Shares in Sabre Insurance (SBRE) suffered a double-digit markdown on the release of the motor insurer’s maiden results since floating in December 2017. This was despite gross premiums rising slightly, and the combined ratio – signifying claims and expenses as a percentage of premium income – improving from 69.3 per cent to 68.5 per cent. Underwriting profit also climbed 5.5 per cent to £59m. For Peel Hunt, these numbers were actually better than expected.
So what provoked the market’s disappointment? Some may have balked at the reference to uncertainty around the Ogden rate, which – together with reductions in personal injury frequency – creating pricing pressure towards the end of 2017 and into the first two months of 2018. This caused a “modest reduction” in premium income year on year. However, bosses have since taken pricing action – successfully returning premium income to the same run rate as last year. Moreover, Sabre reported a solvency coverage ratio of 160 per cent: the top of its 140-160 per cent preferred range. With so much surplus capital, special dividends look even more likely.
Analysts at Numis forecast gross premiums of £220m and EPS of 21.4p for the year to December 2018, against £211m and 20.9p in 2017.
| SABRE INSURANCE (SBRE) | ||||
| ORD PRICE: | 239p | MARKET VALUE: | £1.43bn | |
| TOUCH: | 239-240p | 12-MONTH HIGH: | 296p | LOW: 230p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 39p* | COMBINED RATIO: | 68.5% | |
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
| 2014 | 149 | 48.0 | 2.2 | nil |
| 2015 | 180 | 40.7 | 0.9 | nil |
| 2016 | 197 | 63.4 | 3.5 | nil |
| 2017** | 211 | 55.5 | -0.7 | nil |
| % change | +7 | -12 | -122 | nil |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £157m, or 63p a share **Sabre Insurance floated in December 2017 | ||||
