REG - Sabre Insurance Grp - Trading Update

Sabre InsuranceAnnouncement

19/10/2023 07:00

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RNS Number : 5905Q  Sabre Insurance Group PLC  19 October 2023

 19 October 2023
 Sabre Insurance Group plc

 Trading Update

 Strong premium growth and healthy capital position

 Sabre Insurance Group plc (the "Group" or "Sabre"), one of the UK's leading
 motor insurance underwriters, today provides an update on trading for the
 period from 1 July 2023 to 30 September 2023.

 Financial highlights

                    Nine months ended               Year ended

                     30 September                    31 December
                      2023      2022       % change  2022
 Gross written premium                  £162.2m    £135.7m    19.5%     £171.3m
 Gross written premium - Motor Vehicle  £140.5m    £105.2m    33.6%     £134.9m
 Gross written premium - Motorcycle     £10.7m     £20.9m     (48.8%)   £23.1m
 Gross written premium - Taxi           £11.0m     £9.6m      14.6%     £13.3m
 Post-dividend solvency capital ratio   191%       163%                 154%

Business highlights for the first nine months of 2023

 ‒    Strong performance from our core Motor Vehicle book

 ‒  Gross written premiums ('GWP') up 34% year-to-date and up 61% versus Q3
 2022

 ‒  In recent weeks, premium run-rate has been over 80% up year-on-year

 ‒  Increase in policy count, while maintaining continued focus on
 profitability as a target and volume as an output. Core Motor Vehicle policy
 count 222k at 30 September 2023 (30 June 2023: 211k)

 ‒  Significant rate increases mitigating the impact of claims inflation and
 ensuring margins return towards historical levels for business written in
 recent months

 ‒  Increase in solvency capital ratio reflects return towards historical
 levels of underwriting profitability on core Motor Vehicle business and
 profitable growth

 ‒    Good performance from Motorcycle book

 ‒  Ongoing focus on margin over volume - with rate increases expected to
 drive improved loss ratio performance for 2023 vs 2022

 ‒  Policy count and premium growth impacted by the cessation of trading
 with MCE Insurance, offset by increase in sales through our alternate channel.
 Motorcycle policy count 45k at 30 September 2023 (30 June 2023: 48k)

 ‒    Taxi book performance improving as planned

 ‒  Taxi market remains challenging, significant underwriting actions
 starting to show improved loss ratio performance but have reduced premium
 run-rate vs 2022. Taxi policy count 13k at 30 September 2023 (30 June 2023:
 14k)

 ‒    Underwriting performance across the portfolio in Q3 supports
 expectation of an improvement in the combined operating ratio for H2 vs H1
 2023. Expect combined operating ratio for 2023 at the higher end of 85% - 90%
 on a discounted basis in-line with previous guidance

 ‒    Post-dividend solvency capital ratio as at 30 September 2023 of 191%
 (30 September 2022: 163%)

 ‒    Expect to have sufficient capital to allow the Board flexibility in
 determining an appropriate dividend distribution at year-end in-line with our
 policy - an ordinary dividend payout ratio of 70% of adjusted profit after tax
 and a distribution of surplus capital through special dividends

 Market trends

 ‒    Growth in our GWP and policy count despite price increases suggests
 market pricing correction has continued through Q3, with Sabre continuing to
 see the benefits of acting early with respect to pricing

 ‒    Claims inflation for 2023 continues at around 10%, however rate
 increases applied are sufficient to cover slightly higher levels of inflation
 and improve loss ratios towards historical norms, from which we expect to see
 the benefit in 2024

 Full-year premium guidance raised; profitability reaffirmed

 ‒    Premium in recent months has been above expectations, therefore we
 increase our overall 2023 full-year gross written premium year-on-year growth
 expectation to 20% - 25%

 ‒    Reiterate profitability guidance provided at half-year, expect
 discounted combined operating ratio for the full-year 2023 at the upper end of
 the 85% - 90% range

 ‒    Premium growth and momentum in underwriting margin improvements will
 earn through in 2024, which we expect to result in further improvement in
 combined operating ratio in-line with previous guidance

 Geoff Carter, Chief Executive Officer of Sabre, commented:

 "Having stuck firmly to our 'profitability over volume' strategy through
 four-years of persistent market under-pricing and periods of very high
 inflation, we are now starting to show the benefits of our strategy as market
 pricing continues to correct.

 We have been able to increase prices at a level to cover high on-going
 inflation whilst also returning anticipated profitability on written business
 towards our historical levels - in recent months core Motor Vehicle business
 has been written at an assessed sub-80% undiscounted combined operating ratio
 - which we have achieved at the same time as writing total GWP considerably
 higher than our expectations. This should contribute to continued improvement
 in the financial-year combined operating ratio for 2024, as business written
 in recent months starts to earn through and the impact of Taxi business
 written earlier in 2023 subsides.

 It is also pleasing to see Motorcycle now performing at around the required
 level and Taxi performance improving as planned.

 Our success so far this year is evident in the high premium levels and very
 strong solvency position which will allow sufficient headroom for further
 growth whilst allowing the Board flexibility in determining an appropriate
 dividend distribution at year-end in-line with our policy.

 I would like to thank all our people and shareholders, who have supported
 Sabre through an extended and challenging market, as we look to a bright and
 exciting future."

Investor enquiries                   01306 747 272
 Sabre Insurance Group plc            investor.relations@sabre.co.uk
 Geoff Carter / Adam Westwood

 Media enquiries                      020 7353 4200
 Teneo                                sabre@teneo.com
 James Macey White / Eleanor Pomeroy

 LEI Code: 2138006RXRQ8P8VKGV98

Business highlights for the first nine months of 2023

‒    Strong performance from our core Motor Vehicle book

‒  Gross written premiums ('GWP') up 34% year-to-date and up 61% versus Q3
2022

‒  In recent weeks, premium run-rate has been over 80% up year-on-year

‒  Increase in policy count, while maintaining continued focus on
profitability as a target and volume as an output. Core Motor Vehicle policy
count 222k at 30 September 2023 (30 June 2023: 211k)

‒  Significant rate increases mitigating the impact of claims inflation and
ensuring margins return towards historical levels for business written in
recent months

‒  Increase in solvency capital ratio reflects return towards historical
levels of underwriting profitability on core Motor Vehicle business and
profitable growth

‒    Good performance from Motorcycle book

‒  Ongoing focus on margin over volume - with rate increases expected to
drive improved loss ratio performance for 2023 vs 2022

‒  Policy count and premium growth impacted by the cessation of trading
with MCE Insurance, offset by increase in sales through our alternate channel.
Motorcycle policy count 45k at 30 September 2023 (30 June 2023: 48k)

‒    Taxi book performance improving as planned

‒  Taxi market remains challenging, significant underwriting actions
starting to show improved loss ratio performance but have reduced premium
run-rate vs 2022. Taxi policy count 13k at 30 September 2023 (30 June 2023:
14k)

‒    Underwriting performance across the portfolio in Q3 supports
expectation of an improvement in the combined operating ratio for H2 vs H1
2023. Expect combined operating ratio for 2023 at the higher end of 85% - 90%
on a discounted basis in-line with previous guidance

‒    Post-dividend solvency capital ratio as at 30 September 2023 of 191%
(30 September 2022: 163%)

‒    Expect to have sufficient capital to allow the Board flexibility in
determining an appropriate dividend distribution at year-end in-line with our
policy - an ordinary dividend payout ratio of 70% of adjusted profit after tax
and a distribution of surplus capital through special dividends

Market trends

‒    Growth in our GWP and policy count despite price increases suggests
market pricing correction has continued through Q3, with Sabre continuing to
see the benefits of acting early with respect to pricing

‒    Claims inflation for 2023 continues at around 10%, however rate
increases applied are sufficient to cover slightly higher levels of inflation
and improve loss ratios towards historical norms, from which we expect to see
the benefit in 2024

Full-year premium guidance raised; profitability reaffirmed

‒    Premium in recent months has been above expectations, therefore we
increase our overall 2023 full-year gross written premium year-on-year growth
expectation to 20% - 25%

‒    Reiterate profitability guidance provided at half-year, expect
discounted combined operating ratio for the full-year 2023 at the upper end of
the 85% - 90% range

‒    Premium growth and momentum in underwriting margin improvements will
earn through in 2024, which we expect to result in further improvement in
combined operating ratio in-line with previous guidance

Geoff Carter, Chief Executive Officer of Sabre, commented:

"Having stuck firmly to our 'profitability over volume' strategy through
four-years of persistent market under-pricing and periods of very high
inflation, we are now starting to show the benefits of our strategy as market
pricing continues to correct.

We have been able to increase prices at a level to cover high on-going
inflation whilst also returning anticipated profitability on written business
towards our historical levels - in recent months core Motor Vehicle business
has been written at an assessed sub-80% undiscounted combined operating ratio
- which we have achieved at the same time as writing total GWP considerably
higher than our expectations. This should contribute to continued improvement
in the financial-year combined operating ratio for 2024, as business written
in recent months starts to earn through and the impact of Taxi business
written earlier in 2023 subsides.

It is also pleasing to see Motorcycle now performing at around the required
level and Taxi performance improving as planned.

Our success so far this year is evident in the high premium levels and very
strong solvency position which will allow sufficient headroom for further
growth whilst allowing the Board flexibility in determining an appropriate
dividend distribution at year-end in-line with our policy.

I would like to thank all our people and shareholders, who have supported
Sabre through an extended and challenging market, as we look to a bright and
exciting future."

 Investor enquiries                   01306 747 272
 Sabre Insurance Group plc            investor.relations@sabre.co.uk
 Geoff Carter / Adam Westwood

 Media enquiries                      020 7353 4200
 Teneo                                sabre@teneo.com
 James Macey White / Eleanor Pomeroy

 LEI Code: 2138006RXRQ8P8VKGV98

 

 

 

 

 

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