Sabre Insurance Group Plc · LSE:SBRE
Sabre Insurance — Investor Day (December 2024)
51 slides from Sabre Insurance's investor day presentation, December 2024
Slide 1: Sabre – A high-margin business with strong growth opportunities
Sabre – A high-margin business with strong growth opportunities December 2024
Slide 2: Welcome!
Welcome! Sabre is setting an ambitious earnings target for the medium-term… … whilst maintaining all the things that make us a great business Introducing Ambition 2030, our plan to reach at least £80m of profit before tax in 2030 2 Sabre Capital Markets Update
Slide 3: Presenting today
Presenting today Geoff Carter Adam Westwood Trevor Webb Matt Wright 3 Sabre Capital Markets Update
Slide 4: Agenda
Agenda Sabre – A proven 01 business model 02 Ambition 2030 03 Capital allocation 04 Q&A 4 Sabre Capital Markets Update
Slide 5: Sabre – A proven Business Model
Sabre – A proven Business Model Sabre’s core strengths
Slide 6: Sabre’s proven business model
Sabre’s proven business model Sabre is a unique UK based motor insurer, specialising in the higher margin non-standard and higher premium sectors. Sabre’s market positioning, combined with its differentiated pricing and claims capabilities, has allowed Sabre to deliver market leading underwriting pe
Slide 7: Sabre operates in an attractive market
Sabre operates in an attractive market Motor insurance is Motor insurance Capital requirements There is limited pricing a compulsory purchase purchasing is largely and the cost of regulation in the UK in the UK, providing price-led, with most reinsurance for new market meaning that good-value unlimi
Slide 8: Sabre’s positioning within the market
Sabre’s positioning within the market Sabre has particular expertise in non-standard, higher-premium risks, leveraging more than 20 years’ experience and data Whilst the market typically operates at low margins, Sabre targets a higher margin Sabre’s market share is currently reflecting the risk with
Slide 9: Insurers operate different business models
Insurers operate different business models Underwriting focus Mass-market, commoditised insurers Majority of profit through insurance premium Majority of profit from add-on products income and other related income streams Retains majority of underwriting risk Significant focus on volume Net insuranc
Slide 10: Sabre’s products
Sabre’s products Sabre currently sells three products: Sabre's business by product - Motor Vehicle (i.e. cars and vans) - Motorcycle - Taxi Motor Vehicle products are sold through insurance brokers and direct to customers – with both channels primarily reaching customers through price comparison web
Slide 11: Sabre’s products
Sabre’s products Since 2021, Sabre has complemented its core Motor Vehicle business with a Motorcycle product and a Taxi partnership The Motorcycle and Taxi lines provide resilience in the cyclical motor insurance market Both markets have been entered through low-cost partnerships with highly experi
Slide 12: Sabre achieves this consistent level of market outperformance through:
Sabre achieves this consistent level of market outperformance through: A rigorous focus on technical expertise and The dedicated support of c.170 colleagues, all emerging market conditions, with a proven history based in one site in Dorking, Surrey, primarily in of early identification of inflationa
Slide 13: Sabre delivers leading underwriting performance
Sabre delivers leading underwriting performance Market leading underwriting performance Controlled and attractive growth COR (%) Growth written premium (“GWP”) growth 160% 140% 5% 10-year CAGR GWP growth, across the insurance cycle 120% Market avg. 102% 225 100% 211 210 197 197 180 80% 173 169 171 1
Slide 14: Ambition 2030
Ambition 2030 Delivering at least £80m of profit in 2030
Slide 15: Ambition 2030
Ambition 2030 Sabre has ambitious medium term growth plans – to increase profit to at least £80m in 2030 These growth plans will be driven by initiatives that stay true to Sabre DNA – high-margin underwriting activities Growth will not be linear – and may accelerate and decelerate in various market
Slide 16: Key Strategic Objectives > £80m
Key Strategic Objectives Efficiency of direct distribution Core Motor Increase Profit Expand market position > £80m Direct Motorcycle Increase Profit Broker profit before tax in 2030 Continued controlled expenditure 16 Sabre Capital Markets Update
Slide 17: What’s new
What’s new We are making use of three core concepts in setting our growth target: We will target profit growth We will accelerate We are now ready to through balancing income growth by competing for expand our motorcycle and margin, whilst maintaining additional, slightly lower- product distribution
Slide 18: Key Strategic Objectives > £80m
Key Strategic Objectives Core Motor Increase Profit Expand market position > £80m profit before tax in 2030 18 Sabre Capital Markets Update
Slide 19: Target a margin to reflect policy risk
Target a margin to reflect policy risk For the existing portfolio our current margin is appropriate because of the relatively high-risk profile For less “high risk” business a modestly lower margin is appropriate By targeting a slightly lower margin the competitive footprint will be materially large
Slide 20: Option 1: Increasing income at consistent margin
Option 1 Increasing income at consistent margin Option 1 Current Discount All Impact Net Earned Premium $100 $120 $20 Net Loss Ratio 53% 55% 2pp Expense ratio 27% 28% 1pp COR 80% 83% 3pp Profit $20 $20 $0 N.B. Illustrative numbers only in table above, $ amounts are not reflective of £ income project
Slide 21: Option 2: Targeting different margins
Option 2 Targeting different margins Option 1 Option 2 Current Discount All Impact Current Discount New Impact Net Earned Premium $100 $120 $20 $100 $120 $20 Net Loss Ratio 53% 55% 2pp 53% 54% 1pp Expense ratio 27% 28% 1pp 27% 27% 0pp COR 80% 83% 3pp 80% 81% 1pp Profit $20 $20 $0 $20 $23 $3 N.B. Ill
Slide 22: Technology-powered, cutting-edge pricing
Technology- powered, cutting- edge pricing We have committed extensive effort and resource to developing an enhanced pricing infrastructure, which we are now rolling-out. This significantly expands our ability to deploy even more sophisticated pricing models This will allow us to combine our unique,
Slide 23: Where is the growth coming from?
Where is the growth coming from? Insurer market share by premium Insurer 1 Other insurers Sabre motor policies We are not targeting any specific competitor footprint Insurer 2 Insurer 10 We expect to win new Insurer 9 business from across the market Insurer 8 Insurer 3 Insurer 7 Insurer 6 Insurer 4
Slide 24: Sabre’s average premium is well above the market
Sabre’s average premium is well above the market % Policies sold by price Market 2023 average premium: £544 Sabre 2023 average premium: £1,000 - £1,250 . a) Up to 250 b) £250-£500 c) £500-£750 d) £750- e) £1000- f) £1250- g) £1500- h) £2000- i) £2500- j) £3000- k) £4000- l) £5000+ £1000 £1250 £1500
Slide 25: What does this mean in practice?
What does this mean in practice? We will continue to deliver our current target margin on our existing competitive footprint To drive additional growth, we will target a slightly higher loss ratio on lower risk business to allow us to pick up incremental business – moving down the ‘risk curve’ Overa
Slide 26: Key Strategic Objectives > £80m
Key Strategic Objectives > £80m Direct Motorcycle Increase Profit Broker profit before tax in 2030 26 Sabre Capital Markets Update
Slide 27: Our motorcycle business
Our motorcycle business In Q1 2025, we will start to expand our presence in motorcycle Sabre currently serves less than 3% of the c.1.4m vehicle motorcycle market (by volume) Launch of a new direct, on-line only brand in Q1 Operationally efficient, with 100% on-line sales and servicing. Webchat supp
Slide 28: Introducing…
Introducing… 28 Sabre Capital Markets Update
Slide 29: Timelines
Timelines 01 02 03 All foundations for these 2025 will be a year of Expect to see an impact initiatives are already in testing, transition and on absolute profit from place, having been staged roll-out 2026 onwards developed over the past two years All initiatives leverage existing Sabre strengths,
Slide 30: Capital Allocation
Capital Allocation Premium and profit growth accelerates toward 2030
Slide 31: Capital allocation and distribution priorities
Capital allocation and distribution priorities Capital management decision by 140% to 160% solvency coverage target Organic Investment Ordinary dividend Policy to pay out 70% of profit after tax Current strategic Attractive and Interim dividend mechanically one-third of prior objectives require no c
Slide 32: Full-year 2024 out-turn
Full-year 2024 out-turn Growing premium and profit - No change to guidance issued in the Q3 trading update - Anticipate our highest ever gross written premium in FY 2024 - FY 2024 profit expected to be within market expectation and well ahead of FY 2023 32 Sabre Capital Markets Update
Slide 33: Refreshed key performance indicators (“KPIs”)
Refreshed key performance indicators (“KPIs”) Sabre will now report ‘Traditional’ KPIs Income and profit Balance sheet ‘undiscounted’ net related to profitability KPIs will be reported: strength and capital insurance margin will continue to be efficiency measures as its primary key reported, includi
Slide 34: KPI targets
KPI targets Net insurance margin more usefully reflects the profitability of the business We expect to achieve a margin of 18% to 22% throughout the cycle, depending on market conditions - Critically, Sabre is not fixed to a single-point target margin, and will allow margin to flex modestly to maxim
Slide 35: Ambition 2030
Ambition 2030 At least £80m before tax in 2030 >£80m UW profit (lower margin) New sources of profit UW profit (new bike) will be additive and will complement growth in UW profit (traditional) our traditional business Investment return Net insurance margin 18% to 22% Other income Growth is not expect
Slide 36: Conclusion
Conclusion Delivering on our plan
Slide 37: Ambition 2030
Ambition 2030 Sabre plans to increase profit to at least £80m in 2030 We will expand our competitive footprint without compromising our underwriting discipline or margin on existing business We will grow our presence in the Motorcycle market through our direct brand & further broker relationships We
Slide 38: Q&A Thank you!
Q&A Thank you! 38 Sabre Capital Markets Update
Slide 39: Appendices
Appendices
Slide 40: Key performance indicators
Key performance indicators Clear and transparent reporting
Slide 41: Net insurance margin
Undiscounted net claims incurred + Expenses ÷ = 1 - Net insurance revenue Net insurance margin Gross written premium - Reinsurance premium + Instalment income +- Movement in unearned premium reserve (“liability for remaining coverage”) 41 Sabre Capital Markets Update
Slide 42: Profit before tax build-up
Net insurance revenue Other income Gross written premium + Investment Reinsurance income premium - Net insurance margin + = Profit before tax Instalment Discounting income credit +- Movement in unearned Net insurance premium reserve financial result (‘liability for remaining coverage’) ‘IFRS 17’ Imp
Slide 43: Return on tangible equity
Tangible net assets Total net assets Profit after tax ÷ - = Return on tangible equity Intangible assets (Average across the period) 43 Sabre Capital Markets Update
Slide 44: Expense ratio
Expenses ÷ = Net earned premium Expense ratio Gross written premium - Reinsurance premium +- Movement in unearned premium reserve (“liability for remaining coverage”) 44 Sabre Capital Markets Update
Slide 45: Net loss ratio
Net earned premium Undiscounted net claims incurred - Discounting credit ÷ = Net earned premium Net loss ratio Gross written premium - Reinsurance premium +- Movement in unearned premium reserve (“liability for remaining coverage”) 45 Sabre Capital Markets Update
Slide 46: Combined operating ratio
Discounted claims + Expenses ÷ = Combined Net earned premium operating ratio Gross written premium - Reinsurance premium +- Movement in unearned premium reserve (“liability for remaining coverage”) 46 Sabre Capital Markets Update
Slide 47: Example – 2023 result
Example – 2023 result + Undiscounted net Operating claims incurred expenses £96.0m £46.8m ÷ = 1 - Net insurance revenue Net insurance margin - + 10.6% Gross written premium Reinsurance premium Instalment income £225.1m £(28.5)m £3.8m +- Movement in unearned premium reserve (“liability for remaining
Slide 48: Example – 2023 result
Example – 2023 result Net insurance revenue Other income Gross written premium £1.2m £225.1m + Investment income Reinsurance premium £3.8m + = Net insurance Profit £(28.5)m margin before tax - 10.6% £23.6m Instalment income Discounting £3.7m credit £8.2m +- Movement in unearned Net insurance premium
Slide 49: Example – 2019 result
Example – 2019 result + Undiscounted net Operating claims incurred expenses £94.4m £40.1m ÷ = 1 - Net insurance revenue Net insurance margin - + 28.2% Gross written premium Reinsurance premium Instalment income £197.0m £(20.4)m £4.1m +- Movement in unearned premium reserve (“liability for remaining
Slide 50: Example – 2019 result
Example – 2019 result Net insurance revenue Other income Gross written premium £1.2m £197.0m + Investment income Reinsurance premium £2.4m + = Net insurance Profit £(20.4)m margin before tax - 28.2% £56.4m Instalment income Discounting £4.1m credit N/A +- Movement in unearned Net insurance premium r
Slide 51: Disclaimer
Disclaimer LEGAL NOTICE This presentation has been prepared to inform investors and prospective investors in the secondary markets and other market participants about Sabre Insurance Group plc and its subsidiaries (the "Group") and does not constitute an offer of securities under any applicable legi