisition cash flows 18,166 - - 18,166 14,057 - - 14,057
Insurance service result (229,965) 132,011 4,484 (93,470) (174,189) 116,821 8,619 (48,749)
Insurance finance expense recognised in Profit or Loss Account - 8,392 - 8,392 - 10,170 - 10,170
Insurance finance (income)/expense recognised in Other Comprehensive Income - (6,852) - (6,852) - 12,436 - 12,436
Total changes in Comprehensive Income (229,965) 133,551 4,484 (91,930) (174,189) 139,427 8,619 (26,143)
Cash flows
Premiums received 254,389 - - 254,389 206,189 - - 206,189
Claims and other insurance services expenses paid - (121,469) - (121,469) - (102,720) - (102,720)
Insurance acquisition cash flows (17,905) - - (17,905) (16,828) - - (16,828)
Total cash flows 236,484 (121,469) - 115,015 189,361 (102,720) - 86,641
Closing insurance contract liabilities 69,527 270,440 57,957 397,924 63,008 258,358 53,473 374,839
3.2.2. Reinsurance contracts held
Reconciliation of assets for remaining coverage and the assets for incurred
claims
2024 2023
Assets for remaining coverage Assets for incurred claims TOTAL Assets for remaining coverage Assets for incurred claims TOTAL
In £'k Estimates of present value of future cash flows Risk adjustment for non-financial risk Estimates of present value of future cash flows Risk adjustment for non-financial risk
Opening reinsurance contract assets 2,075 123,433 41,218 166,726 5,675 97,996 33,283 136,954
Net (expense)/income from reinsurance contracts held (33,617) 10,591 2,435 (20,591) (28,506) 23,597 7,935 3,026
Reinsurance expense (33,617) - - (33,617) (28,506) - - (28,506)
Incurred claims recovery - 10,233 9,205 19,438 - 16,738 9,103 25,841
Changes that relate to past service - 358 (6,770) (6,412) - 6,859 (1,168) 5,691
Reinsurance finance income recognised in Profit or Loss Account - 3,714 - 3,714 - 3,588 - 3,588
Reinsurance finance (expense)/income recognised in Other Comprehensive Income - (5,880) - (5,880) - 5,432 - 5,432
Total changes in Comprehensive Income (33,617) 8,425 2,435 (22,757) (28,506) 32,617 7,935 12,046
Cash flows
Premiums paid 34,992 - - 34,992 24,906 - - 24,906
Recoveries received - (18,203) - (18,203) - (7,180) - (7,180)
Total cash flows 34,992 (18,203) - 16,789 24,906 (7,180) - 17,726
Closing reinsurance contract assets 3,450 113,655 43,653 160,758 2,075 123,433 41,218 166,726
3.3. Assets for insurance acquisition cash flows
£'k
Balance as at 1 January 2023 5,962
Amounts incurred during the year 16,828
Amounts derecognised and included in measurement of insurance contracts (14,057)
Balance as at 31 December 2023 8,733
Amounts incurred during the period 17,905
Amounts derecognised and included in measurement of insurance contracts (18,166)
Balance as at 31 December 2024 8,472
The following table sets out when the Group expects to derecognise assets for
insurance acquisition cash flows after the reporting date:
£'k
31 December 2024
Less than one year 8,410
More than one year 62
8,472
31 December 2023
Less than one year 8,032
More than one year 701
8,733
3.4. Claims development
The presentation of the claims development tables for the Group is based on
the actual date of the event that caused the claim (accident year basis).
These triangles present estimated costs including any risk adjustment and
associated liability related to the future cost of handling claims.
Gross of reinsurance
Accident year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
£'k £'k £'k £'k £'k £'k £'k £'k £'k £'k £'k
Estimates of undiscounted gross cumulative claims
At the end of the accident year 103,599 111,518 165,707 120,077 126,981 101,965 89,233 136,811 133,334 146,677
- One year later 90,133 100,935 131,803 108,089 122,663 97,953 93,309 131,433 134,785
- Two years later 82,537 94,294 123,651 107,988 127,225 93,390 90,941 121,909
- Three years later 79,845 91,336 122,674 113,257 131,254 88,192 95,294
- Four years later 77,095 90,789 124,128 118,600 135,173 89,574
- Five years later 77,038 92,629 137,472 125,038 138,777
- Six years later 77,469 101,655 137,660 132,657
- Seven years later 77,729 101,124 135,674
- Eight years later 77,040 102,797
- Nine years later 76,922
Current estimate of cumulative claims 76,922 102,797 135,674 132,657 138,777 89,574 95,294 121,909 134,785 146,677
Cumulative gross claims paid (76,061) (93,893) (90,207) (113,703) (110,701) (73,102) (65,507) (76,827) (68,036) (47,731)
Undiscounted gross liabilities - accident years from 2015 to 2024 861 8,904 45,467 18,954 28,076 16,472 29,787 45,082 66,749 98,946 359,298
Undiscounted gross liabilities - accident years from 2014 and before 32,055
Effect of discounting (62,956)
Total gross liabilities for incurred claims ("LIC") 328,397
Liabilities for remaining coverage ("LRC") 69,527
Total gross liabilities included in the Statement of Financial Position 397,924
The purple-coloured numbers are undiscounted, but otherwise presented on an
IFRS 17 basis. The blue-coloured numbers have not been restated under IFRS 17
and reflect the numbers as previously reported under IFRS 4. The primary
difference between the IFRS 17 and IFRS 4 numbers presented here relates to
the risk adjustment.
The gross liabilities for incurred claims and gross liabilities for remaining
coverage per product is given below:
LIC LRC Total
Motor Vehicle 269,652 58,628 328,280
Motorcycle 30,288 3,152 33,440
Taxi 28,457 7,747 36,204
Total 328,397 69,527 397,924
Net of reinsurance
Accident year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total
£'k £'k £'k £'k £'k £'k £'k £'k £'k £'k £'k
Estimates of undiscounted net cumulative claims
At the end of the accident year 97,288 104,808 106,478 111,433 115,011 85,723 81,161 106,049 102,185 122,858
- One year later 85,814 93,664 96,446 99,649 111,550 81,882 82,487 102,066 99,913
- Two years later 81,164 87,824 91,806 98,641 111,347 80,990 80,146 100,202
- Three years later 77,869 85,243 91,179 99,071 111,342 78,353 80,579
- Four years later 76,409 84,995 88,545 100,893 112,156 78,193
- Five years later 76,254 84,891 92,002 103,254 114,153
- Six years later 76,011 86,784 92,375 103,873
- Seven years later 76,581 86,536 93,897
- Eight years later 76,425 85,464
- Nine years later 76,445
Current estimate of cumulative claims 76,445 85,464 93,897 103,873 114,153 78,193 80,579 100,202 99,913 122,858
Cumulative net claims paid (75,657) (84,089) (85,462) (98,539) (104,853) (70,739) (65,507) (73,666) (65,465) (47,731)
Undiscounted net liabilities - accident years from 2015 to 2024 788 1,375 8,435 5,334 9,300 7,454 15,072 26,536 34,448 75,127 183,869
Undiscounted net liabilities - accident years from 2014 and before 8,703
Effect of discounting (21,483)
Total net liabilities for incurred claims ("LIC") 171,089
Liabilities for remaining coverage ("LRC") 66,077
Total net liabilities included in the Statement of Financial Position 237,166
The purple-coloured numbers are undiscounted, but otherwise presented on an
IFRS 17 basis. The blue-coloured numbers have not been restated under IFRS 17
and reflect the numbers as previously reported under IFRS 4. The primary
difference between the IFRS 17 and IFRS 4 numbers presented here relates to
the risk adjustment.
The net liabilities for incurred claims and net liabilities for remaining
coverage per product is given below:
LIC LRC Total
Motor Vehicle 138,763 55,547 194,310
Motorcycle 15,410 3,010 18,420
Taxi 16,916 7,520 24,436
Total 171,089 66,077 237,166
3.5. Insurance revenue and expenses - Segmental disclosure
An analysis of insurance revenue, insurance service expenses and net expenses
from reinsurance contracts held is included in the tables below. Additional
information on amounts recognised in Profit or Loss and OCI is included in the
movements in insurance and reinsurance contract balances in Note 3.2.
The Group provides short-term motor insurance to clients, which comprises
three lines of business, Motor Vehicle insurance, Motorcycle insurance and
Taxi insurance, which are written solely in the UK. The Group has no other
lines of business, nor does it operate outside of the UK. Other income relates
to auxiliary products and services, including brokerage and administration
fees, all relating to the motor insurance business. The Group does not have a
single client which accounts for more than 10% of revenue.
2024 2023
Motor Vehicles Motorcycle Taxi Total Motor Vehicles Motorcycle Taxi Total
£'k £'k £'k £'k £'k £'k £'k £'k
Insurance revenue
Insurance revenue from contracts measured under the PAA 222,635 10,199 15,297 248,131 158,054 15,363 14,829 188,246
Total insurance revenue 222,635 10,199 15,297 248,131 158,054 15,363 14,829 188,246
Insurance service expense
Incurred claims and other directly attributable expenses (117,752) (6,873) (18,150) (142,775) (91,688) (16,087) (15,887) (123,662)
Changes that relate to past service - changes in the FCF relating to the LIC 1,769 188 4,323 6,280 (861) 1,796 (2,713) (1,778)
Amortisation of insurance acquisition cash flows (14,234) (1,993) (1,939) (18,166) (10,206) (1,953) (1,898) (14,057)
Total insurance service expense (130,217) (8,678) (15,766) (154,661) (102,755) (16,244) (20,498) (139,497)
Net (expense)/income from reinsurance contracts held
Reinsurance expenses - contracts measured under the PAA (30,119) (1,405) (2,093) (33,617) (23,800) (2,444) (2,262) (28,506)
Incurred claims recovery 13,223 944 5,271 19,438 17,367 5,947 2,527 25,841
Changes that relate to past service - changes in the FCF relating to incurred (3,803) 262 (2,871) (6,412) 4,758 (1,184) 2,117 5,691
claims recovery
Total net (expense)/income from reinsurance contracts held (20,699) (199) 307 (20,591) (1,675) 2,319 2,382 3,026
Total insurance service result 71,719 1,322 (162) 72,879 53,624 1,438 (3,287) 51,775
Other than reinsurance assets and insurance liabilities (see Note 3.1), the
Group does not allocate, monitor or report assets and liabilities per business
line and does not consider the information useful in the day-to-day running of
the Group's operations. The Group also does not allocate, monitor, or report
other income and expenses per business line.
3.6. Underwriting risk
The principal risk the Group faces under insurance contracts is that the
actual claims and benefit payments, or the timing thereof, differ from
expectations. This is influenced by the frequency of claims, severity of
claims, actual benefits paid and subsequent development of long-term claims.
Therefore, the objective of the Group is to ensure that sufficient reserves
are available to cover these liabilities.
The Group issues only motor insurance contracts within the UK, which usually
cover a 12-month duration. For these contracts, the most significant risks
arise from severe weather conditions or single catastrophic events. For
longer-tail claims that take some years to settle, there is also inflation
risk.
The above risk exposure is mitigated by diversification across a large
portfolio of policyholders and geographical areas within the UK. The
variability of risks is improved by careful selection and implementation of
underwriting strategies, which are designed to ensure that risks are
diversified in terms of type of risk and level of insured benefits. This is
largely achieved through diversification across policyholders. Furthermore,
strict claim review policies to assess all new and ongoing claims, regular
detailed review of claims handling procedures and frequent investigation of
possible fraudulent claims are all policies and procedures put in place to
reduce the risk exposure of the Group. The Group further enforces a policy of
actively managing and promptly pursuing claims, in order to reduce its
exposure to unpredictable future developments that can negatively impact the
business. Inflation risk is mitigated by taking expected inflation into
account when estimating insurance contract liabilities.
The Group purchases reinsurance as part of its risk mitigation programme.
Reinsurance ceded is placed on a non-proportional basis. This non-proportional
reinsurance is excess-of-loss, designed to mitigate the Group's net exposure
to single large claims or catastrophe losses. The current reinsurance
programme has a retention limit of £1m, with no upper limit. Under this
programme, the Group pays the first £1m of any claim and, from 1 July 2024,
40% of the next £1m (prior to 1 July 2024: 0%). Any amount above £2m, is
covered in full by the panel of reinsurers. All retention levels are subject
to monthly indexation subsequent to the accident date. Amounts recoverable
from reinsurers are estimated in a manner consistent with the outstanding
claims provision and are in accordance with the reinsurance contracts.
Although the Group has reinsurance arrangements, it is not relieved of its
direct obligations to its policyholders and thus a credit exposure exists with
respect to ceded reinsurance, to the extent that any reinsurer is unable to
meet its obligations assumed under such reinsurance agreements. The Group's
placement of reinsurance is diversified such that it is not dependent on a
single reinsurer. There is no single counterparty exposure that exceeds 25% of
total reinsurance assets at the reporting date.
Key assumptions
The principal assumption underlying the liability estimates is that the
Group's future claims development will follow a similar pattern to past claims
development experience. This includes assumptions in respect of average claim
costs, claim handling costs, claim inflation factors and claim numbers for
each accident year. Additional qualitative judgements are used to assess the
extent to which past trends may not apply in the future, for example: one-off
occurrence; changes in market factors such as public attitude to claiming:
economic conditions; and internal factors such as portfolio mix, policy
conditions and claims handling procedures. Judgement is further used to assess
the extent to which external factors such as judicial decisions and government
legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include
variation in interest rates and delays in settlement.
Sensitivities
The motor claim liabilities are primarily sensitive to the reserving
assumptions noted above. It has not been possible to quantify the sensitivity
of individual, specific assumptions such as legislative changes.
The following analysis is performed for reasonably possible movements in key
assumptions with all other assumptions held constant, showing the impact on
profit after tax and equity. The correlation of assumptions will have a
significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be
changed on an individual basis. It should be noted that movements in these
assumptions are non-linear. This sensitivity analysis reflects one-off impacts
at the balance sheet date and should not be interpreted as a forecast.
Increase/(decrease) in profit after tax and equity, gross of reinsurance Increase/(decrease) in profit after tax and equity, net of reinsurance
2024 2023 2024 2023
£'k £'k £'k £'k
Liability for incurred claims ((1) (2))
Impact of 5% increase in insurance contract liabilities (13,921) (13,101) (7,902) (7,013)
Impact of an increase in ultimate loss ratio of 5ppts (22,033) (19,563) (13,256) (11,458)
Discount rates
Impact of 1% increase in the discount rates used in calculating present value 6,282 6,108 2,267 2,244
of future expected cash outflows
Impact of 1% decrease in the discount rates used in calculating present value (7,379) (7,427) (2,604) (2,730)
of future expected cash outflows
Risk adjustment for non-financial risk
Impact of moving the confidence interval of the booked risk adjustment up by (10,103) (9,729) (2,495) (2,180)
5ppts
Impact of moving the confidence interval of the booked risk adjustment down by 8,224 7,740 2,121 1,853
5ppts
(1) The impact of decreases will have a similar but opposite impact.
(2) A substantial increase in individually large claims which are over our
reinsurance retention limit, generally will have no impact on profit after
tax.
Climate change
Management has assessed the short, medium and long-term risks that result from
climate change. The short-term risk is low. Given the geographical diversity
of the Group's policyholders within the UK and the Group's reinsurance
programme, it is highly unlikely that a climate event will materially impact
the Group's financial position, including its assessment of the liability for
incurred claims. More likely is that the costs associated with the transition
to a low-carbon economy will impact the Group's indemnity spend in the medium
term, as electronic vehicles are currently relatively expensive to fix. This
is somewhat, or perhaps completely, offset by advances in technology reducing
the frequency of claims, in particular bodily injury claims which are
generally far more expensive than damage to vehicles. These changes in the
costs of claims are gradual and, as such, reflected in the Group's claims
experience and fed into the pricing of policies. However, if the propensity to
travel by car decreases overall this could impact the Group's income in the
long term.
3.7. Insurance-related credit risk
Key insurance-related areas where the Group is exposed to credit default risk
are:
- Reinsurers default on their share of the Group's insurance
liabilities
- Default on amounts due from insurance contract intermediaries or
policyholders
Sabre uses a large panel of secure reinsurance companies. The credit risk of
reinsurers included in the reinsurance programme is considered annually by
reviewing their credit worthiness. Sabre's largest reinsurance counterparty is
Munich Re. The credit risk exposure is further monitored throughout the year
to ensure that changes in credit risk positions are adequately addressed.
- The following tables demonstrate the Group's exposure to credit
risk in respect of overdue insurance debt and counterparty creditworthiness.
Overdue insurance-related debt
Neither past due nor impaired Past due 1-90 days Past due more than 90 days Assets that have been impaired Carrying value in the balance sheet
At 31 December 2024 £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) 202,231 - - - 202,231
Insurance receivables ((2)) 41,755 22 - - 41,777
Total 243,986 22 - - 244,008
Neither past due nor impaired Past due 1-90 days Past due more than 90 days Assets that have been impaired Carrying value in the balance sheet
At 31 December 2023 £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) 197,591 - - - 197,591
Insurance receivables ((2)) 54,650 62 - - 54,712
Total 252,241 62 - - 252,303
(1) Undiscounted
(2) Included within 'Insurance contract liabilities'
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) - 102,138 100,093 - - - 202,231
Insurance receivables ((2)) - - - - - 41,777 41,777
Total - 102,138 100,093 - - 41,777 244,008
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Reinsurance contracts assets ((1)) - 128,942 68,649 - - - 197,591
Insurance receivables ((2)) - - - - - 54,712 54,712
Total - 128,942 68,649 - - 54,712 252,303
(1) Undiscounted
(2) Included within 'Insurance contract liabilities'
3.8. Net financial result
2024 2023
Insurance Non-insurance related Total Insurance Non-insurance related Total
related
related
Notes £'k £'k £'k £'k £'k £'k
Investment income
Interest income on financial assets using effective interest rate method 4.5 7,501 425 7,926 3,506 269 3,775
Amounts recognised in OCI 4.6 3,774 - 3,774 9,284 - 9,284
Total investment income 11,275 425 11,700 12,790 269 13,059
Insurance finance expenses from insurance contracts issued
Interest accreted (8,392) - (8,392) (10,170) - (10,170)
Effect of changes in interest rates and other financial assumptions 6,852 - 6,852 (12,436) - (12,436)
(1,540) - (1,540) (22,606) - (22,606)
Reinsurance finance income from reinsurance contracts held
Interest accreted 3,714 - 3,714 3,588 - 3,588
Effect of changes in interest rates and other financial assumptions (5,880) - (5,880) 5,432 - 5,432
(2,166) - (2,166) 9,020 - 9,020
Net insurance finance expense (3,706) - (3,706) (13,586) - (13,586)
Net financial results 7,569 425 7,994 (796) 269 (527)
Represented by:
Amounts recognised in Profit or Loss 2,823 425 3,248 (3,076) 269 (2,807)
Amounts recognised in OCI 4,746 - 4,746 2,280 - 2,280
Total 7,569 425 7,994 (796) 269 (527)
3.9. Opening balance restatement - Insurance Finance Reserve
As a result of refinements made to the IFRS 17 discounting model, an amount of
£2.6m has been reclassified between 2023's opening Retained Earnings and
opening Insurance/Reinsurance Finance Reserve. This restatement has no impact
on the total equity or regulatory capital of the Group, and has no impact on
the Consolidated Profit or Loss or Consolidated Statement of Comprehensive
Income for any of the previous periods.
4. FINANCIAL ASSETS
RISK MANAGEMENT
Refer to the following notes for detail on risks relating to financial assets:
Investment concentration risk - Note 4.2.1
Interest rate risk - Note 4.2.2
Credit risk - Note 4.4
Liquidity risk - Note 6
The Group's financial assets are summarised below:
2024 2023
Notes £'k £'k
Cash and cash equivalents 4.1 31,314 35,079
Debt securities held at fair value through other comprehensive income 4.2 311,184 264,679
Receivables 4.3 32 87
Total 342,530 299,845
4.1. Cash and cash equivalents
ACCOUNTING POLICY - CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held on call with
banks and money market funds. Cash and cash equivalents are carried at
amortised cost.
2024 2023
£'k £'k
Cash at bank and on hand 18,174 12,890
Money market funds 13,140 22,189
Total 31,314 35,079
Cash held in money market funds has no notice period for withdrawal.
The carrying value of cash and cash equivalents approximates fair value. The
full value is expected to be realised within 12 months.
4.2. Debt securities held at fair value through other comprehensive income
ACCOUNTING POLICY - FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
Classification
The Group classifies the following financial assets at fair value through
Other Comprehensive Income ("FVOCI"):
- Debt securities
A debt instrument is measured at FVOCI only if it meets both of the following
conditions and is not designated at fair value through the Profit or Loss
Account ("FVTPL"):
- The asset is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial
assets
- The contractual terms of the financial asset give rise to cash
flows that are solely payments of principal and interest ("SPPI") on the
principal amount outstanding on specified dates
Recognition and measurement
At initial recognition, the Group measures debt securities through other
comprehensive income at fair value, plus the transaction costs that are
directly attributable to the acquisition of the financial asset. Debt
securities at FVOCI are subsequently measured at fair value.
Impairment
At each reporting date, the Group assesses debt securities at FVOCI for
impairment. Under IFRS 9, a 'three-stage' model for calculating the expected
credit losses ("ECL") is used, and is based on changes in credit quality since
initial recognition. Refer to Note 4.4.
The Group's debt securities held at fair value through other comprehensive
income are summarised below:
2024 2023
£'k % holdings £'k % holdings
Government bonds 112,793 36.2% 107,040 40.4%
Government-backed securities 103,267 33.2% 81,942 31.0%
Corporate bonds 95,124 30.6% 75,697 28.6%
Total 311,184 100.0% 264,679 100.0%
4.2.1. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to
concentration risk. The Group has no significant investment concentration in
any particular industrial sector and therefore is unlikely to suffer
significant losses through its investment portfolio as a result of
over-exposure to sectors engaged in similar activities or which have similar
economic features that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic, political or
other conditions.
A significant part of the Group's investment portfolio consists primarily of
UK government bonds and government-backed bonds; therefore, the risk of
government default does exist, however the likelihood is extremely remote. The
remainder of the portfolio consists of investment grade corporate bonds. The
Group continues to monitor the strength and security of all bonds. The Group
does not have direct exposure to Ukrainian and Russian assets.
The Group's exposure by geographical area is outlined below:
Government bonds Government-backed securities Corporate bonds Total
At 31 December 2024 £'k £'k £'k £'k % holdings
United Kingdom 112,793 3,038 31,187 147,018 47.2%
Europe - 59,277 37,002 96,279 30.9%
Northern America - 25,761 19,863 45,624 14.7%
Oceania - - 4,973 4,973 1.6%
Asia - 15,191 2,099 17,290 5.6%
Total 112,793 103,267 95,124 311,184 100.0%
Government bonds Government-backed securities Corporate bonds Total
At 31 December 2023 £'k £'k £'k £'k % holdings
United Kingdom 107,040 - 32,364 139,404 52.7%
Europe - 50,982 28,736 79,718 30.1%
Northern America - 28,284 12,643 40,927 15.5%
Oceania - - 1,954 1,954 0.7%
Asia - 2,676 - 2,676 1.0%
Total 107,040 81,942 75,697 264,679 100.0%
The Group's exposure by investment type for government-backed securities and
corporate bonds is outlined below:
Agency Supranational Total
At 31 December 2024 £'k £'k £'k
Government-backed securities 43,921 59,346 103,267
% of holdings 42.5% 57.5% 100.0%
Financial Industrial Utilities Total
At 31 December 2024 £'k £'k £'k £'k
Corporate bonds 51,698 38,873 4,553 95,124
% of holdings 54.3% 40.9% 4.8% 100.0%
Agency Supranational Total
At 31 December 2023 £'k £'k £'k
Government-backed securities 40,310 41,632 81,942
% of holdings 49.2% 50.8% 100.0%
Financial Industrial Utilities Total
At 31 December 2023 £'k £'k £'k £'k
Corporate bonds 40,973 31,117 3,607 75,697
% of holdings 54.1% 41.1% 4.8% 100.0%
4.2.2. Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. Floating rate instruments expose the Group to cash flow interest risk,
whereas fixed interest rate instruments expose the Group to fair value
interest risk.
The Group's interest risk policy requires it to manage the maturities of
interest-bearing financial assets and interest-bearing financial liabilities.
Interest on fixed interest rate instruments is priced at inception of the
financial instrument and is fixed until maturity.
The Group has a concentration of interest rate risk in UK government bonds and
other fixed-income securities.
The analysis that follows is performed for reasonably possible movements in
key variables with all other variables held constant, showing the impact on
profit before tax and equity. The correlation of variables will have a
significant effect in determining the ultimate impact on interest rate risk,
but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis. It should be noted that movements in these
variables are non-linear.
The impact of any movement in market values, such as those caused by changes
in interest rates, is taken through other comprehensive income and has no
impact on profit after tax.
Decrease in profit after tax Decrease in total equity
2024 2023 2024 2023
At 31 December £'k £'k £'k £'k
Interest rate
Impact of a 100-basis point increase in interest rates on debt securities at - - (3,250) (2,758)
FVOCI
Impact of a 200-basis point increase in interest rates on debt securities at - - (6,499) (5,516)
FVOCI
4.2.3. Fair value
ACCOUNTING POLICY
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, or in its absence, the most advantageous market to which
the Group has access at that date.
The Group measures the fair value of an instrument using the quoted bid price
in an active market for that instrument. A market is regarded as active if
transactions for the asset take place with sufficient frequency and volume to
provide pricing information on an ongoing basis.
The fair value of financial instruments traded in active markets is based on
quoted market prices at the Statement of Financial Position date.
A market is regarded as active if quoted prices are readily and regularly
available from the stock exchange or pricing service, and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held by the
Group is the closing bid price.
Fair value measurements are based on observable and unobservable inputs.
Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Group's view of market assumptions in the
absence of observable market information.
IFRS 13 requires certain disclosures which require the classification of
financial assets and financial liabilities measured at fair value using a fair
value hierarchy that reflects the significance of the inputs used in making
the fair value measurement.
Disclosure of fair value measurements by level is according to the following
fair value measurement hierarchy:
Level 1: fair value is based on quoted market prices (unadjusted) in active
markets for identical instruments as measured on reporting date
Level 2: fair value is determined through inputs, other than quoted prices
included in Level 1 that are observable for the assets and liabilities, either
directly (prices) or indirectly (derived from prices)
Level 3: fair value is determined through valuation techniques which use
significant unobservable inputs
Level 1
The fair value of financial instruments traded in active markets is based on
quoted market prices at the Statement of Financial Position date.
A market is regarded as active if quoted prices are readily and regularly
available from the stock exchange or pricing service, and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held by the
Group is the closing bid price. These instruments are included in Level 1 and
comprise only debt securities classified as fair value through other
comprehensive income.
Level 2
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as
little as possible on entity-specific estimates. If all significant input
required to fair value an instrument is observable, the instrument is included
in Level 2. The Group has no Level 2 financial instruments.
Level 3
If one or more of the significant inputs are not based on observable market
data, the instrument is included in Level 3. The Group has no Level 3
financial instruments.
The following table summarises the classification of financial instruments:
Level 1 Level 2 Level 3 Total
At 31 December 2024 £'k £'k £'k £'k
Assets held at fair value
Debt securities held at FVOCI 311,184 - - 311,184
Total 311,184 - - 311,184
Level 1 Level 2 Level 3 Total
At 31 December 2023 £'k £'k £'k £'k
Assets held at fair value
Debt securities held at FVOCI 264,679 - - 264,679
Total 264,679 - - 264,679
Transfers between levels
There have been no transfers between levels during the year (2023: no
transfers).
4.3. Receivables
ACCOUNTING POLICY
Classification
The Group classifies its receivables as at amortised cost only if both of the
following criteria are met:
- The asset is held within a business model whose objective is to
collect the contractual cash flows
- The contractual terms give rise to cash flows that are solely
payments of principle and interest
Recognition and measurement
Receivables are initially recognised at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for
expected credit losses.
Impairment
The Group measures loss allowances at an amount equal to lifetime ECL. To
measure the expected credit losses, receivables have been grouped based on
shared credit risk characteristics and the days past due to create the
categories namely, performing, underperforming and not performing. The
expected loss rates are based on the payment profiles of receivables over a
period of 36 months before year end. The loss rates are adjusted to reflect
current and forward-looking information on macro-economic factors, such as the
socio-economic environment affecting the ability of the debtors to settle the
receivables. Receivables that are 30 days or more past due are considered to
be 'not performing' and the default rebuttable presumption of 90 days
prescribed by IFRS 9 is not applied.
Performing
Customers have a low risk of default and a strong capacity to meet contractual
cash flows.
Underperforming
Receivables for which there is a significant increase in credit risk. A
significant increase in credit risk is presumed if interest and/or principal
repayments are past due.
Not performing
Interest and/or principal repayments are 30 days past due.
The Group's receivables comprise:
2024 2023
Notes £'k £'k
Other debtors 32 87
Total 32 87
The estimated fair values of receivables are the discounted amounts of the
estimated future cash flows expected to be received.
The carrying value of receivables approximates fair value. The provision for
expected credit losses is based on the recoverability of the individual
receivables.
The Group calculated ECL on receivables and has concluded that it is wholly
immaterial and such further disclosure has not been included.
4.4. Credit risk
ACCOUNTING POLICY
Impairment of financial assets
At each reporting date, the Group assesses financial assets measured at
amortised cost and debt securities at FVOCI for impairment. Under IFRS 9 a
'three-stage' model for calculating expected credit losses ("ECL") is used,
and is based on changes in credit quality since initial recognition as
summarised below:
Performing financial assets
Stage 1: From initial recognition of a financial asset to the date on which an
asset has experienced a significant increase in credit risk relative to its
initial recognition, a stage 1 loss allowance is recognised equal to the
credit losses expected to result from its default occurring over the earlier
of the next 12 months or its maturity date ("12-month ECL").
Stage 2: Following a significant increase in credit risk relative to the
initial recognition of the financial asset, a stage 2 loss allowance is
recognised equal to the credit losses expected from all possible default
events over the remaining lifetime of the asset ("Lifetime ECL"). The
assessment of whether there has been a significant increase in credit risk,
such as an actual or significant change in instruments' external credit
rating; significant widening of credit spread; changes in rates or terms of
instrument; existing or forecast adverse change in business, financial or
economic conditions that are expected to cause a significant change in the
counterparty's ability to meet its debt obligations; requires considerable
judgement, based on the lifetime probability of default ("PD"). Stage 1 and 2
allowances are held against performing loans; the main difference between
stage 1 and stage 2 allowances is the time horizon. Stage 1 allowances are
estimated using the PD with a maximum period of 12 months, while stage 2
allowances are estimated using the PD over the remaining lifetime of the
asset.
Impaired financial assets
Stage 3: When a financial asset is considered to be credit-impaired, the
allowance for credit losses ("ACL") continues to represent lifetime expected
credit losses; however, interest income is calculated based on the amortised
cost of the asset, net of the loss allowance, rather than its gross carrying
amount.
Application of the impairment model
The Group applies IFRS 9's ECL model to two main types of financial assets
that are measured at amortised cost or FVOCI:
Other receivables, to which the simplified approach prescribed by IFRS 9 is
applied. This approach requires the recognition of a lifetime ECL allowance on
day one.
Debt securities, to which the general three-stage model (described above) is
applied, whereby a 12-month ECL is recognised initially and the balance is
monitored for significant increases in credit risk which triggers the
recognition of a lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. The probability is
determined by the estimated risk of default which is applied to the cash flow
estimates. On a significant increase in credit risk, from investment grade to
non-investment grade, allowances are recognised without a change in the
expected cash flows (although typically expected cash flows do also change)
and expected credit losses are rebased from 12-month to lifetime expectations.
The measurement of ECLs considers information about past events and current
conditions, as well as supportable information about future events and
economic conditions.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted
from the gross carrying amount of the assets. For debt securities at FVOCI,
the loss allowance is recognised in the Profit or Loss Account and accounted
for as a transfer from OCI to Profit or Loss, instead of reducing the carrying
amount of the asset.
Write-offs
Loans and debt securities are written off (either partially or in full) when
there is no realistic prospect of the amount being recovered. This is
generally the case when the Group concludes that the borrower does not have
assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off.
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
UK government bonds - 112,793 - - - - 112,793
Government-backed securities 98,963 4,304 - - - - 103,267
Corporate bonds 1,127 20,050 57,270 16,677 - - 95,124
Receivables - - - - - 32 32
Cash and cash equivalents 13,140 51 18,123 - - - 31,314
Total 113,230 137,198 75,393 16,677 - 32 342,530
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
UK government bonds - 107,040 - - - - 107,040
Government-backed securities 81,942 - - - - - 81,942
Corporate bonds - 4,153 51,020 20,524 - - 75,697
Receivables - - - - - 87 87
Cash and cash equivalents 22,189 51 12,839 - - - 35,079
Total 104,131 111,244 63,859 20,524 - 87 299,845
With the exception of receivables, all the Group's financial assets are
investment grade (AAA to BBB).
Analysis of credit risk and allowance for ECL
The following table provides an overview of the allowance for ECL provided for
on the types of financial assets held by the Group where credit risk is
prevalent.
Gross carrying amount Allowance for ECL Net amount
At 31 December 2024 £'k £'k £'k
Government bonds 112,793 (3) 112,790
Government-backed securities 103,267 (4) 103,263
Corporate bonds 95,124 (35) 95,089
Receivables 32 - 32
Cash and cash equivalents 31,314 - 31,314
Total 342,530 (42) 342,488
Gross carrying amount Allowance for ECL Net amount
At 31 December 2023 £'k £'k £'k
Government bonds 107,040 (3) 107,037
Government-backed securities 81,942 (4) 81,938
Corporate bonds 75,697 (30) 75,667
Receivables 87 - 87
Cash and cash equivalents 35,079 - 35,079
Total 299,845 (37) 299,808
4.5. Investment income
ACCOUNTING POLICY
Investment income from debt instruments classified as FVOCI are measured using
the effective interest rate which allocates the interest income or interest
expense over the expected life of the asset or liability at the rate that
exactly discounts all estimated future cash flows to equal the instrument's
initial carrying amount. Calculation of the effective interest rate takes into
account fees payable or receivable that are an integral part of the
instrument's yield, premiums or discounts on acquisition or issue, early
redemption fees and transaction costs. All contractual terms of a financial
instrument are considered when estimating future cash flows.
2024 2023
£'k £'k
Interest income on financial assets using effective interest rate method
Interest income from debt securities 6,458 3,131
Interest income from cash and cash equivalents 1,468 644
Total 7,926 3,775
4.6. Net gains/(losses) from fair value adjustments on financial assets
ACCOUNTING POLICY
Movements in the fair value of debt instruments classified as FVOCI are taken
through OCI. When the instruments are derecognised, the cumulative gain or
losses previously recognised in OCI is reclassified to Profit or Loss.
2024 2023
£'k £'k
Other comprehensive income
Unrealised fair value gains on debt securities 3,769 9,278
Expected credit loss 5 6
Unrealised fair value gains on debt securities through Other Comprehensive 3,774 9,284
Income
Net gains from fair value adjustments on financial assets 3,774 9,284
5. PAYABLES
ACCOUNTING POLICY
Payables are recognised when the Group has a contractual obligation to deliver
cash or another financial asset to another entity, or a contractual obligation
to exchange financial assets or financial liabilities with another entity
under conditions that are potentially unfavourable to the entity. Payables are
carried at amortised cost.
2024 2023
£'k £'k
Trade and other creditors 951 2,149
Other taxes 6,044 7,551
Total 6,995 9,700
6. LIQUIDITY RISK
Liquidity risk is the potential that obligations cannot be met as they fall
due as a consequence of having a timing mismatch or inability to raise
sufficient liquid assets without suffering a substantial loss on realisation.
The Group manages its liquidity risk through both ensuring that it holds
sufficient cash and cash equivalent assets to meet all short-term liabilities
and matching, as far as possible, the maturity profile of its financial
investments to the expected cash outflows.
The following table analyses the carrying value of cash and cash equivalents
and financial assets, by contractual maturity, which can fund the repayment of
liabilities as they crystallise. It also analyses the undiscounted cash flows
of reinsurance contract assets held, based on the future expected cash flows
to be received in the periods presented.
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Cash and cash equivalents (1) 31,314 - - - - - 31,314
UK government bonds 11,810 32,790 19,855 30,628 17,710 - 112,793
Government-backed securities 39,740 38,861 7,929 6,034 10,703 - 103,267
Corporate bonds 37,546 20,366 11,347 19,091 6,230 544 95,124
Receivables 32 - - - - - 32
Reinsurance contract assets 56,652 31,084 18,558 19,662 15,631 60,644 202,231
Total 177,094 123,101 57,689 75,415 50,274 61,188 544,761
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Cash and cash equivalents (1) 35,079 - - - - - 35,079
UK government bonds 22,008 8,513 32,136 13,374 31,009 - 107,040
Government-backed securities 57,722 13,914 3,327 5,601 1,378 - 81,942
Corporate bonds 8,987 37,000 12,953 10,216 6,541 - 75,697
Receivables 87 - - - - - 87
Reinsurance contract assets 68,215 30,182 23,361 14,267 12,142 49,425 197,592
Total 192,098 89,609 71,777 43,458 51,070 49,425 497,437
(1) Includes money market funds with no notice period for withdrawal
The following table analyses the undiscounted cash flows of insurance
liabilities based on the future cash flows expected to be paid out in the
periods presented, and payables by maturity dates.
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2024 £'k £'k £'k £'k £'k £'k £'k
Payables 6,995 - - - - - 6,995
Insurance contract liabilities ((2)) 88,992 74,407 42,761 34,427 25,261 77,787 343,635
Total 95,987 74,407 42,761 34,427 25,261 77,787 350,630
Up to 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years Over 5 years Total
At 31 December 2023 £'k £'k £'k £'k £'k £'k £'k
Payables 9,700 - - - - - 9,700
Insurance contract liabilities (2) 83,152 65,618 45,253 26,746 19,598 60,226 300,593
Total 92,852 65,618 45,253 26,746 19,598 60,226 310,293
(2) Excludes the liability for remaining coverage (unearned premium
element) and effect of discounting
Management has considered the liquidity and cash generation of the Group and
is satisfied that the Group will be able to meet all liabilities as they fall
due.
7. OTHER INCOME
ACCOUNTING POLICY
Other income consists of brokerage fees resulting from the sale of ancillary
products connected to the Group's direct business, and other non-insurance
income such as administrative fees charged on direct business. Such income is
recognised once the related service has been performed. Typically, this will
be at the point of sale of the product.
2024 2023
£'k £'k
Administration fees 182 495
Brokerage and other fee income 558 737
Total 740 1,232
Brokerage and other fee income relates to auxiliary products and services,
including brokerage and administration fees, all relating to the Motor Vehicle
product.
8. OTHER OPERATING EXPENSES
2024 2023
Notes £'k £'k
Employee expenses 8.1 15,426 13,869
Property expenses 500 689
IT expense, including IT depreciation 6,756 5,961
Other depreciation 113 59
Industry levies 5,994 5,936
Policy servicing costs 3,153 2,491
Other operating expenses 3,399 3,328
Movement in expected credit loss on debt securities 5 6
Impairment loss on owner occupied properties - 333
Before adjustment for directly attributable claims expenses 35,346 32,672
Adjusted for:
Reclassification of directly attributable claims expenses (7,041) (6,085)
Total operating expenses 28,305 26,587
8.1. Employee expenses
ACCOUNTING POLICY
A. Pensions
For staff who were employees on 8 February 2002, the Group operates a
non-contributory defined contribution Group personal pension scheme. The
contribution by the Group depends on the age of the employee.
For employees joining since 8 February 2002, the Group operates a matched
contribution Group personal pension scheme where the Group contributes an
amount matching the contribution made by the staff member.
Contributions to defined contribution schemes are recognised in the Profit or
Loss Account in the period in which they become payable.
B. Share-based payments
The fair value of equity instruments granted under share‑based payment plans
are recognised as an expense and spread over the vesting period of the
instrument. The total amount to be expensed is determined by reference to the
fair value of the awards made at the grant date, excluding the impact of any
non‑market vesting conditions. Depending on the plan, the fair value of
equity instruments granted is measured on grant date using an appropriate
valuation model or the market price on grant date. At the date of each
Statement of Financial Position, the Group revises its estimate of the number
of equity instruments that are expected to become exercisable. It recognises
the impact of the revision of original estimates, if any, in the Profit or
Loss Account, and a corresponding adjustment is made to equity over the
remaining vesting period. The fair value of the awards and ultimate expense
are not adjusted on a change in market vesting conditions during the vesting
period.
C. Leave pay
Employee entitlement to annual leave is recognised when it accrues to
employees. An accrual is made for the estimated liability for annual leave as
a result of services rendered by employees up to the Statement of Financial
Position date.
The aggregate remuneration of those employed by the Group's operations
comprised:
2024 2023
£'k £'k
Wages and salaries 11,332 10,079
Social security expenses 1,464 1,276
Contributions to defined contribution plans 598 557
Equity-settled share-based payment 1,607 1,606
Other employee expenses 425 351
Before adjustment for directly attributable claims expenses 15,426 13,869
Adjusted for:
Reclassification of directly attributable claims expenses (4,799) (4,146)
Employee expenses 10,627 9,723
8.2. Number of employees
The table below analyses the average monthly number of persons employed by the
Group's operations.
2024 2023
Operations 134 129
Support 31 28
Total 165 157
8.3. Directors' remuneration
Amounts paid to Directors are disclosed within the Annual Report on Directors'
Remuneration on pages 105 to 117.
8.4. Auditor's remuneration
The table below analyses the Auditor's remuneration in respect of the Group's
operations.
2024 2023
£'k £'k
Audit of these financial statements 205 195
Audit of financial statements of subsidiaries of the Group 253 251
Audit fees in relation to IFRS 17 transition - 190
Total audit fees 458 636
Fees for non-audit services - Audit-related assurance services 89 105
Fees for non-audit services - Other non-audit services - -
Total non-audit fees 89 105
Total auditor remuneration 547 741
The above fees exclude irrecoverable VAT of 20%.
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of owned and leased assets that do not
meet the definition of investment property.
2024 2023
£'k £'k
Owner-occupied property 3,600 3,600
Office equipment 539 652
IT equipment 65 136
Total 4,204 4,388
ACCOUNTING POLICY
A. Owner-occupied property
Owner-occupied properties are held by the Group for use in the supply of
services or, for its own administration purposes.
Owner-occupied property is held at fair value. Increases in the carrying
amount of owner-occupied properties as a result of revaluations are credited
to other comprehensive income and accumulated in a revaluation reserve in
equity. To the extent that a revaluation increase reverses a revaluation
decrease that was previously recognised as an expense in Profit or Loss, such
increase is credited to income in Profit or Loss. Decreases in valuation are
charged to Profit or Loss, except to the extent that a decrease reverses the
existing accumulated revaluation reserve and therefore such a decrease is
recognised in other comprehensive income.
A fair value assessment of the owner-occupied property is undertaken at each
reporting date with any material changes in fair value recognised. Valuation
is at highest and best use. Owner-occupied property is also revalued by an
external qualified surveyor, at least every three years. UK properties do not
have frequent and volatile fair value changes and, as such, more frequent
revaluations are considered unnecessary, as only insignificant changes in fair
value is expected.
Owner-occupied land is not depreciated. As the depreciation of owner-occupied
buildings is immaterial and properties are revalued every three years by an
external qualified surveyor, no depreciation is charged on owner-occupied
buildings.
B. Office and IT equipment
Office and IT equipment are stated at historical cost less accumulated
depreciation and impairment charges. Historical cost includes expenditure that
is directly attributable to the acquisition of property and equipment.
Depreciation is calculated on the difference between the cost and residual
value of the asset and is charged to the Profit or Loss Account over the
estimated useful life of each significant part of an item of fixtures,
fittings and IT equipment, using the straight-line basis.
Estimate useful lives are as follows:
Office equipment 3 to 10 years
IT equipment 3 to 5 years
The assets' residual values and useful lives are reviewed at each Statement of
Financial Position date and adjusted if appropriate. An asset's carrying
amount is written down to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. Gains and losses on
disposals are determined by comparing the proceeds with the carrying amount of
the assets and are included in Profit or Loss before tax.
Repairs and maintenance costs are charged to the Profit or Loss Account during
the financial year in which they are incurred. The cost of major renovations
is included in the carrying amount of the asset when it is probable that
future economic benefits from the renovations will flow to the Group.
Owner- occupied Office equipment IT equipment Total
£'k £'k £'k £'k
Cost/Valuation
At 1 January 2024 4,358 720 487 5,565
Additions/Improvements - - - -
Disposals - - - -
Revaluation - - - -
At 31 December 2024 4,358 720 487 5,565
Accumulated depreciation and impairment
At 1 January 2024 758 68 351 1,177
Depreciation charge for the year - 113 71 184
Disposals - - - -
Impairment losses on revaluation - - - -
At 31 December 2024 758 181 422 1,361
Carrying amount
At 31 December 2024 3,600 539 65 4,204
Owner- occupied Office equipment IT equipment Total
£'k £'k £'k £'k
Cost/Valuation
At 1 January 2023 4,250 41 409 4,700
Additions/Improvements 908 679 78 1,665
Disposals - - - -
Revaluation (800) - - (800)
At 31 December 2023 4,358 720 487 5,565
Accumulated depreciation and impairment
At 1 January 2023 425 9 270 704
Depreciation charge for the year - 59 81 140
Disposals - - - -
Impairment losses on revaluation 333 - - 333
At 31 December 2023 758 68 351 1,177
Carrying amount
At 31 December 2023 3,600 652 136 4,388
All items disposed where either donated to charity or recycled at £NIL.
The Group holds two owner-occupied properties, Sabre House and The Old House,
which are both managed by the Group. In accordance with the Group's accounting
policies, owner-occupied buildings are not depreciated. The properties are
measured at fair value which is arrived at on the basis of a valuation carried
out on 16 October 2023 by Hurst Warne and Partners LLP. The valuation was
carried out on an open-market basis in accordance with the Royal Institution
of Chartered Surveyors' requirements, which is deemed to equate to fair value.
While transaction evidence underpins the valuation process, the definition of
market value, including the commentary, in practice requires the valuer to
reflect the realities of the current market. In this context valuers must use
their market knowledge and professional judgement and not rely only upon
historical market sentiment based on historical transactional comparables.
The fair value of the owner-occupied properties was derived using the
investment method supported by comparable evidence. The significant
non-observable inputs used in the valuations are the expected rental values
per square foot and the capitalisation rates. The fair value of the
owner-occupied properties valuation would increase (decrease) if the expected
rental values per square foot were to be higher (lower) and the capitalisation
rates were to be lower (higher).
The fair value measurement of owner-occupied properties of £3,600k (2023:
£3,600k) has been categorised as a Level 3 fair value based on the
non-observable inputs to the valuation technique used.
The following table shows reconciliation to the closing fair value for the
Level 3 owner-occupied property at valuation:
2024 2023
£'k £'k
At 1 January 3,600 3,825
Additions/Improvements - 908
Revaluation losses - (800)
Impairment losses - (333)
At 31 December 3,600 3,600
The fair value of owner-occupied properties includes a revaluation reserve of
£NIL (2023: £NIL) (excluding tax impact) and is not distributable.
Revaluation losses are charged against the related revaluation reserve to the
extent that the decrease does not exceed the amount held in the revaluation
surplus in respect of the same asset. Any additional losses are charged as an
impairment loss in the Profit or Loss Account. Reversal of such impairment
losses in future periods will be credited to the Profit or Loss Account to the
extent losses were previously charged to the Profit or Loss Account.
The table below shows the impact a 15% decrease in property markets will have
on the Group's profit after tax and equity:
Decrease in profit after tax Decrease In total equity
2024 2023 2024 2023
£'k £'k £'k £'k
Owner-occupied property
Impact of a 15% decrease in property markets (405) (309) (405) (309)
Historical cost model values
If owner-occupied properties were carried under the cost model (historical
costs, less accumulated depreciation and impairment losses), the value of
owner-occupied properties in the balance sheet would have been £3,229k (2023:
£3,349k).
10. INCOME TAX EXPENSE
ACCOUNTING POLICY
The income tax expense in the Profit or Loss Account is based on the taxable
profits for the year. It is Group policy to relieve profits where possible by
the surrender of losses from Group companies with payment for value.
2024 2023
£'k £'k
Current taxation
Charge for the year 12,157 4,444
Charge relating to prior periods 570 -
12,727 4,444
Deferred taxation (Note 11)
Origination and reversal of temporary differences (126) 1,104
(126) 1,104
Current taxation 12,727 4,444
Deferred taxation (Note 11) (126) 1,104
Income tax expense 12,601 5,548
Tax recorded in Other Comprehensive Income is as follows:
2024 2023
£'k £'k
Current taxation - 31
Deferred taxation 549 599
549 630
The actual income tax expense differs from the expected income tax expense
computed by applying the standard rate of UK corporation tax of 25.0% (2023:
23.5%) as follows:
2024 2023
£'k £'k
Profit before tax 48,562 23,613
Expected income tax expense 12,141 5,548
Effect of:
Expenses not deductible for tax purposes (86) 12
Adjustment of deferred tax to average rate of 25% - (1)
Adjustment in respect of prior periods 570 -
Other income tax adjustments (24) (11)
Income tax expense for the year 12,601 5,548
Effective income tax rate 25.9% 23.5%
11. DEFERRED TAX
ACCOUNTING POLICY
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more, tax, with the following
exception.
Deferred tax assets are recognised only to the extent that the Directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.
Provisions and other temporary differences Depreciation in excess of capital allowances Share-based payments Fair value movements in debt securities at FVOCI Movement in insurance finance reserve Total
£'k £'k £'k £'k £'k £'k
At 1 January 2023 - (20) 253 4,151 (1,993) 2,391
(Debit)/Credit to the Profit or Loss - (160) 215 (6) (1,153) (1,104)
(Debit)/Credit to Other Comprehensive Income - - - (2,149) 1,550 (599)
At 31 December 2023 - (180) 468 1,996 (1,596) 688
(Debit)/Credit to the Profit or Loss - 43 88 (5) - 126
(Debit)/Credit to Other Comprehensive Income - - - (944) 395 (549)
At 31 December 2024 - (137) 556 1,047 (1,201) 265
2024 2023
£'k £'k
Per Statement of Financial Position:
Deferred tax assets 1,603 2,464
Deferred tax liabilities (1,338) (1,776)
265 688
12. DIVIDENDS
ACCOUNTING POLICY
Dividend distribution to the Group's shareholders is recognised as a liability
in the Group's financial statements in the period in which the dividend is
approved.
2024 2023
pence per share £'k pence per share £'k
Amounts recognised as distributions to equity holders in the period
Interim dividend for the current year 1.7 4,227 0.9 2,238
Final dividend for the prior year 8.1 20,122 1.7 4,228
9.8 24,349 2.6 6,466
Proposed dividends
Final dividend (1) 11.3 28,250 8.1 20,250
(1) Subsequent to 31 December 2024, the Directors declared a final
dividend for 2024 of 11.3p per ordinary share subject to approval at Annual
General Meeting. This dividend will be accounted for as an appropriation of
retained earnings in the year ended 31 December 2024 and is not included as a
liability in the Statement of Financial Position as at 31 December 2024.
The trustees of the employee share trusts waived their entitlement to
dividends on shares held in the trusts to meet obligations arising on share
incentive schemes, which reduced the dividends paid for the year ended 31
December 2024 by £151k (2023: £34k).
13. OTHER ASSETS
2024 2023
£'k £'k
Prepayments and accrued income 778 774
Total 778 774
The carrying value of other assets approximates to fair value. There are no
amounts expected to be recovered more than 12 months after the reporting date.
14. GOODWILL
ACCOUNTING POLICY
Goodwill has been recognised in acquisitions of subsidiaries and represents
the difference between the cost of the acquisition and the fair value of the
net identifiable assets acquired. Goodwill is stated at cost less any
accumulated impairment losses.
Impairment of goodwill
The Group performs an annual impairment review which involves comparing the
carrying amount to the estimated recoverable amount and recognising an
impairment loss if the recoverable amount is lower than the carrying amount.
Impairment losses are recognised through the Profit or Loss Account and are
not subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less
costs to sell and the value in use.
The value in use calculations use cash flow projections based on financial
budgets approved by management.
On 3 January 2014, the Group acquired Binomial Group Limited, the parent of
Sabre Insurance Company Limited, for a consideration of £245,485k satisfied
by cash. As from 1 January 2014, the date of transition to IFRS, goodwill was
no longer amortised but is subject to annual impairment testing. Impairment
testing involves comparing the carrying value of the net assets and goodwill
against the recoverable amount.
The goodwill recorded in respect of this transaction at the date of
acquisition was £156,279k. There has been no impairment to goodwill since
this date, and no additional goodwill has been recognised by the Group.
The Group performed its annual impairment test as at 31 December 2024 and 31
December 2023. The Group considers the relationship between the Group's market
capitalisation and the book value of its subsidiary undertakings, among other
factors, when reviewing for indicators of impairment.
Key assumptions
The valuation uses fair value less cost to sell. The key assumption on which
the Group has based this value is:
The market capitalisation of the Group as at 31 December 2024 of £345,000k
(31 December 2023: £378,500k).
The Directors concluded that the recoverable amount of the business unit would
remain in excess of its carrying value even after reasonably possible changes
in the key inputs and assumptions affecting its market value, such as a
significant fall in demand for its products or a significant adverse change in
the volume of claims and increase in other expenses, before the recoverable
amount of the business unit would reduce to less than its carrying value.
Therefore, the Directors are of the opinion that there are no indicators of
impairment as at 31 December 2024.
15. SHARE CAPITAL
2024 2023
£'k £'k
Authorised share capital
250,000,000 Ordinary Shares of £0.001 each 250 250
Issued Ordinary Share capital (fully paid up):
250,000,000 Ordinary Shares of £0.001 each 250 250
All shares are unrestricted and carry equal voting rights.
Own shares
Own shares are shares in Sabre Insurance Group plc that are held by the Sabre
Insurance Group Employee Benefit Trust ("EBT") for the purpose of issuing
shares under the Group's equity-settled share-based schemes (refer to Note 16
for further information).
Shares bought/(sold) on open market
Number of shares £
As at 31 December 2022 1,431,576 2,809,506
Acquisition of shares by the EBT 435,758 631,940
Disposal of shares by the EBT - -
Employee share scheme issue (278,084) (320,912)
As at 31 December 2023 1,589,250 3,120,534
Acquisition of shares by the EBT 986,377 1,483,654
Disposal of shares by the EBT - -
Employee share scheme issue (612,919) (1,491,750)
As at 31 December 2024 1,962,708 3,112,438
In thousands £'k
31 December 2023 3,121
31 December 2024 3,112
Shares issued to employees are recognised on a first-in-first-out basis.
As at 31 December 2024, The Sabre Insurance Group Employee Benefit Trust held
1,962,708(2023:1,589,250) of the 250,000,000 issued Ordinary Shares with a
nominal value of£1,962.71(2023: £1,589.25) in connection with the operation
of the Group's share plans. Refer to Notes 16 and 17 for additional
information on own shares held.
16. SHARE-BASED PAYMENTS
The Group operates equity-settled share-based schemes for all employees in the
form of a Long Term Incentive Plan ("LTIP"), Deferred Bonus Plan ("DBP") and
Share Incentive Plans ("SIP"), including Free Shares and Save As You Earn
("SAYE"). The shares are in the ultimate Parent Company, Sabre Insurance Group
plc.
The Group recognised a total expense in the Profit or Loss for the year ended
31 December 2024 of £1,607k (2023: £1,606k), relating to equity-settled
share-based plans.
Long Term Incentive Plan ("LTIP")
The LTIP is a discretionary share plan, under which the Board may grant
share-based awards ("LTIP Awards") to incentivise and retain eligible
employees.
LTIP Awards - Restricted Share Awards ("RSAs")
From 2021, the Group no longer issues awards under the LTIP Awards with
performance conditions, but instead issues RSAs.
The RSAs are structured as nil-cost rewards, to receive free shares on
vesting. Shares will normally vest three years after grant date, subject to
continued employment and the satisfaction of pre-determined underpins. Awards
are also subject to an additional two-year holding period, so that the total
time prior to any potential share sale (except to meet any tax liabilities
arising from the award) will generally be five years.
The total number of shares awarded under the scheme was 935,780 (2023:
1,244,964) with an estimated fair value at grant date of £1,581k (2023:
£1,484k). The fair value is based on the closing share price on the grant
date.
Future dividends are accrued separately and are not reflected in the fair
value of the grant.
The table below details the movement in the RSA:
Number of shares Weighted Average Exercise Price
Outstanding at 1 January 2023 982,258 NIL
Granted 1,244,964 NIL
Forfeited - NIL
Vested - NIL
Outstanding at 31 December 2023 2,227,222 NIL
Granted 935,780 NIL
Forfeited (40,863) NIL
Vested (441,684) NIL
Outstanding at 31 December 2024 2,680,455 NIL
The average unexpired life of RSAs is 1.3 years (2023: 1.4 years).
Deferred Bonus Plan ("DBP")
To encourage behaviour which does not benefit short-term profitability over
longer-term value, Directors and some key staff were awarded shares in lieu of
a bonus, to be deferred for two years, using the market value at the grant
date. The total number of shares awarded under the scheme was 218,033 (2023:
NIL) with an estimate fair value of £374k (2023: £NIL). Of this award, the
number of shares awarded to Directors and Persons Discharging Managerial
Responsibilities ("PDMRs") was 204,392 (2023: NIL) with an estimated fair
value of £351k (2023: £NIL). Fair values are based on the share price at
grant date. All shares are subject to a two-year service period and are not
subject to performance conditions.
Future dividends are accrued separately and are not reflected in the fair
value of the grant.
The DBP is recognised in the Profit or Loss Account on a straight-line basis
over a period of two years from grant date.
Share Incentive Plans ("SIPs")
The Sabre SIPs provide for the award of free Sabre Insurance Group plc shares,
Partnership Shares (shares bought by employees under the matching scheme),
Matching Shares (free shares given by the employer to match partnership
shares) and Dividend Shares (shares bought for employees with proceeds of
dividends from partnership shares). The shares are owned by the Employee
Benefit Trust to satisfy awards under the plans. These shares are either
purchased on the market and carried at fair value or issued by the Parent
Company to the trust.
Matching Shares
The Group has a Matching Shares scheme under which employees are entitled to
invest between £10 and £150 each month through the share trust from their
pre-tax pay. The Group supplements the number of shares purchased by giving
employees 1 free matching share for every 3 shares purchased up to £1,800.
Matching shares are subject to a three-year service period before the matching
shares are awarded. Dividends are paid on shares, including matching shares,
held in the trust by means of dividends shares. The fair value of such awards
is estimated to be the market value of the awards on grant date.
In the year ended 31 December 2024, 11,464 (2023: 16,017) matching shares were
granted to employees with an estimated fair value of £16k (2023: £24k).
As at 31 December 2024, 48,134 (2023: 40,940) matching shares were held on
behalf of employees with an estimated fair value of £66k (2023: £62k). The
average unexpired life of Matching Share awards is 1.5 years (2023: 1.8
years).
Save as You Earn ("SAYE")
The SAYE scheme allows employees to enter into a regular savings contract of
between £5 and £500 per month over a three-year period, coupled with a
corresponding option over shares. The grant price is equal to 80% of the
quoted market price of the shares on the invitation date. The participants of
the SAYE scheme are not entitled to dividends and therefore dividends are
excluded from the valuation of the SAYE scheme.
Estimated fair value of options at grant date:
SAYE 2022: 40 pence
SAYE 2023: 49 pence
SAYE 2024: 33 pence
The following table lists the inputs to the Black-Scholes model used to value
the awards granted in respect of the 2024 SAYE scheme.
2024 SAYE
Share price at grant date 172.2 pence
Expected term 3 years
Expected volatility((1)) 30.2%
Continuously compounded risk-free rate 1.5%
Continuously compounded dividend yield 6.0%
Strike price at grant date 141.8 pence
(1) Volatility has been estimated using the historical daily average
volatility of the share price of the Group for the year immediately preceding
the grant date.
The table below details the movement in the SAYE scheme:
Number of shares Weighted Average Exercise Price
Outstanding at 1 January 2023 350,231 2.00
Granted 768,616 0.85
Forfeited (260,442) NIL
Vested - NIL
Outstanding at 31 December 2023 858,405 1.33
Granted 102,880 1.42
Forfeited (49,001) NIL
Vested - NIL
Outstanding at 31 December 2024 912,284 0.99
The average unexpired life of SAYE scheme is 1.5 years (2023: 1.5 years)
17. RESERVES
Own shares
Sabre Insurance Group plc established an Employee Benefit Trust ("EBT") in
2017 in connection with the operation of its share plans. The investment in
own shares as at 31 December 2024 was £3,112k (2023: £3,121k). The market
value of the shares in the EBT as at 31 December 2024 was £2,709k (2023:
£2,406k).
Merger reserve
Sabre Insurance Group plc was incorporated as a limited company on 21
September 2017. On 11 December 2017, immediately prior to the Group's listing
on the London Stock Exchange, Sabre Insurance Group plc acquired the entire
share capital of the former ultimate Parent Company of the Group, Barbados
TopCo Limited ("TopCo"). As a result, Sabre Insurance Group plc became the
ultimate parent of the Sabre Insurance Group. The merger reserve resulted from
this corporate reorganisation.
FVOCI reserve
The FVOCI reserve records the unrealised gains and losses arising from changes
in the fair value of debt securities at FVOCI. The movements in this reserve
are detailed in the Consolidated Statement of Comprehensive Income.
Revaluation reserve
The revaluation reserve records the fair value movements of the Group's
owner-occupied properties. Refer to Note 9 for more information on the
revaluation of owner-occupied properties.
Insurance/Reinsurance finance reserve
The insurance finance reserve comprises the cumulative insurance finance
income and expenses recognised in Other Comprehensive Income.
Share-based payments reserve
The Group's share-based payments reserve records the value of equity-settled
share-based payment benefits provided to the Group's employees as part of
their remuneration that has been charged through the income statement. Refer
to Note 16 for more information on share-based payments.
18. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc is the ultimate parent and ultimate controlling
party of the Group. The following entities included below form the Group.
Name Principal business Registered address
Entities in which the Group holds 100% of the issued share capital
Binomial Group Limited Intermediate holding company Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Sabre Insurance Company Limited Motor insurance underwriter Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Other controlled entities
Sabre 2017 Share Incentive Plan Employee Benefit Trust Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
The Sabre Insurance Group Employee Benefit Trust Employee Benefit Trust Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
No single party holds a significant influence (>20%) over Sabre Insurance
Group plc.
Both Employee Benefit Trusts ("EBTs") were established to assist in the
administration of the Group's employee equity-based compensation schemes. The
UK registered EBT holds the all-employee SIP. The Jersey-registered EBT holds
the Long Term incentive Plan ("LTIP") and Deferred Bonus Plan ("DBP").
While the Group does not have legal ownership of the EBTs and the ability of
the Group to influence the actions of the EBTs is limited to a trust deed, the
EBT was set up by the Group with the sole purpose of assisting in the
administration of these schemes, and is in essence controlled by the Group and
therefore consolidated.
During the period ended 31 December 2024, the Group donated no shares to the
EBTs (2023: NIL).
Key management compensation
Key management includes Executive Directors, Non-executive Directors and
Directors of subsidiaries which the Group considers to be senior management
personnel. Further details of Directors' shareholdings and remuneration can be
found in the Annual Report on Directors' Remuneration on pages 105 to 117.
The aggregate amount paid to Directors during the year was as follows.
2024 2023
£'k £'k
Remuneration 3,428 2,660
Contributions to defined contribution pension scheme 10 9
Shares granted under LTIP 954 912
Total 4,392 3,581
19. EARNINGS PER SHARE
Basic earnings per share
2024 2023
After tax Per share After tax Per share
£'k pence £'k pence
Profit for the year attributable to ordinary shareholders 35,961 14.48 18,065 7.27
Diluted earnings per share
2024
After tax Weighted Per share
£'k average number pence
of shares (000s)
Profit for the year attributable to ordinary shareholders 35,961 248,419 14.48
Net share awards allocable for no further consideration 1,880 (0.11)
Total diluted earnings 250,299 14.37
2023
After tax Weighted Per share
£'k average number pence
of shares (000s)
Profit for the year attributable to ordinary shareholders 18,065 248,636 7.27
Net share awards allocable for no further consideration 2,201 (0.07)
Total diluted earnings 250,837 7.20
20. EVENTS AFTER THE BALANCE SHEET DATE
Other than the declaration of a final dividend as disclosed in Note 12, there
have been no material changes in the affairs or financial position of the
Group and its subsidiaries since the Statement of Financial Position date.
Parent Company Statement of Financial Position
As at 31 December 2024
2024 2023
Notes £'k £'k
Assets
Cash and cash equivalents 282 23
Receivables 2 27 41
Other assets 11 32
Investments 3 453,213 451,606
Total assets 453,533 451,702
Liabilities
Payables 4 721 -
Other liabilities 109 380
Total liabilities 830 380
Equity
Share capital 250 250
Own shares (3,112) (3,121)
Merger reserve 236,949 236,949
Share-based payments reserve 2,620 2,686
Retained earnings 215,996 214,558
Total equity 452,703 451,322
Total liabilities and equity 453,533 451,702
No income statement is presented for Sabre Insurance Group plc as permitted by
section 408 of the Companies Act 2006. The profit after tax of the Parent
Company for the period was £25,604k (2023: £7,437k profit after tax).
Parent Company Statement of Changes in Equity
For the year ended 31 December 2024
Share capital Own shares Merger reserve Share-based payments reserve Retained earnings Total equity
£'k £'k £'k £'k £'k £'k
Balance as at 31 December 2022 250 (2,810) 236,949 2,407 212,581 449,377
Profit for the period attributable to the owners of the Company - - - - 7,437 7,437
Share-based payment expense - - - 279 1,006 1,285
Net movement in own shares - (311) - - - (311)
Dividends paid - - - - (6,466) (6,466)
Balance as at 31 December 2023 250 (3,121) 236,949 2,686 214,558 451,322
Profit for the period attributable to the owners of the Company - - - - 25,604 25,604
Share-based payment expense - - - (66) 183 117
Net movement in own shares - 9 - - - 9
Dividends paid - - - - (24,349) (24,349)
Balance as at 31 December 2024 250 (3,112) 236,949 2,620 215,996 452,703
Parent Company Statement of Cash Flows
For the year ended 31 December 2024
2024 2023
£'k £'k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 25,604 7,437
Operating cash flows before movements in working capital 25,604 7,437
Movements in working capital:
Change in receivables 14 (38)
Change in other assets 22 179
Change in payables 721 (1,607)
Change in other liabilities (269) 289
Net cash generated/(used) from operating activities 26,092 6,260
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (1,484) (632)
Dividends paid (24,349) (6,466)
Net cash generated/(used) by financing activities (25,833) (7,098)
Net increase/(decrease) in cash and cash equivalents 259 (838)
Cash and cash equivalents at the beginning of the year 23 861
Cash and cash equivalents at the end of the year 282 23
Notes To The Parent Company Financial Statements
For the year ended 31 December 2024
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
Consolidated and Company Financial Statements are included in the specific
notes to which they relate. These policies have been consistently applied to
all the years presented, unless otherwise indicated.
1.1. Basis of preparation
These financial statements present the Sabre Insurance Group plc Company
financial statements for the period ended 31 December 2024, comprising the
Parent Company Statement of Financial Position, Parent Company Statement of
Changes in Equity, Parent Company Statement of Cash Flows, and related notes.
The financial statements of the Company have been prepared in accordance with
UK-adopted international accounting standards, comprising International
Accounting Standards ("IAS") and International Financial Reporting Standards
("IFRS"), and the requirements of the Companies Act 2006. Endorsement of
accounting standards is granted by the UK Endorsement Board ("UKEB").
In accordance with the exemption permitted under section 408 of the Companies
Act 2006, the Company's Profit or Loss Account and related notes have not been
presented in these separate financial statements.
The financial statements are prepared in accordance with the going concern
principle using the historical cost basis, except for those financial assets
that have been measured at fair value.
The financial statements values are presented in pounds sterling (£) rounded
to the nearest thousand (£'k), unless otherwise indicated.
The accounting policies that are used in the preparation of these separate
financial statements are consistent with the accounting policies used in the
preparation of the consolidated financial statements of Sabre Insurance Group
plc as set out in those financial statements.
As permitted by section 408 of the Companies Act 2006, the Statement of
Comprehensive Income of the Parent Company is not presented. The additional
accounting policies that are specific to the separate financial statements of
the Company are set out below.
2. RECEIVABLES
2024 2023
£'k £'k
Due within one year
Amounts due from Group undertakings - 14
Other debtors 27 27
As at 31 December 27 41
3. INVESTMENTS
The Company's financial assets are summarised below:
2024 2023
£'k £'k
Investment in subsidiary undertakings 453,213 451,606
Total 453,213 451,606
3.1. Investment in subsidiary undertakings
ACCOUNTING POLICY - INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investment in subsidiaries is stated at cost less any impairment.
2024 2023
£'k £'k
As at 1 January 451,606 450,000
Additions 1,607 1,606
As at 31 December 453,213 451,606
The only operating insurance subsidiary of the Company is Sabre Insurance
Company Limited, from which the value of the Group is wholly derived, as there
are no other trading entities within the Group. The Company performed its
annual impairment test as at 31 December 2024 and 31 December 2023. The
Company considers the relationship between the Group's market capitalisation
and the book value of its subsidiary undertakings, among other factors, when
reviewing for indicators of impairment. As at 31 December 2024 and 31 December
2023, the Company's securities were traded on a liquid market; therefore,
market capitalisation could be used as an indicator of value.
Having carried out this assessment, the Board concluded, on the basis of the
cautious assumptions outlined below, that the value in use is higher than the
current carrying value of the investment in subsidiary and no impairment is
necessary.
Key assumptions
We have used a dividend discount model to estimate the value in use, wherein
dividend payments are discounted to the present value. Dividends have been
estimated, based on forecasted financial information, over a four-year
forecast period, with a terminal growth rate applied. The key assumptions used
in the preparation of future cash flows are: plan-period financial
performance, dividend payout ratio, long-term growth rates and discount rate.
The key assumptions used in the calculation for the value in use is set out
below:
- Plan period financial performance set in line with the Group's
expectations
- Dividend payout ratio in line with the Group's strategy
- Long-term growth rate beyond the plan period of 2%
- Discount rate of 8.4%, being a calculated cost of capital using
market rate returns of Sabre and comparable insurers
These calculations use post-tax cash flow projections based on the Group's
capital models. As the value in use exceeds the carrying amount, the
recoverable amount remains supportable.
The Group has conducted sensitivity testing to the recoverable amount, in
order to understand the relevance of these various factors in arriving at the
value in use.
Dividend within the plan period - To assess the impact of reasonable changes
in performance on our base case impairment analysis and headroom, we flexed
the dividend within the plan period by +10% and -10%. In doing so, the value
in use varied by approximately 16% around the central scenario.
Long-term growth rate - To assess the impact of reasonable changes in the
long-term growth rate on our base case impairment analysis and headroom, we
flexed the long-term growth rate by +1% and -1%. In doing so, the value in use
varied by approximately 8% around the central scenario.
Discount rate - To assess the impact of reasonable changes in the dividend
payout ratio on our base case impairment analysis and headroom, we flexed the
average discount rate by +2% and -2%. In doing so, the value in use varied by
approximately 23% around the central scenario.
In all these scenarios there is material headroom over the carrying value of
the investment in subsidiary.
Name of subsidiary Place of incorporation Principal activity
Directly held by the Company
Binomial Group Limited United Kingdom Intermediate holding company
Indirectly held by the Company
Sabre Insurance Company Limited United Kingdom Motor insurance underwriter
The registered office of each subsidiary is disclosed within Note 18 of the
consolidated Group Financial Statement.
4. PAYABLES
2024 2023
£'k £'k
Due within one year
Amounts due to Group undertakings 721 -
As at 31 December 721 -
5. SHARE CAPITAL AND RESERVES
Full details of the share capital and the reserves of the Company are set out
in Note 15 and Note 17 to the consolidated financial statements.
6. DIVIDEND INCOME
ACCOUNTING POLICY - DIVIDEND INCOME
Dividend income from investment in subsidiaries is recognised when the right
to receive payment is established.
7. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc, which is incorporated in the United Kingdom and
registered in England and Wales, is the ultimate parent undertaking of the
Sabre Insurance Group of companies.
The following balances were outstanding with related parties at year end:
2024 2023
£'k £'k
Due (to)/from
Sabre Insurance Company Limited (721) 14
Total (721) 14
The outstanding balance represents cash transactions effected by Sabre
Insurance Company Limited on behalf of its Parent Company, and will be settled
within one year.
8. SHARE-BASED PAYMENTS
Full details of share-based compensation plans are provided in Note 16 to the
consolidated financial statements.
9. RISK MANAGEMENT
The risks faced by the Company, arising from its investment in subsidiaries,
are considered to be the same as those presented by the operations of the
Group. Details of the key risks and the steps taken to manage them are
disclosed in Note 2 to the Consolidated Financial Statements.
10. DIRECTORS' AND KEY MANAGEMENT REMUNERATION
The Directors and key management of the Group and the Company are the same.
The aggregate emoluments of the Directors and the remuneration and pension
benefits payable in respect of the highest paid Director are included in the
Directors' Remuneration Report in the Governance section of the Annual Report
and Accounts.
Financial Reconciliations
GROSS WRITTEN PREMIUM
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Movement in unearned premium (7,203) 40,590 (6,919)
Gross written premium 236,435 225,098 171,257
NET LOSS RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance service expense 154,661 139,497 126,607
Less: Amortisation of insurance acquisition cash flows (18,166) (14,057) (12,942)
Less: Amounts recoverable from reinsurers for incurred claims (13,026) (31,532) (6,304)
Less: Directly attributable claims expenses (7,041) (6,085) (6,210)
Add: Net impact of discounting 6,914 8,201 7,593
Undiscounted net claims incurred 123,342 96,024 108,744
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Net loss ratio 58.7% 61.6% 71.0%
EXPENSE RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Other operating expenses 28,305 26,587 22,815
Add: Amortisation of insurance acquisition cash flows 18,166 14,057 12,942
Add: Directly attributable claims expenses 7,041 6,085 6,210
Total operating expenses 53,512 46,729 41,967
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Expense ratio 25.5% 30.0% 27.4%
COMBINED OPERATING RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net loss ratio 58.7% 61.6% 71.0%
Expense ratio 25.5% 30.0% 27.4%
Combined operating ratio 84.2% 91.6% 98.4%
DISCOUNTED NET LOSS RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Insurance service expense 154,661 139,497 126,607
Less: Amortisation of insurance acquisition cash flows (18,166) (14,057) (12,942)
Less: Amounts recoverable from reinsurers for incurred claims (13,026) (31,532) (6,304)
Less: Directly attributable claims expenses (7,041) (6,085) (6,210)
Net claims incurred 116,428 87,823 101,151
Insurance revenue 248,131 188,246 181,476
Less: Instalment income (4,493) (3,738) (3,300)
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net earned premium 210,021 156,002 153,218
Discounted net loss ratio 55.4% 56.3% 66.0%
DISCOUNTED COMBINED OPERATING RATIO
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net loss ratio 55.4% 56.3% 66.0%
Expense ratio 25.5% 30.0% 27.4%
Discounted combined operating ratio 80.9% 86.3% 93.4%
NET INSURANCE MARGIN
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
Net claims incurred 123,342 96,024 108,744
Total operating expenses 53,512 46,729 41,967
Total insurance expense 176,854 142,753 150,711
Insurance revenue 248,131 188,246 181,476
Less: Reinsurance expense (33,617) (28,506) (24,958)
Net insurance revenue 214,514 159,740 156,518
Net insurance margin 17.6% 10.6% 3.7%
RETURN ON TANGIBLE EQUITY
For the year ended 31 December
2024 2023 2022
£'k £'k £'k
IFRS net assets at year end 258,346 242,412 228,988
Less: Goodwill at year end (156,279) (156,279) (156,279)
Closing tangible assets 102,067 86,133 72,709
Opening tangible equity 86,133 72,709 93,797
Average tangible equity 94,100 79,421 83,253
Profit after tax 35,961 18,065 11,078
Return on tangible equity 38.2% 22.7% 13.3%
SOLVENCY COVERAGE RATIO - PRE-DIVIDEND
As at 31 December
2024 2023 2022
£'k £'k £'k
Solvency II net assets 134,695 121,099 91,191
Solvency capital requirement 62,199 58,998 56,516
Solvency coverage ratio - pre-dividend 216.6% 205.3% 161.4%
SOLVENCY COVERAGE RATIO - POST-DIVIDEND
As at 31 December
2024 2023 2022
£'k £'k £'k
Solvency II net assets 134,695 121,099 91,191
Less: Interim/Final dividend (28,250) (20,250) (4,250)
Solvency II net assets - post-dividend 106,445 100,849 86,941
Solvency capital requirement 62,199 58,998 56,516
Solvency coverage ratio - post-dividend 171.1% 170.9% 153.8%
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