Sabre Insurance’s (SBRE) half-year results were broadly positive, with all key metrics moving in the right direction. Indeed, the loss ratio – denoting the ratio of paid insurance claims to premiums earned – fell to 45.7 per cent, from 49.6 per cent. Meanwhile, the combined ratio – denoting claims and expenses as a percentage of premium income – improved from 71.7 per cent to 68.6 per cent; particularly strong when one considers that the insurer targets the mid-70s.
Most importantly for income-seekers, the solvency coverage ratio reached 209 per cent, or 179 per cent after accounting for the 7.2p interim dividend. This trumps bosses’ preferred range of 140-160 per cent, increasing the likelihood of a special dividend at the full-year stage.
Still, there’s the wider industry context to consider. In May, a trading update revealed that competitive pricing in the first two months of 2018 – as per the last few weeks of 2017 – had led to a modest reduction in premium income year-on-year. And, within the latest results, management referred to an apparent “phase of weaker pricing” for the market. But it reckons Sabre’s “non-standard” market positioning should help to insulate it from such pressures. Sabre focuses on the higher-average-premium end of the market, where there is typically less competition.
Analysts at Barclays forecast gross written premiums of £214m and EPS of 21.2p for 2018, against £211m and 14.5p in 2017.
SABRE INSURANCE (SBRE) | ||||
ORD PRICE: | 281p | MARKET VALUE: | £ 700m | |
TOUCH: | 281-282p | 12-MONTH HIGH: | 296p | LOW: 227p |
DIVIDEND YIELD: | 2.6% | PE RATIO: | na | |
NET ASSET VALUE: | 104p* | COMBINED RATIO: | 68.6% |
Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
2017* | 109 | 28.0 | -0.2 | nil |
2018 | 109 | 32.0 | -0.1 | 7.2 |
% change | - | +14 | - | - |
Ex-div: | 23 Aug | |||
Payment: | 20 Sep | |||
*Includes intangible assets of £157m, or 63p per share**Sabre Insurance floated in December 2017 |