Profits down two-thirds at Sabre in 2022

The provider’s gross written premium ticked up marginally from £169.3m to £171.3m. Sabre’s motor premium was down year-on-year at £134.9m from £164.6m.

According to the insurer, the motor book remained “suppressed in 2022 due to continued market-wide underpricing”. In its view, “a material correction is necessary”.

Inflation

Sabre reported that it had maintained a disciplined approach to pricing delivering rate increases of around 30% in 2022. However, the current year loss ratio for the line still increased by in the region of 4% to 60.4%.

The actions we have taken have enabled us to grow supplementary product lines, deliver a profit and announce a special dividend in what has been a highly challenging market.

Geoff Carter

Sabre cited being hit by “an extraordinary period of inflation” driven by the conflict in Russia and Ukraine, after effects of the Covid-19 pandemic and Brexit, together with a lack of car parts and staff increasing repair and car-hire costs.

Motorcycle

In November 2021, Sabre signed up to be MCE Insurance’s exclusive underwriter as it moved into the motorcycle market.

It followed this up joining the panel of Bennetts in the first quarter of 2022.

Splitting out motorcycle business, Sabre reported GWP of £23.1m with a net loss ratio of 118.4%.

Taxi

Sabre also entered the taxi market in January 2022 as an exclusive underwriting partner for taxi and courier insurance specialist Freeway UK Insurance Services. Taxi delivered £13.3m of GWP with a net loss ratio of 106.8%.

Sabre acknowledged that in-year performance for the early stage motorcycle and taxi business “was below expectation”, and the timing was in some ways “slightly unfortunate”.

It noted that it did not expect the lines to generate a significant contribution to profit in the first year, but had not anticipated being hit with challenges on the motor book, and the impact of claims inflation in the portfolios.

Sabre detailed it had known the motorcycle book needed extensive re-underwriting and pricing to get to a sustainably profitable level, but found the scale was greater than anticipated. However, it said this has now been done, and the product is “on a firm pathway to profitability in 2023”.

Slower start

Similarly, the business accepted that the taxi portfolio got off to “a slightly slower than assumed start” flagging the need to re-platform administration systems.

Again, Sabre stated that this has been done, and it is “focusing on capitalising on the growth opportunities ahead as rates in this market increase”.

Speed bump

Looking to the future, Sabre said it was not “downbeat”, and the 2022 loss ratios across the market would later be seen as “a speed bump rather than the start of a trend”.

It stressed that at the end of 2022 it was writing new business in line with its target COR.

Sabre had been one of the first insurers to warn of the dangers of inflation 12 months ago, arguing that rate was needed and the pressure was getting worse.

It updated: “Our very early call on inflation and immediate pricing actions to correct this, regardless of the effect on volumes, means we anticipate a relatively rapid bounce back towards our target normal levels of profitability through 2023 and into 2024, albeit that inflation will provide some overhang in 2023.”

Standards

Geoff Carter, CEO at Sabre, said: “While the 2022 result is disappointing by our own standards, due to the impacts of extraordinary levels of inflation, I am hugely encouraged by how quickly we identified and corrected for these challenges, and the strong foundation we have maintained.

“The actions we have taken have enabled us to grow supplementary product lines, deliver a profit and announce a special dividend in what has been a highly challenging market. I believe our performance is highly creditable in a market context.”

Carter concluded: “We will continue to focus rigorously on treating volume as an output, and not a target, and on maintaining our historic strengths.”

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