Sabre Insurance Group Plc · LSE:SBRE
Sabre Insurance — H1 2024 Earnings Presentation
31 slides from Sabre Insurance's earnings presentation, Jul 30, 2024
Slide 1: 2024 Half-Year Results
2024 Half-Year Results 30 July 2024
Slide 2: Agenda and Presenters
Agenda Presenters and Q&A 1 Highlights Geoff Carter, CEO 2 Summary of trading Adam Westwood, CFO 3 The UK motor insurance market Geoff Carter Adam Westwood CEO CFO Geoff Carter, CEO 4 Legislative and regulatory focus Geoff Carter, CEO 5 Sabre’s strategy Geoff Carter, CEO 6 Outlook and summary Geoff
Slide 3: Highlights
Highlights Geoff Carter INSURANCE
Slide 4: Strong year-on-year growth at target margins
Strong year-on-year growth at target margins Strong financial result Healthy Growth Good progress on key Attractive dividend − HY profit £20.2m vs − GWP up 26% year-on- strategic initiatives flow £4.8m for HY 2023 year − Evolving pricing − Interim dividend of 1.7p − 10 ppt year-on-year − Core Motor
Slide 5: Summary of trading for the half-year ended 30 June 2024
Summary of trading for the half- year ended 30 June 2024 Adam Westwood
Slide 6: Half-year 2024 financial performance
Half-year 2024 financial performance Disciplined underwriting is delivering profitable growth Net loss ratio and strong capital generation 80.0% 57.3% 62.0% 56.3% 60.0% Unaudited Audited 40.0% 2024-HY 2023-HY 2023-FY 20.0% Gross written premium £125.7m £99.5m £225.1m 0.0% Insurance revenue £121.9m £
Slide 7: Underwriting performance
Underwriting performance ‒ Improvement in current-year loss ratio as price increases earn-through ‒ H1 generally carries greater uncertainty than full-year due to less ‘developed’ claims ‒ Low impact from prior-year claims in H1 2024 ‒ Discounting credit of 2.4ppts below H1 2023 reflecting slightly
Slide 8: Underwriting by product
Underwriting by product Net earned premium and claims by product ‒ Growth in core Motor Vehicle £100m business has shifted mix £90m towards the more profitable, £80m established product £70m ‒ Reduction in Motorcycle £60m premium result of exiting £50m distributor relationship in Q2 £40m 2023 £30m £
Slide 9: Attractive Capital Generation
Attractive Capital Generation Post dividend Solvency Capital Ratio of 185% Interim dividend of 1.7p (2023: 0.9p) in-line with policy ‒ We continue to benefit from strong profitability and an efficient capital model ‒ Strong capital generation led to a period-end post-dividend solvency ratio of 185%
Slide 10: The UK motor insurance market and claims inflation
The UK motor insurance market and claims inflation Geoff Carter
Slide 11: Fully-focussed on market developments
Fully-focussed on market developments ‒ Claims inflation is likely to remain high for much of 2024 as easing in damage claims is offset by increased bodily injury claims costs. Likely to remain elevated into 2025 ‒ The market continues to be dynamic, with lots of players, and highly competitive ‒ Ab
Slide 12: A dynamic market
A dynamic market Possible positive factors Possible challenging factors ‒ Rational market price ‒ Irrational pricing behaviour increases ‒ Underlying claims inflation ‒ Stabilisation of used car ‒ Impact of global politics on prices supply chain ‒ Continued improvements in ‒ Cost of living challenge
Slide 13: Pricing for claims inflation
Pricing for claims inflation ‒ Overall CPI inflation is expected to return to normal (circa 2.0% to 2.5%) over the second half of the year ‒ However, many of the goods and services that make up claims pricing demonstrate a lag compared to overall CPI inflation or are specific to insurance claims Fix
Slide 14: Pricing for claims inflation
Pricing for claims inflation Personal injury ‒ Public sector and minimum wage increases drive and cost pressures in the care industry ‒ On-going scarcity of resource in care industries ‒ Potential “Whiplash” tariff increase c.20%? ‒ Risk that small claims track limit does not increase from £5,000. C
Slide 15: Motor insurance competitive landscape
Motor insurance competitive landscape Rational Well-funded ‒ Calculated risk on claims inflation ‒ Cautious on claims inflation Profitable ‒ Maintaining margins ‒ Low price increases ‒ Controlled sacrifice of margin for ‒ Able to sacrifice volume if necessary volume “Corridor of uncertainty” Attempt
Slide 16: Legislative and regulatory focus
Legislative and regulatory focus Geoff Carter
Slide 17: Well-positioned for current environment
Well-positioned for current environment ‒ Significant focus on motor insurance premiums in 2023 and 2024 ‒ Association of British Insurers published a ‘Roadmap to Tackle Insurance Costs’ in February 2024 ‒ Manifesto published by Labour in June 2024 named car insurance premiums as a cost that should
Slide 18: Well-positioned for current environment
Well-positioned for current environment ‒ All products subject to robust fair value assessment, with action having been taken where appropriate ‒ Transparent and fair valuation of claims (e.g. total loss) ‒ Consistent target margin across products and market segments with very wide underwriting foot
Slide 19: Sabre's Strategy
Sabre’s Strategy Geoff Carter
Slide 20: Our core strengths
Our core strengths We have continued to develop our core business strengths… ‒ Highly integrated teams and business processes ‒ Short, effective feedback loops between Claims and Pricing teams ‒ Large and consistent dataset for non-standard private car business ‒ Efficient and expert operating struc
Slide 21: Driving success
Driving success Where are we now? − Re-established our long-standing successful strategy, following disruption caused by Covid and high inflation − Demonstrated focus on profitability, not volume − Showed resilience across the market cycle even under stress scenarios − Highest ever level of premium
Slide 22: Market positioning
Market positioning Sabre’s 2023 net combined ratio remains amongst the best in the market Market: 103.1% Source: EY July 2024 Motor Insurance Seminar Sabre Insurance Group plc 2024 Half-year results 22
Slide 23: Outlook and Summary
Outlook and Summary Geoff Carter
Slide 24: Confirming outlook for 2024
Confirming outlook for 2024 Maintain focus on “profitability, not volume” strategy ‒ We are in a strong position for H2 2024 and beyond ‒ Higher than claims-inflation premium growth anticipated. Combined operating ratio within our 75% to 80% range ‒ We remain vigilant in identifying claims trends an
Slide 25: A strong return to form
A strong return to form The first half of 2024 continued the strong performance of H2 2023 Gross Written Premium for 2024 expected to be our highest ever Combined operating ratio is in line with expectations, supporting a strong profit and dividend Sabre Insurance Group plc 2024 Half-year results 25
Slide 26: Q&A
Q&A Geoff Carter, Adam Westwood, Matt Wright, Trevor Webb
Slide 27: Appendices
Appendices INSURANCE
Slide 28: Reconciliation to KPIs
Reconciliation to KPIs Gross written premium 30 June 2024 30 June 2023 31 Decem ber 2023 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 w ritten prem ium 125,722 99,465 225,098 Net loss ratio 30 Ju
Slide 29: Reconciliation to KPIs
Reconciliation to KPIs Expense ratio 30 June 2024 30 June 2023 31 Decem ber 2023 Other operating expenses 14,069 13,243 26,587 Add: Amortisation of insurance acquisition cash flow s 8,782 6,636 14,057 Add: Directly attributable claims expenses 3,763 2,991 6,085 Total operating expenses 26,614 22,870
Slide 30: Reconciliation to KPIs
Reconciliation to KPIs Combined operating ratio - Undiscounted 30 June 2024 30 June 2023 31 Decem ber 2023 Undiscounted net loss ratio 59.7% 66.2% 61.6% Expense ratio 26.3% 31.8% 30.0% Undiscounted com bined operating ratio 86.0% 98.0% 91.6% Net profit margin 30 June 2024 30 June 2023 31 Decem ber 2
Slide 31: 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
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