2021 Q3 Trading Update 2019 - Sabre Insurance
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2021 Q3 Trading Update 2019
Results Context
‒ Continued soft market, ahead of FCA pricing reforms. Market prices continue to lag claims
inflation
‒ Material, temporary reduction in normal addressable market, due primarily to the impact of
COVID-19 reducing the flow of new drivers and delays in new car registrations
‒ Rigorous application of our long-term strategy - treat volume as an output from disciplined
pricing, not a target
‒ Have written at the top end of our long-term combined operating ratio (COR) range to
optimise profits within addressable market
‒ Natural short-term reduction in premium and earnings to protect long-term health of the
business
‒ We are satisfied with our current volumes and margin ahead of anticipated growth
opportunities
2Q3 Trading Update
‒ Gross written premium for the nine months ending 30 September 2021 was £126.7m(1)
(nine months ending 30 September 2020: £139.2m)
‒ Combined operating ratio for 2021 expected to be towards the upper end of the of the
target 75% – 80% range
‒ Continued organic capital generation with a solvency coverage ratio of 175% as at 30
September 2021 (30 September 2020: 186%)
3Traffic Levels
Traffic levels vs pre-pandemic
140%
1st National 2nd National 3rd National
lockdown in lockdown in lockdown in
England England England
120%
100%
80%
60%
40%
20%
0%
‒ Traffic volumes return to ‘pre-COVID’ levels
Source: https://www.gov.uk/government/statistics/transport-use-during-the-coronavirus-covid-19-pandemic
4New Drivers
Monthly driving test passes 2019 to Jun 2021
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Tests taken Tests passed
‒ Flow of new drivers into the market suppressed since lockdowns began
Source: https://www.gov.uk/government/statistical-data-sets/driving-test-statistics-drt#driving-test-and-motorcycle-test-pass-rates-drt01
5New Car Registrations
Monthly driving test passes 2019 to Jun 2021
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Tests taken Tests passed
‒ New car sales, which drive policy ‘shoparound’, depressed during 2020/21
Source: https://www.smmt.co.uk/vehicle-data/car-registrations/
6Claims Inflation
6.7% CAGR
Year-on-year care cost inflation
Source: Innovation Group 8.0%
7.0%
6.0%
5.0%
4.0%
‒ Inflation in care costs and parts 3.0%
2.0%
remains significant 1.0%
0.0%
2016 2017 2018 2019 2020
Year-on-year inflation
Source:
https://www.ons.gov.uk/surveys/informationforbusinesses/businesssurveys/annualsurveyofh
oursandearningsashe
7Further Claims/Cost Inflation
Pressure emerging in
Clear evidence repair network due to
MIB Levy – 21 % Increase in used car emerging of care skills labour shortage,
increase for 2022 valuations worker shortages and part and paint supply
wage inflation and hire/courtesy
vehicle availability
We take all these factors into account in our view of cost inflation and subsequent pricing actions
8Pricing Context
Pricing discipline maintained – continue to price within our target 75% to 80% COR range
Year-on-year positions difficult to demonstrate due to:
‒ Claims inflation (which we have sought to cover fully)
‒ Temporary “lockdown-period” discounts reflecting likely lower claims frequency
‒ Discounts applied to reflect likely Ministry of Justice reform (whiplash) benefits
Note: Price increases highly unlikely to be apparent in average premiums due to these factors
and risk mix changes, especially reduced proportion of new to market younger drivers.
9Quote Volumes
Quote requests received through ‘big 4’ aggregators vs the same period in 2019
15.0%
10.0%
5.0%
0.0%
Jan-20 Mar-20 Jun-20 Sep-20 Dec-20
. Mar-21 Jun-21 Sep-21
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
-30.0%
Source: Sabre analysis
‒ Quote volumes in the market did not bounce back as strongly as in 2020, but are
returning to normal levels
10Growth in Policy Count
Live Policy Count
290,000
285,000
280,000
275,000
270,000
265,000
260,000
255,000
250,000
31-Dec-20 31-Mar-21 30-Jun-21 30-Sep-21
11Outlook
‒ Taking hard decisions to allow volumes to soften in unprecedented market conditions has
left us strongly positioned to take advantage of anticipated growth opportunities
‒ Natural growth as market pricing corrects, reflects FCA changes and addressable market
returns to growth
‒ New development initiatives, with flex product due to come online in Q4 this year and
further initiatives in the pipeline – we will update on these at the year-end results
announcement
‒ Some signs of tentative market price increases, and improving Sabre competitive position in
recent weeks
‒ No structural market changes identified that undermine our ambitions or strategy
12Disclaimer
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 legislation or an offer to sell or solicitation of any offer to buy, or otherwise constitute an invitation or
inducement to any person to subscribe for or otherwise acquire or underwrite, any securities or other financial instruments or any
advice or recommendation with respect to any securities or other financial instruments. This presentation contains forward-
looking statements concerning the financial condition, results, operations and business of the Group which are necessarily subject
to risks and uncertainties because they relate to events and depend upon circumstances that may or may not occur in the future.
For example, statements regarding expected revenues, margins, earnings per share, market trends and the Group's product
pipeline are forward-looking statements. Words such as "aim", "plan", "intend", "anticipate", "well placed", "believe", "estimate",
"expect", "target", "vision", "consider" or the negative of these terms and other similar expressions are generally intended to
identify forward-looking statements. These forward-looking statements are based upon current expectations and assumptions
regarding anticipated developments and other factors affecting the Group and are not guarantees of future performance. There
are a number of factors, many of which are beyond the Group's control, that could cause actual results or developments of the
Group's business and operations to differ materially from those expressed or implied by these forward looking statements. Some
of those factors are discussed in the Group's Annual Report and Accounts 2020 in the section headed "Principal risks and
uncertainties". Any forward-looking statement is based on information available to the Group as of the date of preparation of this
presentation and the Group cautions against placing undue reliance on any forward-looking statement. All written or oral forward-
looking statements attributable to the Group are qualified by this caution. Except as required by any applicable law or regulation,
the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking
statement contained in this presentation to reflect any change in the Group’s expectations or any change in events, conditions or
circumstances on which any such statement is based. This presentation may contain supplemental non-GAAP financial and
operating information which the Group believes provides valuable insight into the performance of the Group's business. Whilst
such information is considered important, it should be viewed as supplemental to the Group's financial results prepared in
accordance with International Financial Reporting Standards and not as a substitute for them. Nothing in this presentation should
be construed as a profit forecast.
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