Half-year Report 2025

Half-year Report 2025

Strong margins and earnings on-track for full-year

Good momentum towards Ambition 2030 target

Sabre Insurance Group plc (the "Group" or "Sabre"), one of the UK's leading motor insurance underwriters, reports its half-year results for the six months ended 30 June 2025.

Key financial and operational highlights

- Healthy premium volumes being written at target margins

- Excellent underwriting performance with net insurance margin in line with target and significant improvement in loss ratio

- Profit before tax of £25.5m, a 26.2% increase on the same period in 2024 (HY 2024: £20.2m)

- Strong solvency underpinned by continued organic capital generation

- Interim dividend increased by 100% and £5m share buyback launched

- Operational and strategic initiatives are on-track, including the successful launch of our direct Motorcycle product

- On track to deliver Ambition 2030 targets, including strong levels of profitability in 2025 and beyond

- Continue to target absolute profit growth through balancing income and margin whilst maintaining resolute underwriting discipline

Geoff Carter, Chief Executive Officer of Sabre, commented:

"I am very pleased with our position at the halfway point of the year. We have continued to write measured but healthy volumes of business at our target loss ratios through the continued soft part of the market pricing cycle. We have maintained cautious claims inflation assumptions, and focussing on margins not volumes will help protect us against any external macro shocks. This also positions us well to resume strong growth as the market cycle turns - which we still anticipate being later this year.

We have continued to make good progress towards our Ambition 2030 targets; in particular, we were pleased with the launch of our direct Motorcycle product which went to market on schedule and has delivered encouraging early results. I expect us to begin testing of differentiated car insurance rates in H2, in-line with the timeline set out at our December 2024 Capital Markets Event. 

We have ended the first half of the year in a strong capital position and our first share buyback programme is progressing well. Our interim dividend is double that paid in 2024.

We remain confident of delivering a strong profit in 2025, in-line with 2024, and an attractive dividend. Sabre is well placed to achieve strong levels of absolute profit growth in the years ahead - delivered both by our margin over volume strategy and Ambition 2030 initiatives and targets. This will underpin our commitment to sustainable and attractive total shareholder returns."

Summary of results

(1) = 30 June 2025 ratios include the impact of the share buyback. Share buyback not reflected in 2024 ratios.

Strategic initiatives

- We are continuing to follow our long-established strategy of balancing volume and margin in order to maximise absolute profit and returns, and have continued to write comfortable levels of business despite continuing soft market conditions

- We have made solid progress with key strategic initiatives related to our "Ambition 2030" - to deliver a profit before tax of at least £80m in 2030:

- 'Sabre Direct' Motorcycle brand launched

- Pricing platform enhancements due to begin testing later in 2025

- All initiatives remain on-track with the timetable set out at our Capital Markets Event in December 2024

Market trends

- Following price reductions across the market in 2024 and early 2025, price decreases appear to have slowed or stopped in recent months, supporting our view that premium increases should return in H2 2025. We are well placed to return to growth in as market conditions improve

- Claims inflation has continued at elevated levels in 2025, which we consider is at mid-to-high single-digits

- We have maintained our cautious approach to pricing and reserving, fully covering the cost of claims

- We continue to expect market pricing to increase to meet the inflating cost of claims as the delta between pricing and claims costs has widened during 2025

Performance in 2025

- We have delivered a net insurance margin well inside our 18% to 22% target range, with continued improvement in loss ratio, particularly in core Motor Vehicle where we recorded a net loss ratio of 48.1% (HY 2024: 56.7%)

- Overall net loss ratio of 54.9% shows on-target performance across the business as a whole. Impact of a small number of large claims on Motorcycle and Taxi has obscured good underlying profitability in those products, which remain a small part of total income for the Group

- In-line with Sabre's strategy, premium levels have been allowed to reduce whilst market conditions are weak, ready to return to growth when market conditions are favourable

Shareholder returns

- Continued strong solvency position of 194.3% pre-dividend, 180.9% post-dividend, reflecting our robust underwriting performance, which continues to generate capital

- Interim dividend of 3.4p per share (2024: 1.7p per share)

- Share buyback commenced on 1st July 2025 and is progressing well

Legal and regulatory environment

- On 22nd July 2025, the FCA published a suite of documents outlining their "Roadmap for Retail Insurance" including an analysis of claims costs, an interim report on the study into premium financing and an evaluation of the General Insurance Pricing Practices Remedies

- We were encouraged to see the FCA confirm that claims inflation, and the compensating premium increases, were being primarily driven by external factors largely outside of insurers' direct control

- The FCA also confirmed that it is unlikely to make material market-wide interventions around the provision of premium finance, and we expect action to be taken on an individual firm basis where required. The existing Consumer Duty and Fair Value rules should be sufficient to address this

- Sabre employs a robust Consumer Duty framework and therefore we do not anticipate any material impact on Group profit regardless of the approach taken. We are pleased with this significant reduction in regulatory uncertainty

Outlook

- We remain confident in our ability to deliver at least £80m of profit before tax in 2030

- More material contribution to premium from Ambition 2030 initiatives expected from 2026 onwards

- Guidance reiterated for the full-year:

- Anticipate net insurance margin within our target range

- Expect gross written premium to be slightly lower than 2024 given relatively weaker market conditions in H1 2025

- Forward-looking claims inflation in mid-to-high single-digits

There will be a call for analysts and investors at 0930hrs on Thursday, 31 July 2025. For details, please contact [email protected] or find the registration link here: Results Presentation

Enquiries

Dividend calendar

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

The Sabre Insurance Group plc LEI number is 2138006RXRQ8P8VKGV98.

Forward-looking statements disclaimer

Cautionary statement

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Sabre's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Sabre's business, results of operations, financial position, prospects, growth or strategies and the industry in which it operates.

Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, Sabre disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.

Financial and business review

Highlights

(1) = Alternative performance metrics are reconciled to the IFRS reported figures in the Financial Reconciliations section

(2) = 30 June 2025 ratios include the impact of the share buyback. Share buyback not reflected in 2024 ratios.

In the first half of 2025 Sabre has delivered a profit before tax of £25.5m, a 26.2% increase on the same period in 2024 and a demonstration of the strength of Sabre's model, having been achieved during the weakest part of the current pricing cycle, during which prices have fallen in 2024 and 2025 to date. In-line with Sabre's strategy, premium levels have been allowed to reduce whilst market conditions are weak. The Group has reported a net insurance margin of 19.0%, comfortably within the target range of 18% to 22% set out at the December 2024 Capital Markets Event. Sabre remains on track to deliver a strong profit for the full-year as we progress towards the Ambition 2030 target of a profit before tax of at least £80m in 2030. 

The £5m share buyback programme announced at the year-end results began on 1st July following regulatory approval and is progressing well. The full impact of the share buyback is reflected in both our pre- and post-dividend capital ratios of 194.3% and 180.9% respectively. Capital generation has been strong as expected in the first half of the year, and we have announced an interim dividend of 3.4p per share in-line with our policy. We will consider an appropriate allocation and distribution of any excess capital at our year-end results.

Insurance revenue

We have continued to write comfortable levels of premium in the first half of 2025, against a backdrop of continued under-pricing across the market, with decreases in average premiums across the period unreflective of the increasing costs of servicing policies - a trend which we expect to reverse during the second half of this year. Having protected our margins through reflecting the actual cost of claims in our pricing, which ultimately optimises profit, we have seen volumes dip in an expected and manageable fashion - and are ready to return to growth when market conditions become more favourable. 

As set out at the December 2024 Capital Markets Event we expect to implement our 'Ambition 2030' initiatives carefully over the next two years and expect to see the benefits from these from 2026 onwards. The new Motorcycle product, 'Sabre Direct', launched successfully in April and is showing great potential, but volumes are being kept at deliberately low levels whilst we gain comfort in the accuracy of our pricing models and underwriting processes. The enhanced pricing infrastructure, which will allow us to expand our competitiveness, remains on-track to test in the later part of this year, with implementation expected in 2026. 

The Motorcycle and Taxi books overall remain a small part of total income, with Taxi remaining at relatively low levels whilst market premiums remain unattractive. 

The 'unearned' element of the liability for remaining coverage represents the element of written premium covering future periods, which has the effect of smoothing gross earned premium ("GEP") (and therefore insurance revenue) over time, so where there is a big change in written premium, insurance revenue will change more slowly.

Customer instalment income reflects the interest income charged on instalment policies and remains a relatively small percentage of the Group's total insurance revenue. 

Insurance expense

(1) Includes discounting on Periodic Payment Orders ("PPOs")

(2) Calculation of undiscounted net loss ratio allows for the impact of discounting on long-term non-life annuities, Periodic Payment Orders ("PPOs"), consistent with presentation under IFRS 4.

Sabre delivered an excellent underwriting performance in the first half of 2025, with a return to releases from prior-years, an overall undiscounted prior-year loss ratio of (6.3%), and an overall loss ratio of 54.9%, allowing the Group to deliver a net insurance margin of 19.0%, within its target range of 18% to 22% despite a slight increase in expense ratio to 27.7% resulting primarily from the decrease in net earned premium.

The core Motor Vehicle loss ratio was particularly strong, at 48.1%, an improvement of 8.6 ppts over the same period in 2024. This is the result of the current year performing as expected and slightly higher than normal releases from prior years. Motorcycle and Taxi loss ratios have been impacted by a small number of large claims, which has an outsized impact on the half-year loss ratios over the 6-month period where earned premium is very low. We don't see the relatively poor loss ratios reported at the interim as being indicative of the overall performance of these books, with Motorcycle business in particular expected to perform well across the full-year. We remain cautious on the Taxi business given wider market conditions. 

Other operating expenditure

The expense ratio has increased slightly to 27.7% against 26.3% for the last full-year. This is due to the decrease in insurance revenue set against normal inflationary increases in the Group's operating expense base. Whilst the Group maintains a high proportion of variable costs (in particular acquisition costs) which significantly decrease the impact of volume-based leverage, a small increase in expense ratio is expected when market conditions are less favourable. 

Overall, the cost base remains tightly controlled, with no unusual or unexpected expenditure. The Group continues to invest in recruiting and retaining top talent across the business and in building and maintaining its secure IT platforms. The impact of this investment on the overall expense base remains small.

Other income

Interest revenue

Interest revenue reflects the yield achieved across the Group's investment portfolio. The increase in interest revenue reflects the higher yield gained through reinvesting matured assets as well as an increase in the total assets invested during the year. The Group's investment strategy remains unchanged, being invested in a low-risk mix of UK Government bonds, other government-backed securities and diversified investment-grade corporate bonds. 

Fair value gains and losses are taken through Other Comprehensive Income and largely reflect market movements in the yields of risk-free and low-risk assets. We do not expect to realise any material market value movements within profit. 

Other income

Other income, related to non-insurance revenue earned such as product fees (excluding instalment interest) and commissions, remains a very small element of the Group's income.

Net insurance finance result

Net insurance finance result reflects the run-off of discounting applied to insurance liabilities under IFRS 17. As cash flows move towards settlement, the total level of discounting is reduced and this reduction is reflected here. We generally expect the overall impact of IFRS 17 discounting (the net of the discounting credit on claims and the insurance finance expense) to be immaterial in the context of the overall Group result.

Taxation

In the first half of 2025 the Group recorded a corporation tax expense of £6.5m (HY 2024: £5.1m), with an effective tax rate of 25.7%, (HY 2024: 25.3%). It is slightly higher than the current 25% UK rate of corporation tax mainly due to the Group's employee share schemes. The Group has not entered into any complex or unusual tax arrangements during the period. 

Earnings per share

Basic earnings per share of 7.64p is proportionate to profit after tax. Diluted earnings per share is similarly proportionate to profit after tax, taking into account the potentially dilutive effect of the Group's share schemes. No shares have been issued or cancelled during the period, however we expect the number of shares in issue to reduce in the second half of 2025 due to the ongoing share buyback programme that started on 1 July 2025.

Cash and investments

The level of cash retained reflects Sabre's normal liquidity requirements and there has been no change in the overall investment strategy, with UK Government bonds and other government-backed assets remaining the majority of the portfolio, with c.30% of invested assets held in investment-grade corporate bonds. 

Insurance liabilities

The Group's net insurance liabilities continue to reflect the underlying profitability and volume of business written. Generally, the gross insurance liabilities are more volatile and impacted by the receipt and settlement of individually large claims. The level of net insurance liabilities held remains broadly proportionate to the volume of business written along with the inflation applied to claims costs. 

Leverage

The Group continues to hold no external debt. All of the Group's capital is considered Tier 1 under the UK regulatory regime. The Directors continue to hold the view that this allows the greatest operational flexibility for the Group. 

Dividends and solvency

The interim dividend proposed is in line with the Group's current policy to pay an ordinary interim dividend equal to one third of the prior-year's full interim dividend. 

Note that the Group disclosed at its full-year results that from 2025 onwards, the Group has increased the maximum ordinary dividend to 80% of profit after tax. This allows for an ordinary dividend much closer to historical levels of distribution. 

Excluding the capital required to pay this interim dividend, the Group's SCR coverage ratio at 30 June 2025 is 180.9%. The Group has received regulatory approval for the £5m buyback programme announce at the full-year results and is currently proceeding with that programme as planned. The programme is expected to be completed well in advance of the end-date of 31 December 2025.

Condensed Consolidated Profit or Loss Account

For the six months ended 30 June 2025

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2025

Condensed Consolidated Statement of Financial Position

As at 30 June 2025

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2025

(1) On 30 June 2025, Sabre Insurance Group plc entered into an irrevocable agreement to acquire £5m of ordinary shares for cancellation. Accordingly, a liability of £5m has been recorded in the balance sheet with a corresponding amount in equity. As at 30 June 2025, £0m of shares had been acquired under the programme (see Note 11 for further information).

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2025

Notes to the Condensed Consolidated Financial Statements

For the six months ended 30 June 2025

1. General information

The Condensed Consolidated Interim Financial Statements comprise the results and balances of the Group for the six-month period ended 30 June 2025, the comparative period for the six months ended 30 June 2024 and the year ended 31 December 2024. The information in the Condensed Consolidated Interim Financial Statements is unaudited and does not constitute statutory accounts as defined in s.434 of the Companies Act 2006. The independent auditor's report on the Group accounts for the year ended 31 December 2024 is unqualified, does not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and does not include a statement under s.498(2) or (3) of the Companies Act 2006.

2. Accounting policies

2.1. Basis of preparation

The Condensed Consolidated Interim Financial Statements have been prepared and approved by the Directors in accordance with UK-adopted International Accounting Standard 34 ('Interim Financial Reporting'). As required by the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority, these Condensed Consolidated Interim Financial Statements have been prepared applying the accounting policies and presentation that will be applied in the preparation of the Annual Financial Statements of the Group and will be prepared in accordance and fully comply with UK-adopted international accounting standards, comprising International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRSs'). The Annual Financial Statements were prepared in accordance with the going concern principle using the historical cost basis, except for those financial assets that have been measured at fair value.

The accounting policies applied in the preparation of the Condensed Consolidated Interim Financial Statements are consistent with those accounting policies applied in the preparation of the 31 December 2024 Annual Report and Accounts, expect for those referred to in 2.3 below.

The Condensed Consolidated Interim Financial Statements values are presented in Pounds Sterling (£) rounded to the nearest thousand (£'k), unless otherwise indicated. The Group does not consider it is exposed to material seasonal volatility in its financial results.

2.2. Going concern

The Condensed Consolidated Interim Financial Statements have been prepared on a going concern basis. Having assessed the Group's forecasts, projections and principal risks of the Group over the full duration of the planning cycle, the Directors have a reasonable expectation that the Group will continue in operation for at least 12 months from the date the Directors approved these Condensed Consolidated Financial Statements and that therefore it is appropriate to adopt a going concern basis for the preparation of these Condensed Consolidated Interim Financial Statements.

The Group's Principal Risks and Uncertainties are outlined in the Strategic Report of the 31 December 2024 Annual Report and Accounts and have not changed since the last reporting date. The principal risks are:

- Insurance

- Operations

- Finance and Capital

- IT and Systems

- Regulatory, Governance and Compliance

- People

- Macro risks

- Climate change

- Inflation and interest rate increases

- Geo-political instability

2.3. New and amended standards and interpretations adopted by the Group

Amendments to IFRS

The following amended standards became effective for the year ended 31 December 2025:

- Lack of Exchangeability (Amendments to IAS 21)

The amendments have not had a material impact on the Group.

2.4. New and amended standards and interpretations not yet effective in 2025

A number of new standards and interpretations adopted by the UK which are not mandatorily effective, as well as standards' interpretations issued by the IASB but not yet adopted by the UK, have not been applied in preparing these financial statements. The Group does not plan to adopt these standards early; instead, it expects to apply them from their effective dates as determined by their dates of UK endorsement. The Group is reviewing the upcoming standards to determine their impact:

- IFRS 18 Presentation and Disclosure in Financial Statements - Effective 1 January 2027, with retrospective application - IFRS 18, which replaces IAS 1 "Presentation of Financial Statements", introduces new requirements for presentation and disclosure in the financial statements, with a focus on the Profit or Loss Account. Items in the Profit of Loss Account will be classified into one of five categories: operating, investing, financing, income taxes and discontinued operations, of which the first three are new. It also requires the disclosure of newly defined management-derived performance measures, how these are calculated and why these provide useful information, reconciled to the IFRS reporting. As a presentation and disclosure standard, the implementation of IFRS 18 will not affect the Group's results. The Group is currently working to identify all impacts the amendments will have on the primary financial statements and notes to the financial statements.

3. Insurance liabilities and reinsurance assets

CRITICAL ACCOUNTING ESTIMATES AND judgements

There have been no significant changes to the principles, estimates and judgements used in applying the Group's accounting policies during the period. Full details of these critical accounting estimates and judgements are disclosed on pages 151 to 153 of the Group's Annual Report and Accounts 2024.

Discount rates

Discount rates applied for discounting future cash flows are listed below:

Risk adjustment for non-financial risk

The Group has estimated the risk adjustment using a methodology which targets a confidence level (probability of sufficiency) approach between the 80th and 90th percentile. At 30 June 2025, the risk margin applied equates to an approximate confidence interval of 82.2% (30 June 2024: 82.1% / 31 December 2024: 80.6%) That is, the Group has assessed its indifference to uncertainty for all product lines (as an indication of the compensation that it requires for bearing non-financial risk) as being equivalent to the 80th to 90th percentile confidence level less the mean of an estimated probability distribution of the future cash flows.

3.1. Composition of the Statement of Financial Position

An analysis of the amounts presented on the Statement of Financial Position for insurance contracts is included in the table below.

3.2. Movement in insurance and reinsurance contract balances

3.2.1. Insurance contracts issued

3.2.2. Reinsurance contracts held

3.3. Assets for insurance acquisition cash flows

3.4. Insurance revenue and expenses - Segmental disclosure

An analysis of insurance revenue, insurance service expenses and net income/(expense) from reinsurance contracts held is included in the tables below.

The Group provides short-term motor insurance to clients, which comprises three lines of business, Motor Vehicle insurance, Motorcycle insurance and Taxi insurance, which are written solely in the UK. The Group has no other lines of business, nor does it operate outside of the UK. The Group does not have a single client which accounts for more than 10% of revenue.