REG - Sabre Insurance Grp - Half-year Report 2024
30/07/2024 07:00
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RNS Number : 2776Y Sabre Insurance Group PLC 30 July 2024
Half-year Report 2024
Strong year-on-year growth at target margins
Full-year guidance reiterated
Sabre Insurance Group plc (the "Group" or "Sabre"), one of the UK's leading
motor insurance underwriters, reports its half-year results for the six months
ended 30 June 2024.
KEY HIGHLIGHTS
- Strong year-on-year profit growth
- Healthy gross written premium levels being written at target margins
- Loss ratio significantly better than H1 2023
- Continued organic capital generation and strong solvency position
- Good progress across our key strategic initiatives, which will support
planned growth in profit and volume in future periods
Geoff Carter, Chief Executive Officer of Sabre, commented:
"We are in a strong position at the halfway point of the year, having written
good levels of premium at our target margins across all product lines. This is
clearly demonstrated by the positive numbers we are reporting today. We have
been able to deploy price increases which reflect our view of claims
inflation, and we look forward to a strong performance in the second-half of
the year as the premium we have written to date earns-through."
SUMMARY OF RESULTS
Unaudited as at Audited as at
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Gross written premium £125.7m £99.5m £225.1m
Net loss ratio 57.3% 62.0% 56.3%
Expense ratio 26.3% 31.8% 30.0%
Combined operating ratio 83.6% 93.8% 86.3%
Net profit margin 18.0% 8.3% 15.8%
Profit before tax £20.2m £4.8m £23.6m
Profit after tax £15.1m £3.8m £18.1m
Interim dividend per share 1.7p 0.9p 0.9p
Final ordinary and special dividend per share n/a n/a 8.1p
Solvency coverage ratio (pre-interim/final dividend) 191.9% 173.0% 205.3%
Solvency coverage ratio (post-interim/final dividend) 185.2% 169.0% 170.9%
Current trading
- On core Motor Vehicle, we have established a position where we are
able to balance the delivery of volume and profitability
- We are continuing to follow our long-established strategy of
profitability being a target, and volume the output
- Motorcycle and Taxi portfolios are developing well and we consider
these products provide a valuable complement to our core Motor Vehicle
portfolio with good underlying profitability
- Continued strong solvency position, reflecting our robust underwriting
performance, which continues to generate capital
Market trends
- Following the necessary market pricing correction which drove price
increases in 2023, there is evidence of an anticipated slowing-down of
market-wide price increases in the first half of this year
- Claims inflation has continued at relatively high levels in 2024, and
this is expected to continue into 2025
- Further market-wide rate increases are required this year to meet the
inflating cost of claims
- We have maintained our usual prudent approach to pricing and
reserving, fully covering claims inflation through price changes
Legal and regulatory environment
- We note the new government's comments around the need to ensure
competitive and transparent pricing in motor insurance
- Our consistent target margin approach across all customer segments and
lack of dependency on income from ancillary products positions Sabre well in
this environment
- We believe that the UK motor insurance market delivers value for
consumers through price transparency, a highly competitive market and a wide
choice of products, whilst reflecting the underlying cost of claims
Strategic initiatives
- We have continued to make solid progress with key strategic
initiatives:
‒ Putting in place "insurer hosted pricing", which will provide
the infrastructure for further evolving our pricing capabilities
‒ On track to expand our Motorcycle distribution in early 2025
‒ Enhancing the efficiency of our direct operations
Outlook
- Guidance reiterated for the full-year:
‒ Anticipate further growth in the core Motor Vehicle account
with overall growth in GWP above claims inflation across 2024
‒ Overall COR of 75% to 80% on an IFRS 17 (discounted) basis,
dependent on the level of discounting credit recorded for the year
- Forward-looking claims inflation continues at circa 10%
There will be a call for analysts and investors at 0930hrs on Tuesday, 30 July
2024. For details, please contact sabre@teneo.com or find the registration
link here: Results Presentation
(https://events.teams.microsoft.com/event/3306d576-bd3c-47c2-b381-90bd6673a50b@57dd0ee8-ea36-4e50-af2c-d5f1da335307)
ENQUIRIES
Sabre Insurance
Group
0330 024 4696
Geoff Carter, Chief Executive Officer
Adam Westwood, Chief Financial Officer
Teneo
020 7260 2700
James Macey White/Ffion
Dash
sabre@teneo.com
DIVIDEND CALENDAR
2024 Interim Dividend Payment Dates
Ex-dividend date: 22 August 2024
Record date: 23 August 2024
Payment date: 25 September 2024
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014.
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.
FINANCIAL AND BUSINESS REVIEW
Highlights
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Gross written premium* £125.7m £99.5m £225.1m
Insurance revenue £121.9m £86.1m £188.2m
Net loss ratio* 57.3% 62.0% 56.3%
Expense ratio 26.3% 31.8% 30.0%
Combined operating ratio* 83.6% 93.8% 86.3%
Net profit margin* 18.0% 8.3% 15.8%
Profit before tax £20.2m £4.8m £23.6m
Profit after tax £15.1m £3.8m £18.1m
Solvency coverage ratio (pre-dividend)* 191.9% 173.0% 205.3%
Solvency coverage ratio (post-dividend)* 185.2% 169.0% 170.9%
*Alternative Performance Metrics are reconciled to IFRS in the Financial
Reconciliation section
The significant improvement in top-line and profitability in the first half of
2024 is a clear demonstration of Sabre's strategy, which has allowed the Group
to leverage favourable market conditions to generate profitable growth in the
latter half of 2023 and into 2024, which has earned through in 2024. Whilst
gross written premium is up by 26.3%, showing continued momentum in the
Group's growth, a key factor in the c.4x increase in profit before tax is the
41.6% increase in insurance revenue, which is equivalent to gross earned
premium plus income from instalment interest.
The increase in insurance revenue has generated an improvement in operating
expense leverage, with a significant 5.5ppt reduction in expense ratio.
Net loss ratio has also improved since H1 2023, as more profitable business
earns through - H1 2023 was still being impacted by the inflation shock in
2022. Overall, all products have performed in-line with expectation, and a
discounted combined operating ratio of 83.6% keeps the Group on track to meet
its guidance of a full-year discounted combined operating ratio within the
target 75% to 80% range, dependent on the level of discounting credit
achieved.
The Group's solvency coverage ratio, both pre- and post-dividend remains very
strong, with capital having been generated during the period due to profitable
underwriting set against the Group's capital efficient operating model. The
Group's policy is to address the capital position annually once the full-year
underwriting result is certain and distribute excess capital primarily by way
of a special dividend following the year-end results.
Revenue
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Profit or loss
Gross written premium £125.7m £99.5m £225.1m
Insurance revenue £121.9m £86.1m £188.2m
Net earned premium £101.1m £71.8m £156.0m
Other technical income £0.4m £0.7m £1.2m
Customer instalment income £2.0m £1.6m £3.7m
Interest revenue calculated using the effective interest method £3.5m £0.7m £3.8m
Other comprehensive income
Fair value gains/(losses) on debt securities through OCI £0.8m (£1.6m) £9.3m
Gross written premium by product
Motor vehicle £112.0m £83.0m £199.0m
Motorcycle £5.6m £9.1m £11.8m
Taxi £8.1m £7.4m £14.3m
Policy counts by product at period end
Motor vehicle ('000) 237 212 234
Motorcycle ('000) 41 48 44
Taxi ('000) 11 14 12
The increase in gross written premium vs H1 2023 has been primarily driven by
the core Motor Vehicle product, which has grown by 34.9% year-on-year. This is
slightly offset by an expected decrease in Motorcycle business following the
loss of a distribution partner in Q3 2023 - although we note that the run-rate
for Motorcycle policies is in-line with our expectation as compared to Q4
2023. The taxi product has grown a little as we remain cautious on this
product, having taken appropriate underwriting action to protect the
underwriting profitability.
Policy count for core Motor Vehicles grew 1.3% vs 31 December 2023, although
the increase in policy count has slowed in recent months, as year-on-year
premium growth has been achieved primarily through average premium increases.
We expect policy count to grow and shrink throughout the market pricing cycle,
even in sustained periods of hard pricing, as individual insurers temporarily
alter market pricing. Motorcycle and Taxi policy counts are stable and we
expect these products to remain a relatively small part of the book overall.
The below table shows how the familiar measures used to calculate our KPIs
build up into the income entries in the IFRS 17 Profit or Loss Account.
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Gross written premium £125.7m £99.5m £225.1m
Less: Unearned element of liability for remaining coverage (£5.8m) (£15.0m) (£40.6m)
Gross earned premium £119.9m £84.5m £184.5m
Reinsurance expense (£18.8m) (£12.7m) (£28.5m)
Net earned premium £101.1m £71.8m £156.0m
Customer instalment income £2.0m £1.6m £3.7m
Insurance service expense (£97.6m) (£66.6m) (£139.5m)
Amounts recoverable from reinsurers £27.1m £12.5m £31.5m
Insurance service result £32.6m £19.3m £51.8m
Represented by:
Insurance service result before reinsurance contracts held £24.2m £19.5m £48.7m
Net income/(expense) from reinsurance contracts held £8.4m (£0.2m) £3.0m
£32.6m £19.3m £51.8m
This reconciliation highlights the significant improvement in underwriting
performance in H1 2024, with the insurance service result being 68.9% above
the same period in 2023 and 0.42% ahead of H2 2023.
Operating expenditure
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Profit or loss
Insurance service expense £97.6m £66.6m £139.5m
Reinsurance expense £18.8m £12.7m £28.5m
Current-year net loss ratio 57.1% 61.5% 58.8%
Prior-year net loss ratio 0.2% 0.5% (2.5%)
Net loss ratio 57.3% 62.0% 56.3%
Other operating expenses £14.1m £13.2m £26.6m
Expense ratio 26.3% 31.8% 30.0%
Combined operating ratio 83.6% 93.8% 86.3%
Net loss ratio by product
Motor vehicle 55.4% 55.8% 50.4%
Motorcycle 101.2% 60.5% 65.2%
Taxi 55.3% 120.8% 108.8%
Overall net loss ratio has improved by 4.4ppts since H1 2023, as current-year
experience in core Motor Vehicle has benefitted from pricing increases during
and subsequent to the period of very high inflation, bringing our expected
performance for the year into line with our long-term goals. This has been
offset slightly by a reduction in the release of prior-year claims reserves.
Overall net loss ratio has also benefitted from the greater proportion of
business earned on the core Motor Vehicle book vs the less mature products. We
note that Motorcycle and Taxi business is on-track to deliver a profit in 2024
and, notwithstanding the volatility inherent within smaller lines of business
and demonstrated in the H1 loss ratio for Motorcycle, appear to be performing
close to our target margins.
The expense ratio improved by 5.5ppts vs H1 2023, showing the benefit of
enhanced operating leverage and continued tight control of costs.
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Undiscounted gross claims incurred £88.7m £63.1m £139.6m
Discounting (£3.6m) (£6.1m) (£20.3m)
Directly attributable expenses £3.8m £3.0m £6.1m
Amortisation of insurance acquisition costs £8.8m £6.6m £14.1m
Insurance service expense £97.7m £66.6m £139.5m
Undiscounted reinsurance recoveries (£28.7m) (£15.6m) (£41.4m)
Discounting £1.6m £3.1m £9.8m
Amounts recoverable from reinsurers for incurred claims (£27.1m) (£12.5m) (£31.6m)
Undiscounted net claims incurred * £60.3m £47.5m £96.0m
Net earned premium £101.1m £71.8m £156.0m
Current-year undiscounted net loss ratio 59.3% 69.7% 64.3%
Prior-year undiscounted net loss ratio 0.4% (3.5%) (2.7%)
Financial-year undiscounted net loss ratio 59.7% 66.2% 61.6%
Undiscounted combined operating ratio 86.0% 98.0% 91.6%
Undiscounted net loss ratio by product
Motor vehicle 56.7% 58.9% 55.0%
Motorcycle 110.6% 67.3% 73.3%
Taxi 68.3% 132.8% 117.1%
* Not adjusted for discounting on PPOs, consistent with prior reporting
periods
On an undiscounted basis, the current-year loss ratio has improved at a
portfolio-level since 2023, a result of price increases earning-through and a
greater proportion of business being earned on the core Motor Vehicle book as
opposed to Motorcycle and Taxi. Overall, the core Motor Vehicle book continues
to perform in-line with our expectations, with current-year carrying some
expected growth strain reflecting the normal uncertainty inherent within new
claims. The prior-year run-off has been lower than in previous periods,
however at the 6-month stage this is often more volatile than on an annual
basis.
Whilst the Taxi loss ratio has improved considerably, the Motorcycle loss
ratio has moved out. This shows the inherent variability in loss ratio across
these very small lines of business, where a movement in one large claim can
significantly impact the loss ratio. It is our view that both portfolios are
operating profitably in the long-run and we expect both products to deliver a
profit for the full-year.
Net insurance financial result
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Insurance finance income expense for insurance contracts issued (£4.1m) (£4.7m) (£10.2m)
Reinsurance finance income for reinsurance contracts held £1.9m £2.1m £3.6m
Net insurance financial result (£2.2m) (£2.6m) (£6.6m)
Net insurance finance result primarily reflects the run-off of discounting
recorded during the period.
Other comprehensive income ('OCI')
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Key elements of other comprehensive income
Fair value gains/(losses) on debt securities through OCI £0.8m (£1.6m) £9.3m
Net insurance financial result £1.2m £3.8m (£7.0m)
The net insurance financial result through OCI reflects the run-off
specifically related to prior charges/credits to OCI, which are generated
primarily through changes in discount rates.
Earnings per share
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Basic earnings per share 6.08p 1.54p 7.27p
Diluted earnings per share 6.04p 1.52p 7.20p
Earnings per share reflects the Group's profit after tax divided by the number
of shares, adjusted for dilution through equity-settled incentive schemes.
Cash and investments
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Government bonds £109.5m £85.6m £107.0m
Government-backed securities £98.7m £80.5m £81.9m
Corporate bonds £81.4m £61.5m £75.7m
Cash and cash equivalents £37.5m £29.3m £35.1m
£327.1m £256.9m £299.7m
The increase in the size of the investment portfolio reflects growth in the
business and organic generation of capital. The Group's investment objectives
remain to operate a low capital-intensity, low-risk portfolio which generates
income ahead of the risk-free interest rate.
Insurance liabilities and reinsurance contracts
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Gross insurance liabilities £421.2m £322.0m £374.8m
Reinsurance assets (£179.8m) (£138.3m) (£166.7m)
Net insurance liabilities £241.4m £183.7m £208.1m
The increase in net insurance liabilities reflects the growth in the size of
the business over the period.
Leverage
The Group continues to hold no external debt. All of the Group's capital is
considered 'Tier 1' under Solvency II. The Directors continue to hold the view
that this currently allows the greatest operational flexibility for the Group.
Dividend
Unaudited Audited
6 months ended 12 months ended
30 June 2024 30 June 2023 31 December 2023
Interim ordinary dividend 1.7p 0.9p 0.9p
Final ordinary dividend - - 4.2p
Total ordinary dividend 1.7p 0.9p 5.1p
Special dividend - - 3.9p
Total dividend 1.7p 0.9p 9.0p
The Board has declared an ordinary interim dividend of 1.7p per share (30 June
2023: 0.9p) in line with the Group's policy to pay an interim dividend equal
to one-third of prior-year's ordinary dividend. The Directors will consider
distribution of further excess capital following the release of the Group's
full-year results.
Condensed Consolidated Profit or Loss Account
For the six months ended 30 June 2024
30 June 2024 30 June 2023 31 December 2023
Notes £'k £'k £'k
Insurance revenue 3.4 121,852 86,119 188,246
Insurance service expense 3.4 (97,646) (66,628) (139,497)
Insurance service result before reinsurance contracts held 24,206 19,491 48,749
Reinsurance expense 3.4 (18,755) (12,655) (28,506)
Change in amounts recoverable from reinsurers for incurred claims 3.4 27,127 12,498 31,532
Net income/(expense) from reinsurance contracts held 8,372 (157) 3,026
Insurance service result 32,578 19,334 51,775
Interest income on financial assets using effective interest rate method 4.4 3,495 720 3,775
Total investment income 3,495 720 3,775
Insurance finance expenses from insurance contracts issued (4,111) (4,736) (10,170)
Reinsurance finance income from reinsurance contracts held 1,892 2,085 3,588
Net insurance financial result (2,219) (2,651) (6,582)
Net insurance and investment result 33,854 17,403 48,968
Other income 6 427 682 1,232
Other operating expenses 7 (14,069) (13,243) (26,587)
Profit before tax 20,212 4,842 23,613
Income tax expense 8 (5,106) (1,020) (5,548)
Profit for the period attributable to ordinary shareholders 15,106 3,822 18,065
Basic earnings per share (pence per share) 6.08 1.54 7.27
Diluted earnings per share (pence per share) 6.04 1.52 7.20
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024
30 June 2024 30 June 2023 31 December 2023
Notes £'k £'k £'k
Profit for the period attributable to ordinary shareholders 15,106 3,822 18,065
Items that are or may be reclassified subsequently to Profit or Loss
Unrealised fair value gains/(losses) on debt securities 4.5 819 (1,636) 9,284
Tax (charge)/credit (205) 409 (2,149)
Debt securities at fair value through other comprehensive income 614 (1,227) 7,135
Insurance finance income/(expense) from insurance contracts issued 3,298 5,745 (12,436)
Reinsurance finance (expense)/income from reinsurance contracts held (2,127) (1,946) 5,432
Tax (charge)/credit (293) (925) 1,550
Net insurance financial income/(expense) 878 2,874 (5,454)
Items which will not be reclassified to Profit or Loss
Revaluation losses on owner-occupied properties - - (800)
Income tax relating to items that will not be reclassified - - (31)
- - (831)
Total other comprehensive income for the period, net of tax 1,492 1,647 850
Total comprehensive income for the period attributable to ordinary 16,598 5,469 18,915
shareholders
Condensed Consolidated Statement of Financial Position
As at 30 June 2024
30 June 2024 30 June 2023 ((1)) 31 December 2023 ((1))
Notes £'k £'k £'k
Assets
Cash and cash equivalents 4.1 37,469 29,327 35,079
Financial investments 4.2 289,553 227,667 264,679
Receivables 4.3 58 6 87
Current tax assets 2,281 3,363 1,438
Reinsurance contract assets 3.1 179,838 138,332 166,726
Property, plant and equipment 4,283 5,133 4,388
Deferred tax assets 167 1,215 688
Other assets 2,186 2,097 774
Goodwill 156,279 156,279 156,279
Total assets 672,114 563,419 630,138
Liabilities
Payables 5 8,561 8,345 9,700
Insurance contract liabilities 3.1 421,184 321,965 374,839
Other liabilities 3,303 2,260 3,187
Total liabilities 433,048 332,570 387,726
Equity
Issued share capital 250 250 250
Own shares (2,722) (2,552) (3,121)
Merger reserve 48,525 48,525 48,525
FVOCI reserve (5,280) (14,256) (5,894)
Revaluation reserve - 831 -
Insurance/Reinsurance finance reserve ((1)) 3,117 10,567 2,239
Share-based payments reserve 1,834 1,883 2,686
Retained earnings ((1)) 193,342 185,601 197,727
Total equity 239,066 230,849 242,412
Total liabilities and equity 672,114 563,419 630,138
(1) Opening balance restatement - Refer to Note 3 "Insurance liabilities and
reinsurance assets"
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 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 1 January 2023 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 period attributable to ordinary shareholders - - - - - - - 3,822 3,822
Total other comprehensive income for the period, net of tax: Items that are or - - - (1,227) - 2,874 - - 1,647
may be reclassified subsequently to Profit or Loss
Share-based payment expense - - - - - - (524) 886 362
Net movement in own shares - 258 - - - - - - 258
Dividends paid - - - - - - - (4,228) (4,228)
Restated balance as at 30 June 2023 ((1)) 250 (2,552) 48,525 (14,256) 831 10,567 1,883 185,601 230,849
Profit for the period attributable to ordinary shareholders - - - - - - - 14,243 14,243
Total other comprehensive income for the period, net of tax: Items that are or - - - 8,362 - (8,328) - - 34
may be reclassified subsequently to Profit or Loss
Total other comprehensive income for the period, net of tax: Items which will - - - - (831) - - - (831)
not be reclassified to Profit or Loss
Share-based payment expense - - - - - - 803 121 924
Net movement in own shares - (569) - - - - - - (569)
Dividends paid - - - - - - - (2,238) (2,238)
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 period attributable to ordinary shareholders - - - - - - - 15,106 15,106
Total other comprehensive income for the period, net of tax: Items that are or - - - 614 - 878 - - 1,492
may be reclassified subsequently to Profit or Loss
Share-based payment expense - - - - - - (852) 631 (221)
Net movement in own shares - 399 - - - - - - 399
Dividends paid - - - - - - - (20,122) (20,122)
Balance as at 30 June 2024 250 (2,722) 48,525 (5,280) - 3,117 1,834 193,342 239,066
(1) Opening balance restatement - Refer to Note 3 "Insurance liabilities and
reinsurance assets"
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2024
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the period 20,212 4,842 23,613
Adjustments for:
Depreciation of property, plant and equipment 105 45 140
Share-based payment - equity-settled schemes 822 803 1,606
Investment return (2,632) (523) (3,131)
Expected credit loss - - 6
Impairment loss on owner-occupied buildings - - 333
Operating cash flows before movements in working capital 18,507 5,167 22,567
Movements in working capital:
Change in receivables 29 1 (80)
Change in reinsurance contract assets (15,239) (3,325) (24,340)
Change in other assets (1,412) (819) 504
Change in payables (1,139) 3,236 4,592
Change in insurance contract liabilities 49,643 13,370 48,062
Change in other liabilities 116 878 1,804
Cash generated from operating activities before investment of insurance assets 50,505 18,508 53,109
Taxes paid (5,926) (2,468) (4,658)
Net cash generated from operating activities before investment of insurance 44,579 16,040 48,451
assets
Interest and investment income received 2,121 1,431 3,818
Proceeds from the sale and maturity of invested assets 17,908 4,400 24,089
Purchases of invested assets (41,452) (5,452) (51,018)
Net cash generated from operating activities 23,156 16,419 25,340
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment - (1,182) (1,665)
Net cash used by investing activities - (1,182) (1,665)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (644) (184) (632)
Dividends paid (20,122) (4,228) (6,466)
Net cash used by financing activities (20,766) (4,412) (7,098)
Net increase in cash and cash equivalents 2,390 10,825 16,577
Cash and cash equivalents at the beginning of the year 35,079 18,502 18,502
Cash and cash equivalents at the end of the year 37,469 29,327 35,079
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2024
1. GENERAL INFORMATION
The Condensed Consolidated Interim Financial Statements comprise the results
and balances of the Group for the six-month period ended 30 June 2024, the
comparative period for the six months ended 30 June 2023 and the year ended 31
December 2023. The information in the Condensed Consolidated Interim Financial
Statements is unaudited and does not constitute statutory accounts as defined
in s.434 of the Companies Act 2006. The independent auditor's report on the
Group accounts for the year ended 31 December 2023 is unqualified, does not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report and does not include a statement
under s.498(2) or (3) of the Companies Act 2006.
2. ACCOUNTING POLICIES
2.1. Basis of preparation
The Condensed Consolidated Interim Financial Statements have been prepared and
approved by the Directors in accordance with UK-adopted International
Accounting Standard 34 ('Interim Financial Reporting'). As required by the
Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial
Conduct Authority, these Condensed Consolidated Interim Financial Statements
have been prepared applying the accounting policies and presentation that will
be applied in the preparation of the Annual Financial Statements of the Group
and will be prepared in accordance and fully comply with UK-adopted
international accounting standards, comprising International Accounting
Standards ('IAS') and International Financial Reporting Standards ('IFRSs').
The Annual Financial Statements were 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 accounting policies applied in the preparation of the Condensed
Consolidated Interim Financial Statements are consistent with those accounting
policies applied in the preparation of the 31 December 2023 Annual Report and
Accounts, expect for those referred to in 2.3 below.
Other than the Equity opening balance restatement, the prior year accounts
have been reported on by the Group's auditors and filed with the Registrar of
Companies. This report should be read in conjunction with the Group's Annual
Report and Accounts as at and for the year ended 31 December 2023.
The Condensed Consolidated Interim Financial Statements values are presented
in Pounds Sterling (£) rounded to the nearest thousand (£'k), unless
otherwise indicated. The Group does not consider it is exposed to material
seasonal volatility in its financial results.
2.2. Going concern
The Condensed Consolidated Interim Financial Statements have been prepared on
a going concern basis. Having assessed the Group's forecasts, projections and
principal risks of the Group over the full duration of the planning cycle, the
Directors have a reasonable expectation that the Group will continue in
operation for at least 12 months from the date the Directors approved these
Condensed Consolidated Financial Statements and that therefore it is
appropriate to adopt a going concern basis for the preparation of these
Condensed Consolidated Financial Statements.
The Group's Principal Risks and Uncertainties are outlined in the Strategic
Report of the 31 December 2023 Annual Report and Accounts and have not changed
since the last reporting date. The principal risks are:
- Insurance
- Operations
- Finance and Capital
- IT and Systems
- Regulatory, Governance and Compliance
- People
- Macro risks
- Climate
- Inflation and interest rate increases
- Geo-political
2.3. New and amended standards and interpretations adopted by the Group
Amendments to IFRS
The following amended 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 as Current or Non-Current
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 on the Group.
2.4. 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 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
3. Insurance liabilities and reinsurance assets
CRITICAL ACCOUNTING ESTIMATES AND judgements
There have been no significant changes to the principles, estimates and
judgements used in applying the Group's accounting policies during the period.
Full details of these critical accounting estimates and judgements are
disclosed on pages 126 to 128 of the Group's Annual Report and Accounts 2023.
Discount rates
Discount rates applied for discounting future cash flows are listed below:
30 June 2024 30 June 2023 31 December 2023
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
Motor insurance 5.12% 4.48% 4.19% 4.09% 6.35% 5.92% 5.32% 4.54% 5.05% 3.98% 3.67% 3.59%
Risk adjustment for non-financial risk
The Company has estimated the risk adjustment using a methodology which
targets a confidence level (probability of sufficiency) approach between the
80th and 90th percentile. At 30 June 2023, the risk margin applied equates to
an approximate confidence interval of 82.1% (30 June 2023: 82.0% / 31 December
2023: 81.3%)
Risk adjustment for non-financial risk
The Company has estimated the risk adjustment using a methodology which
targets a confidence level (probability of sufficiency) approach between the
80th and 90th percentile. At 30 June 2023, the risk margin applied equates to
an approximate confidence interval of 82.1% (30 June 2023: 82.0% / 31 December
2023: 81.3%)
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.
30 June 2024 30 June 2023 31 December 2023
Notes £'k £'k £'k
Insurance contract liabilities
Insurance contract liabilities
Motor Vehicle insurance 366,778 273,168 321,720
Motorcycle insurance 35,653 31,462 32,370
Taxi insurance 28,241 24,469 29,482
Asset for insurance acquisition cash flows
Motor Vehicle insurance 3.3 (7,435) (5,204) (6,933)
Motorcycle insurance 3.3 (1,011) (926) (867)
Taxi insurance 3.3 (1,042) (1,004) (933)
Total insurance contract liabilities 421,184 321,965 374,839
Reinsurance contracts assets
Motor Vehicle insurance 158,694 120,160 143,364
Motorcycle insurance 13,819 11,147 13,502
Taxi insurance 7,325 7,025 9,860
Total reinsurance contract assets 179,838 138,332 166,726
3.2. Movements in insurance and reinsurance contract balances
3.2.1. Insurance contracts issued
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Opening insurance contract liabilities 374,839 314,341 314,341
Changes in the Profit or Loss Account
Insurance revenue (121,852) (86,119) (188,246)
Insurance service expenses
Incurred claims and other directly attributable expenses 73,326 60,945 123,662
Changes that relate to past service - changes in the FCF relating to the LIC 15,538 (953) 1,778
Amortisation of insurance acquisition cash flows 8,782 6,636 14,057
97,646 66,628 139,497
Insurance service result (24,206) (19,491) (48,749)
Net finance income from insurance contracts issued 4,111 4,736 10,170
Total changes in the Profit or Loss Account (20,095) (14,755) (38,579)
Changes in the Statement of Comprehensive Income
Net finance (expense)/ income from insurance contracts issued (3,298) (5,745) 12,436
Total changes in Statement of Comprehensive Income (3,298) (5,745) 12,436
Cash flows
Premiums received 130,713 87,493 206,189
Claims and other insurance services expenses paid (51,438) (51,561) (102,720)
Insurance acquisition cash flows (9,537) (7,808) (16,828)
Total cash flows 69,738 28,124 86,641
Closing insurance contract liabilities 421,184 321,965 374,839
3.2. Movements in insurance and reinsurance contract balances
3.2.2. Reinsurance contracts held
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Opening reinsurance contract assets 166,726 136,954 136,954
Changes in the Profit or Loss Account
Net income/(expense) from reinsurance contracts held
Reinsurance expense (18,755) (12,655) (28,506)
Incurred claims recovery 11,752 13,825 25,841
Changes that relate to past service - changes in the FCF relating to incurred 15,375 (1,327) 5,691
claims recovery
8,372 (157) 3,026
Net finance income for reinsurance contracts held 1,892 2,085 3,588
Total changes in the Profit or Loss Account 10,264 1,928 6,614
Changes in the Statement of Comprehensive Income
Net finance (expense)/ income for reinsurance contracts held (2,127) (1,946) 5,432
Total changes in Statement of Comprehensive Income (2,127) (1,946) 5,432
Cash flows
Premiums paid 6,043 6,408 24,906
Recoveries received (1,068) (5,012) (7,180)
Total cash flows 4,975 1,396 17,726
Closing reinsurance contract assets 179,838 138,332 166,726
3.3. Assets for insurance acquisition cash flows
£'k
Balance as at 1 January 2023 5,962
Amounts incurred during the year 7,808
Amounts derecognised and included in measurement of insurance contracts (6,636)
Balance as at 30 June 2023 7,134
Amounts incurred during the year 9,019
Amounts derecognised and included in measurement of insurance contracts (7,420)
Balance as at 31 December 2023 8,733
Amounts incurred during the year 9,537
Amounts derecognised and included in measurement of insurance contracts (8,782)
Balance as at 30 June 2024 9,488
3.4. 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.
6 months ended 30 June 2024 6 months ended 30 June 2023
Motor Vehicle Motorcycle Taxi Total Motor Vehicle Motorcycle Taxi Total
£'k £'k £'k £'k £'k £'k £'k £'k
Insurance revenue
Insurance revenue from contracts measured under the PAA 109,549 5,059 7,244 121,852 69,616 9,132 7,371 86,119
Total insurance revenue 109,549 5,059 7,244 121,852 69,616 9,132 7,371 86,119
Insurance service expense
Incurred claims and other directly attributable expenses (62,053) (4,131) (7,142) (73,326) (39,911) (11,242) (9,792) (60,945)
Changes that relate to past service - changes in the FCF relating to the LIC (19,987) (1,114) 5,563 (15,538) (888) 2,659 (818) 953
Amortisation of insurance acquisition cash flows (6,813) (1,046) (923) (8,782) (4,580) (1,111) (945) (6,636)
Total insurance service expense (88,853) (6,291) (2,502) (97,646) (45,379) (9,694) (11,555) (66,628)
Net income/(expenses) from reinsurance contracts held
Reinsurance expenses - contracts measured under the PAA (16,829) (801) (1,125) (18,755) (10,183) (1,368) (1,104) (12,655)
Incurred claims recovery 9,977 237 1,539 11,753 5,475 5,545 2,805 13,825
Changes that relate to past service - changes in the FCF relating to incurred 18,702 159 (3,487) 15,374 854 (2,266) 85 (1,327)
claims recovery
Total net income/(expense) from reinsurance contracts held 11,850 (405) (3,073) 8,372 (3,854) 1,911 1,786 (157)
Total insurance service result 32,546 (1,637) 1,669 32,578 20,383 1,349 (2,398) 19,334
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.
12 months ended 31 December 2023
Motor Vehicle Motorcycle Taxi Total
£'k £'k £'k £'k
Insurance revenue
Insurance revenue from contracts measured under the PAA 158,054 15,363 14,829 188,246
Total insurance revenue 158,054 15,363 14,829 188,246
Insurance service expense
Incurred claims and other directly attributable expenses (91,688) (16,087) (15,887) (123,662)
Changes that relate to past service - changes in the FCF relating to the LIC (861) 1,796 (2,713) (1,778)
Amortisation of insurance acquisition cash flows (10,206) (1,953) (1,898) (14,057)
Total insurance service expense (102,755) (16,244) (20,498) (139,497)
Net income/(expense) from reinsurance contracts held
Reinsurance expense - contracts measured under the PAA (23,800) (2,444) (2,262) (28,506)
Incurred claims recovery 17,367 5,947 2,527 25,841
Changes that relate to past service - changes in the FCF relating to incurred 4,758 (1,184) 2,117 5,691
claims recovery
Total net income/(expense) from reinsurance contracts held (1,675) 2,319 2,382 3,026
Total insurance service result 53,624 1,438 (3,287) 51,775
3.5. 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 and Loss Account or Consolidated Statement of
Comprehensive Income for any of the previously reported periods.
4. Financial assets
The Group's financial assets are summarised below:
30 June 2024 30 June 2023 31 December 2023
Notes £'k £'k £'k
Cash and cash equivalents 4.1 37,469 29,327 35,079
Debt securities held at fair value through other comprehensive income 4.2 289,553 227,667 264,679
Receivables 4.3 58 6 87
Total 327,080 257,000 299,845
4.1. Cash and cash equivalents
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Cash at bank and on hand 15,995 23,462 12,890
Money market funds 21,474 5,865 22,189
Total 37,469 29,327 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
The Group's debt securities held at fair value through other comprehensive
income are summarised below:
30 June 2024 30 June 2023 31 December 2023
£'k % holdings £'k % holdings £'k % holdings
Government bonds 109,396 37.8% 85,605 37.6% 107,040 40.4%
Government-backed securities 98,709 34.1% 80,548 35.4% 81,942 31.0%
Corporate bonds 81,448 28.1% 61,514 27.0% 75,697 28.6%
Total 289,553 100.0% 227,667 100.0% 264,679 100.0%
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.
Transfers between levels
There have been no transfers between levels during the period (30 June 2023:
no transfers / 31 December 2023: no transfers).
4.3. Receivables
The Group's receivables comprise of:
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Other debtors 58 6 87
Total 58 6 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 ('ECL') is based on the recoverability of the
individual receivables.
The Group has calculated the ECL on receivables and has concluded that it is
wholly immaterial and such further disclosure has not been included.
4.4. Investment income
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Interest income on financial assets using effective interest rate method
Interest income from debt securities 2,632 523 3,131
Interest income from cash and cash equivalents 863 197 644
Total 3,495 720 3,775
4.5. Net gains/(losses) from fair value adjustments on financial assets
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Other comprehensive income
Unrealised fair value gains/(losses) on debt securities 819 (1,636) 9,278
Expected credit loss - - 6
Unrealised fair value gains/(losses) on debt securities through Other 819 (1,636) 9,284
Comprehensive Income
Net gains/(losses) from fair value adjustments on financial assets 819 (1,636) 9,284
5. PAYABLES
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Trade and other creditors 1,020 1,643 2,149
Indirect taxes 7,541 6,702 7,551
Total 8,561 8,345 9,700
6. Other income
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Administration fees 33 379 495
Brokerage and other fee income 394 303 737
Total 427 682 1,232
Other income relates to auxiliary products and services, including brokerage
and administration fees, all relating to the Motor Vehicle product.
7. OTHER Operating expenses
30 June 2024 30 June 2023 31 December 2023
Notes £'k £'k £'k
Employee expenses 7.1 8,046 7,237 13,869
Property expenses 161 469 689
IT expenses including IT depreciation 3,314 3,077 5,961
Other depreciation 57 4 59
Industry levies 2,927 2,973 5,936
Policy servicing costs 1,510 1,010 2,491
Other operating expenses 1,817 1,464 3,328
Movement in expected credit loss on debt securities - - 6
Impairment loss on owner occupied properties - - 333
Before adjustment for directly attributable claims expenses 17,832 16,234 32,672
Adjusted for:
Reclassification of directly attributable claims expenses (3,763) (2,991) (6,085)
Total operating expenses 14,069 13,243 26,587
7.1. Employee expenses
The aggregate remuneration of those employed by the Group's operations
comprised:
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Wages and salaries 5,939 5,216 10,079
Social security expenses 691 745 1,276
Contributions to defined contribution plans 307 292 557
Equity-settled share-based payment 851 803 1,606
Other employee expenses 258 181 351
Before adjustment for directly attributable claims expenses 8,046 7,237 13,869
Adjusted for:
Reclassification of directly attributable claims expenses (2,531) (2,081) (4,146)
Employee expenses 5,515 5,156 9,723
8. INCOME TAX EXPENSE
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Current taxation
Charge for the year 5,082 360 4,444
5,082 360 4,444
Deferred taxation
Origination and reversal of temporary differences 24 660 1,104
24 660 1,104
Current taxation 5,082 360 4,444
Deferred taxation 24 660 1,104
Income tax expense for the year 5,106 1,020 5,548
Tax recorded in Other Comprehensive Income is as follows:
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Current taxation - - 31
Deferred taxation 498 516 599
498 516 630
Management estimates the Group's effective tax rate to be approximately 25.3%
of profit before tax for the year ending 31 December 2024, in line with the
corporation tax rate in the UK of 25.0%. This estimate is slightly higher than
the prevailing rate of corporation tax in the UK, reflecting the impact of the
Group's employee share schemes. The income tax expense for the period is
recognised based on this estimate.
9. Dividends
30 June 2024 30 June 2023 31 December 2023
pence per share £'k pence per share £'k pence per share £'k
Amounts recognised as distributions to equity holders in the period
Interim dividend for the current year - - - - 0.9 2,238
Final dividend for the prior year 8.1 20,122 1.7 4,228 1.7 4,228
8.1 20,122 1.7 4,228 2.6 6,466
Proposed dividends
Interim dividend in respect of the current year ((1)) 1.7 4,250 0.9 2,250
(1) Subsequent to 30 June 2024, the Directors declared an interim dividend for
2024 of 1.7p per ordinary share. 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 30
June 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 period ended 30
June 2024 by £128k (30 June 2023: £22k and 31 December 2023: £34k).
10. Related party transactions
There has been no change to the relationships disclosed in Note 18 of the 31
December 2023 Annual Report and Accounts.
No related party transactions have taken place in the period ended 30 June
2024 that have materially affected the financial position or the financial
performance of the Group.
11. EVENTS AFTER THE BALANCE SHEET DATE
Other than the declaration of a final dividend as disclosed in Note 9, 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.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
The Condensed Consolidated Financial Statements for the six months ended 30
June 2024 have been prepared in accordance with International Accounting
Standards 34 ("IAS 34") as adopted by the UK.
The interim management report includes a fair review of the information as
required by:
- DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of the important events that have occurred during the first six
months of the current financial year and their impact on the condensed set of
Consolidated Financial Statements and a description of the principle risks and
uncertainties for the remaining six months of the financial year; and
- DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transaction that have taken place in the first six months of the current
financial year and that have materially impacted the financial position or
performance of the Group during the period; and any changes in the related
party transactions from the Group's Consolidated Financial Statements for the
year ended 31 December 2023 that could do so.
Signed on behalf of the Board of Directors
Geoff Carter Adam Westwood
Chief Executive Officer Chief Financial Officer
29 July 2024 29 July 2024
Independent review report to Sabre Insurance Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Sabre Insurance Group plc's condensed consolidated interim
financial statements (the "interim financial statements") in the Half-Year
Report 2024 of Sabre Insurance Group plc for the 6 month period ended
30 June 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
- the Condensed Consolidated Statement of Financial Position as at
30 June 2024;
- the Condensed Consolidated Profit or Loss Account and the Condensed
Consolidated Statement of Comprehensive Income for the period then ended;
- the Condensed Consolidated Statement of Cash Flows for the period then
ended;
- the Condensed Consolidated Statement of Changes in Equity for the
period then ended; and
- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-Year Report 2024 of
Sabre Insurance Group plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half-Year Report 2024 and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half-Year Report 2024, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half-Year Report 2024 in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half-Year Report 2024, including
the interim financial statements, the directors are responsible for assessing
the group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half-Year Report 2024 based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
29 July 2024
Financial Reconciliations
GROSS WRITTEN PREMIUM
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Insurance revenue 121,852 86,119 188,246
Less: Instalment income (1,969) (1,630) (3,738)
Less: Movement in unearned premium 5,839 14,976 40,590
Gross written premium 125,722 99,465 225,098
NET LOSS RATIO
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Insurance service expense 97,646 66,628 139,497
Less: Amortisation of insurance acquisition cash flows (8,782) (6,636) (14,057)
Less: Amounts recoverable from reinsurers for incurred claims (27,127) (12,498) (31,532)
Less: Directly attributable claims expenses (3,763) (2,991) (6,085)
Net claims incurred 57,974 44,503 87,823
Insurance revenue 121,852 86,119 188,246
Less: Instalment income (1,969) (1,630) (3,738)
Less: Reinsurance expense (18,755) (12,655) (28,506)
Net earned premium 101,128 71,834 156,002
Net claims incurred 57,974 44,503 87,823
Net earned premium 101,128 71,834 156,002
Net loss ratio 57.3% 62.0% 56.3%
EXPENSE RATIO
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Other operating expenses 14,069 13,243 26,587
Add: Amortisation of insurance acquisition cash flows 8,782 6,636 14,057
Add: Directly attributable claims expenses 3,763 2,991 6,085
Total operating expenses 26,614 22,870 46,729
Insurance revenue 121,852 86,119 188,246
Less: Instalment income (1,969) (1,630) (3,738)
Less: Reinsurance expense (18,755) (12,655) (28,506)
Net earned premium 101,128 71,834 156,002
Total operating expenses 26,614 22,870 46,729
Net earned premium 101,128 71,834 156,002
Expense ratio 26.3% 31.8% 30.0%
COMBINED OPERATING RATIO
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Net loss ratio 57.3% 62.0% 56.3%
Expense ratio 26.3% 31.8% 30.0%
Combined operating ratio 83.6% 93.8% 86.3%
UNDISCOUNTED NET LOSS RATIO
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Net claims incurred 57,974 44,503 87,823
Add: Net impact of discounting 2,350 3,045 8,201
Undiscounted net claims incurred 60,324 47,548 96,024
Net earned premium 101,128 71,834 156,002
Undiscounted net loss ratio 59.7% 66.2% 61.6%
UNDISCOUNTED COMBINED OPERATING RATIO
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Undiscounted net loss ratio 59.7% 66.2% 61.6%
Expense ratio 26.3% 31.8% 30.0%
Undiscounted combined operating ratio 86.0% 98.0% 91.6%
NET PROFIT MARGIN
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Net claims incurred 57,974 44,503 87,823
Total operating expenses 26,614 22,870 46,729
Total insurance expense 84,588 67,373 134,552
Insurance revenue 121,852 86,119 188,246
Less: Reinsurance expense (18,755) (12,655) (28,506)
Net insurance revenue 103,097 73,464 159,740
Net profit margin 18.0% 8.3% 15.8%
SOLVENCY COVERAGE RATIO - PRE-DIVIDEND
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Solvency II net assets 121,737 97,091 121,099
Solvency capital requirement 63,445 56,113 58,998
Solvency coverage ratio - pre-dividend 191.9% 173.0% 205.3%
SOLVENCY COVERAGE RATIO - POST-DIVIDEND
30 June 2024 30 June 2023 31 December 2023
£'k £'k £'k
Solvency II net assets 121,737 97,091 121,099
Less: Interim/Final dividend (4,250) (2,250) (20,250)
Solvency II net assets - post-dividend 117,487 94,841 100,849
Solvency capital requirement 63,445 56,113 58,998
Solvency coverage ratio - post-dividend 185.2% 169.0% 170.9%
GLOSSARY OF TERMS
Acquisition cash flows Cash flows arising from the costs of selling, underwriting and starting a
group of insurance contracts (issued or expected to be issued) that are
directly attributable to the portfolio of insurance contracts to which the
group belongs. Such cash flows include cash flows that are not directly
attributable to individual contracts or groups of insurance contracts within
the portfolio.
Adjusted IFRS net assets Equals the Group's IFRS net assets, less Goodwill.
Asset for incurred claims ("AIC") The reinsurers' share of the liability for incurred claims ("LIC").
Asset for remaining coverage ("ARC") The reinsurers' share of the liability for remaining coverage ("LRC").
Combined operating ratio ("COR") The combined operating ratio is the ratio of total expenses (which comprises
commission expenses and operating expenses), and net insurance claims relative
to net earned premium ("NEP"), expressed as a percentage.
Contractual service margin ("CSM") This represents the unearned profit the entity will recognise as it provides
insurance contract service under the insurance contracts in the group. It is a
component of the carrying amount of the asset or liability for a group of
insurance contracts.
Coverage period The period during which the entity provides insurance contract services. The
period includes the insurance contract services that relate to all premiums
within the boundary of the insurance contract.
Effective tax rate Effective tax rate is defined as the approximate tax rate calculated by
dividing the Group's profit before tax by the tax charge going through the
Profit or Loss Account.
Expense ratio Expense ratio is a measure of total expenses (which comprises commission
expenses and operating expenses), and claims handling expenses, relative to
net earned premium ("NEP"), expressed as a percentage.
Fair value through OCI ("FVOCI") Unrealised gains and losses from the remeasurement of the fair value financial
assets are recognised in the Statement of Other Comprehensive Income ("OCI").
Financial Reporting Council ("FRC") The UK's regulator for the accounting, audit and actuarial professions,
promoting transparency and integrity in business.
Fulfilment cash flows ("FCF") An explicit, unbiased and probability-weighted estimate (i.e. expected value)
of the present value of the future cash outflows minus the present value of
the future cash inflows that will arise as the entity fulfils insurance
contacts, including a risk adjustment for non-financial risk.
Gross earned premium ("GEP") The proportions of premium attributable to the periods of risk that relate to
the current accounting period. It represents gross written premium ("GWP")
adjusted by the unearned premium provision at the beginning and end of the
accounting period, before deduction of reinsurance expense.
Gross written premium ("GWP") Gross written premium comprises all premiums in respect of policies
underwritten in a particular financial period, regardless of whether such
policies relate in whole or in part to a future financial period, before
deduction of reinsurance expense.
IFRS 17 "Insurance Contracts" An accounting standard that addresses the establishment of principles for the
recognition, measurement, presentation and disclosure of insurance contracts
within the scope of the standard (Effective 1 January 2023).
IFRS net assets The difference between the Group's total assets and total liabilities.
Insurance revenue Gross earned premium ("GEP") plus instalment income.
International Financial Reporting Standards ("IFRS") Accounting standards issued by the IFRS Foundation and the International
Accounting Standards Board ("IASB").
Liability for incurred claims ("LIC") An entity's obligation to:
a) Investigate and pay valid claims for insured events that have
already occurred, including events that have occurred but for which claims
have not been reported, and other incurred insurance expenses; and
b) Pay amounts that are not included in (a) and that relate to:
i. insurance contract services that have already been provided; or
ii. any investment components or other amounts that are not related to
the provision of insurance contract services and that are not in the liability
for remaining coverage
Liability for remaining coverage ("LRC") An entity's obligation to:
a) investigate and pay valid claims under existing insurance contracts
for insured events that have not yet occurred (i.e. the obligation that
relates to the unexpired portion of the insurance coverage); and
b) pay amounts under existing insurance contracts that are not
included in (a) and that relate to:
i. insurance contract services not yet provided (i.e. the
obligations that relate to future provision of insurance contract services);
or
ii. any investment components or other amounts that are not related to
the provision of insurance contract services and that have not been
transferred to the liability for incurred claims
Net claims incurred Net claims incurred is equal to gross claims incurred less amounts recovered
from reinsurers.
Net earned premium ("NEP") Gross earned premium ("GEP") less reinsurance expense.
Net insurance revenue Insurance revenue less reinsurance expense
Net loss ratio ("NLR") Net loss ratio measures net insurance claims, less claims handling expenses,
relative to net earned premium expressed as a percentage.
Net profit margin ("NPM") Net profit margin measures how much net profit is generated as a percentage of
net insurance revenue.
Own Risk and Solvency Assessment ("ORSA") An prospective assessment of the Group's risks and solvency capital
requirements.
Periodic Payment Order ("PPO") A compensation award as part of a claims settlement that involves making a
series of annual payments to a claimant over their remaining life to cover the
costs of the care they will require.
Premium allocation approach ("PAA") Method for measuring insurance contracts under IFRS 17 "Insurance Contracts"
Return on tangible equity Return on tangible equity is measured as the ratio of the Group's profit after
tax to its average tangible equity over the financial year, expressed as a
percentage.
Risk adjustment for non-financial risk The compensation an entity requires for bearing the uncertainty about the
amount and timing of the cash flows that arises from non-financial risk as the
entity fulfils insurance contracts.
Solvency capital ratio The ratio of Own Funds (Solvency II capital) to Solvency Capital Requirement
"SCR".
Solvency Capital Requirement ("SCR") The total amount of capital that the Group must hold to cover the risks under
the Solvency II regulatory framework. The Group is required to maintain
eligible own funds of at least 100% of the SCR.
The Group uses the Standard Formula to determine the SCR.
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