TIDMSBRE
RNS Number : 5201G
Sabre Insurance Group PLC
27 July 2021
Half-Year Report 2021
DISCIPLINED UNDERWRITING THROUGH UNCERTAIN TIMES
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 2021.
SUMMARY OF RESULTS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
--------------------------------------------- ---------- ---------- ------------
Gross written premium GBP78.2m GBP86.9m GBP173.2m
Net loss ratio 44.9% 45.1% 48.6%
Expense ratio 29.5% 26.6% 26.7%
Combined operating ratio 74.4% 71.7% 75.3%
Adjusted profit before tax GBP22.2m GBP27.8m GBP49.1m
Profit before tax GBP22.2m GBP27.8m GBP49.1m
Adjusted profit after tax GBP18.0m GBP22.5m GBP39.8m
Profit after tax GBP18.0m GBP22.5m GBP39.8m
Ordinary interim dividend per share 3.7p 4.3p 4.3p
Additional interim dividend per share 0.0p 5.2p 5.2p
Total interim distribution per share 3.7p 9.5p 9.5p
Final dividend per share N/A N/A 8.1p
Return on tangible equity (annualised) 33.5% 39.9% 36.0%
Solvency coverage ratio (pre-interim/final
dividend) 185% 218% 203%
Solvency coverage ratio (post-interim/final
dividend) 169% 178% 155%
--------------------------------------------- ---------- ---------- ------------
KEY HIGHLIGHTS
- Relentless focus on prioritising profitability over volume
- Strong net loss ratio of 44.9% reflecting high quality
underwriting and claims management, benefitting from low claims
frequency during lockdown
- Improving volumes, with 12 consecutive weeks of modest portfolio growth to 30 June 2021
- Year to date written premium in line with expectations under lockdown
- Further tailwinds expected to increase volumes into 2022,
however premium out-turn for 2021 remains difficult to forecast
accurately
- Market developments including the FCA pricing review and
whiplash reforms evolving in line with our expectations
- Strategic growth initiatives with launch of Saga partnership
in H1 and new temporary car insurance product expected to launch in
H2
- Full-year 2021 combined operating ratio is expected to be in the range of 75% to 80%
- Interim dividend of 3.7p being one third of the prior-year
ordinary dividend, in line with our existing policy, maintaining
strong capital position
Geoff Carter, Chief Executive Officer of Sabre, commented:
"At the half-year stage our general mood is one of cautious
optimism that the anticipated market strengthening and our own
development efforts will support growth as we move through 2021 and
into 2022.
Reflecting on the past 16 months, we have seen a completely
unprecedented temporary shift in market conditions, with a
significant reduction in our addressable market and an unforeseen
extension to the historically soft market conditions. Despite that,
we have continued to apply our pricing discipline, maintained
strong profitability and put ourselves in a very strong position to
grow our business as the market returns to full strength and prices
increase.
We are continuing to increase rates ahead of the market to
counter ongoing claims inflation and are continuing to price within
our target combined operating ratio range. With some recent
encouraging signs that competitors are beginning to recognise the
building industry-wide pressures, our portfolio has grown modestly
on a weekly basis - and is now, at 30 June 2021, 2.8% greater than
at the end of Q1 2021.
We believe that there is an attempt to increase rates across the
motor insurance market, as a reflection of the looming market-level
margin squeeze as COVID-19 discounts unwind and ongoing claims
inflation impact profitability, while others have to react to the
FCA pricing reforms. We would anticipate we will be a beneficiary
of these market-level actions later in 2021 and into 2022.
Market, quote volumes have been low through the various
lockdowns. We expect these to recover as lockdown eases, although
we have seen only modest evidence of this so far. There remains a
significant backlog of driving tests and shortage of second-hand
car stocks and as lockdown eases we believe an increase in car
sales and new drivers entering the market should give a further
push to demand as the year progresses.
Traffic volumes are now effectively back to 100% of pre-COVID
levels, albeit with different driving patterns evident throughout
the day. These developments are in line with our underlying pricing
assumptions.
The MOJ "whiplash" reforms have gone live, bringing additional
complexity but little material change. There is little evidence, so
far, of individuals making claims themselves with the vast majority
of claims coming from lawyers or claims management companies, with
some evidence that claims have been "stacked" with additional cost
elements. There is also clear evidence of claims management
companies struggling with the technology, resulting in a potential
backlog of claims to be submitted.
Consequently, predicting actual claims costs for the second half
of 2021 remains challenging, primarily due to the unknowable
medium-term impact of lockdown easing on traffic and with
subsequent claims costs and the MOJ reform processes ramping
up.
Our growth initiatives have progressed. We commenced our
relationship with Saga as a member of their motor panel in Q2, and
importantly the IT infrastructure we have built to support this
partnership has now given increased capability to integrate with
other non-traditional partners. We are now also able to test launch
new products on a far quicker, highly cost-effective basis and we
plan to launch our new flexible product later this year ahead of
further developments in 2022.
Despite our optimism, we remain cautious that market-level price
increases always take longer than logic would suggest and so the
timing of more substantial growth is still slightly uncertain at
this stage. Looking toward the full year, we would anticipate a
combined ratio in the 75% to 80% range, in-line with our pricing
plans in softer parts of the market cycle and as traffic levels
have recovered to pre-COVID levels. We remain committed to using
our strong capital range to support an attractive dividend as we
earn through the lower premium volumes, ahead of anticipated
growth."
ENQUIRIES
Sabre Insurance Group investor.relations@sabre.co.uk
Geoff Carter, Chief Executive Officer
Adam Westwood, Chief Financial Officer
Tulchan Communications 020 7353 4200
James Macey White
Simon Pilkington
Guy Bates
ANALYST VIRTUAL PRESENTATION
Sabre management will host a virtual presentation for analysts
today (27 July 2021) via Zoom. The presentation will start at
9:00am.
To register to access the meeting, please follow this link:
https://us02web.zoom.us/webinar/register/WN_6HSBrUD2Ts6hDH1tDusaSA
A replay will be made available on the Sabre website following
the conclusion of the presentation.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
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.
The Sabre Insurance Group plc LEI number is
2138006RXRQ8P8VKGV98
CFO Report
FINANCIAL AND BUSINESS REVIEW
Highlights
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
----------------------------------------- ---------- ---------- ------------
Gross written premium GBP78.2m GBP86.9m GBP173.2m
Net loss ratio 44.9% 45.1% 48.6%
Combined operating ratio 74.4% 71.7% 75.3%
Adjusted profit after tax GBP18.0m GBP22.5m GBP39.8m
Profit after tax GBP18.0m GBP22.5m GBP39.8m
Solvency coverage ratio (pre dividend) 185% 218% 203%
Solvency coverage ratio (post dividend) 169% 178% 155%
Return on opening SCR (annualised) 59.7% 75.6% 66.9%
Return on tangible equity (annualised) 33.5% 39.9% 36.0%
----------------------------------------- ---------- ---------- ------------
The first half of 2021 has again been dominated by the impacts
of continued varying levels of restrictions on individuals' ability
to travel, manifesting in lower road use than 'normal', as well as
a continued reduction in the number of driving tests taken and the
number of new and used cars sold and purchased during the period.
This overarching theme has driven two now familiar impacts on
Sabre:
1. Lower daily traffic volume during H1 has driven lower claims
frequency than in normal conditions, leading to strong current-year
claims experience. We should note, however, that claims frequency
is not directly correlated to traffic levels, an element of the
improved loss ratio would be absorbed through the price reductions
made to policies in anticipation of this benefit.
2. Pressure on premium income, due to both continued low levels
of market premium (set against Sabre's matching of claims inflation
in policy pricing) and a continued reduction in new drivers
entering the market or new customers entering segments in which
Sabre is more competitive through the purchase of new vehicles or
other life events.
The net result of the factors above is that premiums are down on
H1 2020, which has been significantly offset by continued strong
claims performance. In recent weeks we have witnessed some signs of
improvement in the competitiveness of our pricing, suggesting that
market price increases may be staring to feed through. However, the
expected increase in new policyholders due to increases in other
events, such as car sales and new drivers, has been relatively slow
to materialise.
Solvency coverage remains very high, at 185% (H1 2020: 218%)
before the payment of the interim dividend. Capital has been
generated entirely organically through operating profits offset by
the payment of an ordinary and special dividend in respect of
2020.
The Group's return on tangible equity (ROTE) remains a function
of the profit after tax earned during the period and the amount of
dividend paid during the period. The decrease in ROTE against the
comparative period is due to the slightly lower profit earned
during the period, and the smaller year-end dividend paid in
respect of the previous financial year, with the special dividend
having been deferred due to COVID-19 uncertainties.
In the next 6 months, Sabre expects to launch a flexible motor
insurance product allowing customers to insure by the month, day or
hour. The new product, which will trade under the "DriveSmart"
brand, is a digital product and will be available to customers via
an app and online. As mobility needs change and customers demand
more flexible insurance, this new proposition will extend Sabre's
offering to a broader customer base.
Revenue
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
------------------------------------------------ ---------- ---------- ------------
Profit or loss
Gross written premium GBP78.2m GBP86.9m GBP173.2m
Gross earned premium GBP82.5m GBP94.0m GBP185.8m
Net earned premium GBP72.7m GBP84.7m GBP165.7m
Other operating income GBP1.0m GBP0.9m GBP2.2m
Customer instalment income GBP1.9m GBP2.1m GBP4.6m
Interest revenue calculated using the effective GBP0.6m GBP0.8m GBP1.4m
interest method
Other Comprehensive Income
Fair value (losses) / gains on debt securities (GBP2.2m) GBP1.6m GBP2.4m
through OCI
------------------------------------------------ ---------- ---------- ------------
Throughout the period, we have continued to apply the "right
price" to our policies, continually adjusting pricing to reflect
our view of claims inflation offset against projected frequency
benefits from lockdown. During the first few months of 2021, our
premium was low relative to the comparative periods in 2021, which
were 'pre-pandemic' periods. In Q2, our premium income improved
considerably relative to 2020, as both the current and comparative
periods reflected the effects of lockdowns. Beyond this, we have
seen some increase in the competitiveness of our policies during
Q2, which has allowed some recovery in the size of our book and is
a promising sign that the market may be starting to reflect the
true underlying cost of inflation in policy prices.
Other income remained broadly proportional to the size of the
direct book, predominantly being the instalment income earned on
financed policies.
Investment yields remain low, although well ahead of the
equivalent gilt yields, having introduced a small amount of market
risk into the portfolio through holding corporate bonds alongside
our core of government-backed investments.
Operating Expenditure
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
------------------------------- ---------- ---------- ------------
Net insurance claims* GBP32.7m GBP38.1m GBP80.5m
Current-year net loss ratio 50.7% 55.5% 51.2%
Prior-year net loss ratio (5.8%) (10.4%) (2.6%)
Financial year net loss ratio 44.9% 45.1% 48.6%
Net operating expenses GBP21.4m GBP22.6m GBP44.3m
Expense ratio 29.5% 26.6% 26.7%
Combined ratio 74.4% 71.7% 75.3%
------------------------------- ---------- ---------- ------------
*Net insurance claims shown here excludes GBP3.9m (6 months
2020: GBP4.0m , 12 months 2020: GBP7.6m ) of claims handling
expenses.
Overall, the claims result for H1 is strong, with a financial
year net loss ratio of 44.9%. While a 6-month loss ratio is
inherently volatile, this is nonetheless indicative of good claims
performance during the period, benefiting in part from the
reduction in claims frequency during the third national lockdown.
The current-year net loss ratio of 50.7% (H1 2020: 55.5%) is
reflective of this benefit, notwithstanding the inherent volatility
within a short, period reflecting immature claims. The prior-year
loss ratio of (5.8%) (H1 2020: (10.4%)) has, as expected, delivered
a smaller benefit than in previous periods. This is entirely
in-line with our expectation and reflects business-as-usual
run-off, rather than exceptional releases, which we indicated at
our last results presentation would not be expected to feature in
our claims experience in future periods. Gross loss ratio (i.e.
excluding the effect of reinsurance) continues to be highly
volatile, as movements on a small number of large claims can
generate significant movements in the ratio over a short period. As
such, we continue to focus on net loss ratio, which gives a far
more accurate view of overall underwriting performance.
Our expense ratio has increased to 29.5% for H1 2021, against
26.7% for the full-year 2020 and 26.6% in H1 2020. This is
reflective of a similar level of fixed cost set against a lower
level of net earned premium, as the lower written premium in 2020
and H1 2021 has earned through. Core costs remain well under
control, with normal levels of inflation in salary costs and our IT
infrastructure expense offset against reductions elsewhere. A
high-level breakdown of costs is given below:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
--------------------------------------------- ---------- ---------- ------------
Employee expenses 7,292 7,154 13,518
IT expenses including IT depreciation 2,456 2,201 4,965
Industry levies 2,802 2,914 5,170
Policy servicing costs 1,229 1,410 2,463
Other expenses 1,370 1,380 3,582
--------------------------------------------- ---------- ---------- ------------
Before adjustments for deferred acquisition
costs and claims handling expenses 15,149 15,059 29,698
--------------------------------------------- ---------- ---------- ------------
Employee expenses have increased by an inflationary amount,
reflecting annual wage inflation in a period where employee numbers
have been retained despite a decrease in policy count. We continue
to retain excess staff on payroll in anticipation of growth in the
near future. IT expenditure is moderately higher than in H1 2020,
but is similar to the overall 2020 run-rate, which is reflective of
the in-year phasing of development costs which evened-out over the
full-year. Policy serving expenses remain proportionate to earned
direct business, while the decrease in levies is reflective of the
slight decrease in market share.
Earnings per Share
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
---------------------------- ---------- ---------- ------------
Basic earnings per share 7.22p 9.00p 15.98p
Diluted earnings per share 7.15p 8.90p 15.82p
---------------------------- ---------- ---------- ------------
Earnings per share for the current and comparative period are
calculated on the basis of the current capital structure. Diluted
Earnings per share for H1 2021 is 7.15p compared to 8.90p for the
comparative period in 2020, reflecting slightly lower profit after
tax reported in H1 2021 than in the comparative period. The
difference between basic and diluted earnings per share reflects
the maximum dilution effect of share awards which have been granted
but which have not vested.
Cash and Investments
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
Government bonds GBP85.1m GBP221.9m GBP121.9m
Government-backed securities GBP85.7m GBP.0m GBP84.2m
Corporate bonds GBP66.1m GBP27.7m GBP40.2m
Cash and cash equivalents GBP24.4m GBP37.3m GBP37.9m
----------------------------- ---------- ---------- ------------
The Group continues to hold a low-risk investment portfolio and
sufficient cash to meet its future claims liabilities. From the
start of 2020, the Group has revised its investment guidelines to
allow a proportion of the portfolio to be invested in
investment-grade corporate bonds, in order to increase the return
on invested capital while maintaining a low risk portfolio. The
size of the overall invested portfolio has remained consistent with
the prior reporting period, while the amount of cash held remains
high, reflecting the continued importance of maintaining strong
liquidity in the current environment.
Insurance Liabilities
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
------------------------- ---------- ---------- ------------
Gross outstanding claims GBP227.2m GBP203.2m GBP226.5m
Reinsurance assets GBP97.9m GBP73.5m GBP92.0m
Net outstanding claims GBP129.3m GBP129.7m GBP134.5m
------------------------- ---------- ---------- ------------
The Group's insurance liabilities continue to reflect the
underlying profitability and volume of business written. The Group
continues to hold excess-of-loss reinsurance contracts across its
entire book at an excess of GBP1.0m.
Leverage
The Group continues to hold no external debt. All of the Group's
capital is considered 'Tier 1' under Solvency II. The Directors
continue to hold the view that this currently allows the greatest
operational flexibility for the Group.
Dividends
Where the Board believes that the Group holds capital which it
considers surplus to the Group's requirements, the Group would
intend to return such surplus capital to shareholders. This
assessment is generally made at year-end, with capital distributed
via a special full-year dividend. Under normal circumstances, the
Board considers a Solvency II capital coverage ratio within the
range of 140% to 160% to be appropriate, and will consider this
when determining the potential for special dividends. The Board may
revise the Group's dividend policy from time to time as it
considers appropriate.
The Board has declared an ordinary interim dividend of 3.7p per
share (2020: 4.3p ordinary, 5.2p special).
Auditor Rotation
We are pleased to announce that following a successful
competitive tender process, as part of our normal auditor rotation,
we intend to appoint PwC as our external audit firm from the year
ended 31 December 2022.
CONDENSED CONSOLIDATED PROFIT OR LOSS ACCOUNT
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
30 June 2021 30 June 2020 31 December 2020
Notes GBP'k GBP'k GBP'k
--------------------------------------------------------- ------ --------------- --------------- -----------------
Gross written premium 78,220 86,938 173,235
Less: Reinsurance premium ceded (1,860) (1,796) (20,390)
--------------------------------------------------------- ------ --------------- --------------- -----------------
Net written premium 76,360 85,142 152,845
--------------------------------------------------------- ------ --------------- --------------- -----------------
Less: Change in unearned premium reserve
Gross amount 3.1.1 4,284 7,100 12,527
Reinsurers' share 3.1.1 (7,905 ) (7,570) 335
--------------------------------------------------------- ------ --------------- --------------- -----------------
Net earned premium 72,739 84,672 165,707
--------------------------------------------------------- ------ --------------- --------------- -----------------
Interest income on financial assets using effective
interest rate method 4.4 610 768 1,417
Instalment income 1,908 2,133 4,607
Other operating income 6 1,011 905 2,171
--------------------------------------------------------- ------ --------------- --------------- -----------------
Total income 76,268 88,478 173,902
--------------------------------------------------------- ------ --------------- --------------- -----------------
Insurance claims 3.4 (43,730) (39,450) (104,043)
Insurance claims recoverable from reinsurers 3.4 7,192 (2,672) 15,933
--------------------------------------------------------- ------ --------------- --------------- -----------------
Net insurance claims (36,538) (42,122) (88,110)
--------------------------------------------------------- ------ --------------- --------------- -----------------
Finance costs (8) (7) (13)
Commission expenses (6,348) (7,318) (14,287)
Operating expenses 7 (11,213) (11,281) (22,370)
--------------------------------------------------------- ------ --------------- --------------- -----------------
Total expenses (17,569) (18,606) (36,670)
--------------------------------------------------------- ------ --------------- --------------- -----------------
Profit before tax 22,161 27,750 49,122
--------------------------------------------------------- ------ --------------- --------------- -----------------
Tax charge 8 (4,160) (5,255) (9,324)
--------------------------------------------------------- ------ --------------- --------------- -----------------
Profit for the period attributable to the equity holders
of the parent 18,001 22,495 39,798
--------------------------------------------------------- ------ --------------- --------------- -----------------
Basic Earnings Per Share (pence per share) 7.22 9.03 15.98
--------------------------------------------------------- ------ --------------- --------------- -----------------
Diluted Earnings Per Share (pence per share) 7.15 8.94 15.82
--------------------------------------------------------- ------ --------------- --------------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 2020 31 December
2021 2020
GBP'k GBP'k GBP'k
-------------------------------------------------------- ---------- ------------- ------------
Profit for the period attributable to the equity
holders of the parent 18,001 22,495 39,798
Items that are or may be reclassified subsequently
to profit or loss
Fair value (losses) / gains on debt securities (2,176) 1,608 2,436
Tax credit / (charge) 402 (306) (463)
-------------------------------------------------------- ---------- ------------- ------------
(1,774) 1,302 1,973
-------------------------------------------------------- ---------- ------------- ------------
Items which will not be reclassified to profit
or loss
Revaluation losses on owner-occupied properties - - (165)
Tax credit - - 31
-------------------------------------------------------- ---------- ------------- ------------
- - (134)
-------------------------------------------------------- ---------- ------------- ------------
Total for the period (1,774) 1,302 1,839
-------------------------------------------------------- ---------- ------------- ------------
Total comprehensive income for the period attributable
to the equity holders of the parent 16,227 23,797 41,637
-------------------------------------------------------- ---------- ------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited at
at at
30 June 30 June 2020 31 December
2021 2020
Notes GBP'k GBP'k GBP'k
---------------------------------------------- ------ ---------- ------------- ------------
Assets
Goodwill 156,279 156,279 156,279
Property, plant and equipment 4,103 4,474 4,174
Right-of-use asset 311 315 189
Reinsurance assets 3.1 97,912 73,492 99,921
Deferred tax assets 236 82 -
Deferred acquisition costs 3.1.2 14,498 15,421 14,791
Insurance receivables 3.2 38,989 41,316 33,976
Loans and other receivables 4.2 13 75 84
Current tax assets 620 - 369
Prepayments, accrued income and other assets 1,702 1,812 868
Financial investments 4.1 236,812 249,538 246,281
Cash and cash equivalents 4.3 24,411 37,254 37,904
---------------------------------------------- ------ ---------- ------------- ------------
Total assets 575,886 580,058 594,836
---------------------------------------------- ------ ---------- ------------- ------------
Equity
Issued share capital 250 250 250
Own shares (2,088) (1,061) (1,494)
Merger reserve 48,525 48,525 48,525
FVOCI reserve 436 1,539 2,210
Revaluation reserve 831 965 831
Share-based payments reserve 1,513 2,108 1,817
Retained earnings 202,955 219,444 214,261
---------------------------------------------- ------ ---------- ------------- ------------
Total equity 252,422 271,770 266,400
---------------------------------------------- ------ ---------- ------------- ------------
Liabilities
Insurance liabilities 3.1 227,210 203,186 226,546
Unearned premium reserve 3.1 83,066 92,777 87,350
Lease liability 317 320 194
Deferred tax liability - - 125
Insurance payables 3.3 4,223 3,755 6,246
Trade and other payables 5.1 5,941 5,984 5,530
Current tax liabilities - 298 -
Accruals 2,707 1,968 2,445
---------------------------------------------- ------ ---------- ------------- ------------
Total liabilities 323,464 308,288 328,436
---------------------------------------------- ------ ---------- ------------- ------------
Total equity and liabilities 575,886 580,058 594,836
---------------------------------------------- ------ ---------- ------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 2020 31 December
2021 2020
GBP'k GBP'k GBP'k
-------------------------------------------------- ---------- ------------- ------------
ORDINARY SHAREHOLDERS' EQUITY - at 1 January 250 250 250
--------------------------------------------------- ---------- ------------- ------------
At period end 250 250 250
--------------------------------------------------- ---------- ------------- ------------
OWN SHARES - at 1 January (1,494) (1,061) (1,061)
Net movement in own shares (594) - (433)
--------------------------------------------------- ---------- ------------- ------------
At period end (2,088) (1,061) (1,494)
--------------------------------------------------- ---------- ------------- ------------
MERGER RESERVE - at 1 January 48,525 48,525 48,525
--------------------------------------------------- ---------- ------------- ------------
At period end 48,525 48,525 48,525
--------------------------------------------------- ---------- ------------- ------------
FVOCI RESERVE - at 1 January 2,210 - -
Implementation of IFRS 9 "Financial Instruments" - 237 237
--------------------------------------------------- ---------- ------------- ------------
FVOCI RESERVE - adjusted at 1 January 2,210 237 237
Fair value gains on debt securities (2,176) 1,608 2,436
Tax credit / (charge) 402 (306) (463)
--------------------------------------------------- ---------- ------------- ------------
At period end 436 1,539 2,210
--------------------------------------------------- ---------- ------------- ------------
REVALUATION RESERVE - at 1 January 831 965 965
Revaluation losses on owner-occupied properties - - (165)
Tax credit / (charge) - - 31
--------------------------------------------------- ---------- ------------- ------------
At period end 831 965 831
--------------------------------------------------- ---------- ------------- ------------
SHARE-BASED PAYMENT RESERVE - at 1 January 1,817 1,362 1,362
Settlement of share-based payments (957 ) - (1,193)
Charge in respect of share-based payments 653 746 1,648
--------------------------------------------------- ---------- ------------- ------------
At period end 1,513 2,108 1,817
--------------------------------------------------- ---------- ------------- ------------
RETAINED EARNINGS - at 1 January 214,261 217,376 217,376
Implementation of IFRS 9 "Financial Instruments" - (237) (237)
--------------------------------------------------- ---------- ------------- ------------
RETAINED EARNINGS - adjusted at 1 January
2020 214,261 217,139 217,139
Settlement of share-based payments - - 1,193
Share scheme transfer to retained earnings (139 ) - -
Profit for the period attributable to the
equity holders of the parent 18,001 22,495 39,798
Ordinary dividends paid (29,168) (20,190) (43,869)
--------------------------------------------------- ---------- ------------- ------------
At period end 202,955 219,444 214,261
--------------------------------------------------- ---------- ------------- ------------
Total equity at period end 252,422 271,770 266,400
--------------------------------------------------- ---------- ------------- ------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 2020 31 December
2021 2020
GBP'k GBP'k GBP'k
---------------------------------------------------------- ---------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the period 22,161 27,750 49,122
Adjustments for:
Depreciation of property, plant and equipment 75 94 176
Depreciation of right-of-use assets 125 126 252
Share-based payment - equity-settled schemes 653 746 1,648
Investment return (759) (879) (1,680)
Interest on lease liability 8 7 13
Expected credit loss 21 38 23
Impairment loss on owner-occupied buildings - - 65
Operating cash flows before movements in working
capital 22,284 27,882 49,619
Movements in working capital:
Change in reinsurance assets 2,009 10,438 (15,990)
Change in deferred acquisition costs 293 790 1,420
Change in insurance receivables (5,013) (3,562) 3,778
Change in loans and other receivables 71 (44) (53)
Change in prepayments, accrued income and other
assets (834) 1,816 2,759
Change in insurance liabilities 664 (8,981) 14,379
Change in unearned premium reserve (4,284) (7,100) (12,527)
(2,023
Change in insurance creditors ) (2,253) 237
Change in trade and other payables 411 (482) (936)
Change in accruals 262 761 1,239
---------------------------------------------------------- ---------- ------------- ------------
Cash generated from operating activities before
investment of insurance assets 13,840 19,265 43,925
Taxes paid (4,370) (10,018) (14,673)
---------------------------------------------------------- ---------- ------------- ------------
Net cash generated from operating activities before
investment of insurance assets 9,470 9,247 29,252
---------------------------------------------------------- ---------- ------------- ------------
Interest and investment income received 2,106 1,052 7,115
Net proceeds from the sale, maturity and purchases
of invested assets 5,922 15,480 14,325
---------------------------------------------------------- ---------- ------------- ------------
Net cash generated from operating activities 17,498 25,779 50,692
---------------------------------------------------------- ---------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (5 ) - (12)
---------------------------------------------------------- ---------- ------------- ------------
Net cash used by investing activities (5 ) - (12)
---------------------------------------------------------- ---------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of principal portion of lease liabilities (128 ) (126) (264)
Net cash used in acquiring and disposing of own
shares (1,690) - (433)
Dividends paid (29,168) (20,190) (43,870)
---------------------------------------------------------- ---------- ------------- ------------
Net cash (used by) / generated from financing activities (30,986) (20,316) (44,567)
---------------------------------------------------------- ---------- ------------- ------------
Net (decrease) / increase in cash and cash equivalents (13,493) 5,463 6,113
Cash and cash equivalents at the beginning of the
period 37,904 31,791 31,791
Cash and cash equivalents at the end of the period 24,411 37,254 37,904
---------------------------------------------------------- ---------- ------------- ------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CORPORATE INFORMATION
Sabre Insurance Group plc is a company incorporated in the
United Kingdom and registered in England and Wales. The address of
the registered office is Sabre House, 150 South Street, Dorking,
Surrey, RH4 2YY, England. The nature of the Group's operations is
the writing of general insurance for motor vehicles. The Company's
principal activity is that of a holding company.
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 2021 and the comparative period for the six months
ended 30 June 2020 and the year ended 31 December 2020. 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 2020 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 of the Financial Conduct Authority, these
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 Financial Reporting Standards ('IFRSs'). The annual
financial statements were prepared on an historical cost basis,
except for investment properties and those financial assets that
have been measured at fair value. The condensed consolidated
financial statements values are presented in Pounds Sterling (GBP)
rounded to the nearest thousand (GBP'k), unless otherwise
indicated. The Group does not consider it is exposed to material
seasonal volatility in its financial results.
In the current year, the Group have applied amendments to IFRS
issued by the IASB and UKEB that are mandatorily effective for an
accounting period that begins on or after 1 January 2021. None of
the amendments issued by the IASB have had an impact to the
Group.
2.2. Going concern
The condensed consolidated interim financial statements of Sabre
Insurance Group plc have been prepared on a going concern basis.
The Directors of the Company, having assessed the principal risks
of the Group over the full duration of the planning cycle, consider
it appropriate to adopt the going concern basis of accounting in
preparing the interim condensed consolidated financial statements.
The Group's principal risks and uncertainties are outlined on pages
20 to 27 of the 31 December 2020 Annual Report and Accounts and
have not changed since the last reporting date. The principal risks
are:
- Strategic, Governance, Regulatory and Compliance
- Insurance risk
- Operations
- Financial and Capital
- People
- Ongoing Systemic Risks
- Climate change
- Brexit
- Impact of COVID-19
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 estimates and judgements are disclosed in page 109 of the Group's
Annual Report and Accounts 2020.
The Group's insurance liabilities and reinsurance assets are
summarised below:
Unaudited at Unaudited at Audited at
30 June 2021 30 June 2020 31 December 2020
Notes GBP'k GBP'k GBP'k
------------------------------------------------------------ ------ -------------- ------------- -----------------
Insurance liabilities 3.1 310,276 295,963 313,896
Reinsurance assets 3.1 (97,912) (73,492) (99,921)
Receivables arising from insurance and reinsurance
contracts 3.2 (38,989) (41,316) (33,976)
Payables arising from insurance and reinsurance contracts 3.3 4,223 3,755 6,246
------------------------------------------------------------ ------ -------------- ------------- -----------------
177,598 184,910 186,245
------------------------------------------------------------ ------ -------------- ------------- -----------------
3.1 Insurance liabilities and reinsurance assets
Unaudited at Unaudited at Audited at
30 June 2021 30 June 2020 31 December 2020
Notes GBP'k GBP'k GBP'k
-------------------------------------------------- ------- -------------- ------------- -----------------
GROSS
Claims incurred and reported 308,054 289,381 313,164
Claims incurred but not reported (84,659) (89,998) (90,267)
Claims handling provision 3,815 3,803 3,649
----------------------------------------------------------- -------------- ------------- -----------------
Outstanding claims liabilities 3.1.1 227,210 203,186 226,546
Provision for unearned premiums 83,066 92,777 87,350
Total insurance liabilities - Gross 310,276 295,963 313,896
----------------------------------------------------------- -------------- -----------------
RECOVERABLE FROM REINSURERS
Claims incurred and reported (124,378) (105,395) (123,440)
Claims incurred but not reported 26,466 31,903 31,424
----------------------------------------------------------- -------------- ------------- -----------------
Outstanding claims liabilities 3.1.1 (97,912) (73,492) (92,016)
Provision for unearned premiums - - (7,905)
----------------------------------------------------------- -------------- ------------- -----------------
Total reinsurers' share of insurance liabilities (97,912) (73,492) (99,921)
----------------------------------------------------------- -------------- ------------- -----------------
NET
Claims incurred and reported 183,676 183,986 189,724
Claims incurred but not reported (58,193) (58,095) (58,843)
Claims handling provision 3,815 3,803 3,649
----------------------------------------------------------- -------------- ------------- -----------------
Outstanding claims liabilities 3.1.1 129,298 129,694 134,530
Provision for unearned premiums 83,066 92,777 79,445
----------------------------------------------------------- -------------- ------------- -----------------
Total insurance liabilities - Net 212,364 222,471 213,975
----------------------------------------------------------- -------------- ------------- -----------------
When claims are initially reported, case estimates are set based
on a reasonable worst-case expectation of settlement costs (for
example, assuming full liability). Case estimates are amended
throughout the life of a claim as further information emerges,
Quarterly, an actuarially-determined adjustment to open case
reserves is booked at a portfolio level, which converts the open
claims reserves to a true "best estimate basis". This can result in
a negative 'Incurred But Not Enough Reported' ("IBNER") adjustment,
if the case reserves held are in excess of a "best estimate
basis".
3.1.1 Movement in insurance liabilities and reinsurance assets
Unaudited at 30 June 2021 Unaudited at 30 June Audited at 31 December
2020 2020
Gross RI share Net Gross RI share Net Gross RI share Net
GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
CLAIMS AND CLAIMS HANDLING
EXPENSES
Claims incurred and reported 313,164 (123,440) 189,724 290,963 (97,788) 193,175 290,963 (97,788) 193,175
Claims incurred but not reported (90,267) 31,424 (58,843) (82,565) 21,427 (61,138) (82,565) 21,427 (61,138)
Claims handling provision 3,649 - 3,649 3,769 - 3,769 3,769 - 3,769
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Total at the beginning of the
period 226,546 (92,016) 134,530 212,167 (76,361) 135,806 212,167 (76,361) 135,806
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Cash paid for claims settled in
the period (39,188) 1,296 (37,892) (44,432) 196 (44,236) (82,027) 278 (81,749)
Increase in liabilities
* from current period claims 39,413 (2,342) 37,071 50,974 (4,031) 46,943 100,944 (16,242) 84,702
* from prior period claims 439 (4,850 ) (4,411) (15,523) 6,704 (8,819) (4,538) 309 (4,229)
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Total at the end of the period 227,210 (97,912) 129,298 203,186 (73,492) 129,694 226,546 (92,016) 134,530
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Claims incurred and reported 308,054 (124,378) 183,676 289,381 (105.395) 183,986 313,164 (123,440) 189,724
Claims incurred but not reported (84,659) 26,466 (58,193) (89,998) 31,903 (58,095) (90,267) 31,424 (58,843)
Claims handling provision 3,815 - 3,815 3,803 - 3,803 3,649 - 3,649
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Total at the end of the Period 227,210 (97,912) 129,298 203,186 (73,492) 129,694 226,546 (92,016) 134,530
---------------------------------- ---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------- ----------
Amounts due from reinsurers in respect of claims already paid by
the Group on the contracts that are reinsured are included in Note
3.2.
Unaudited at 30 June Unaudited at 30 June Audited at 31 December
2021 2020 2020
Gross RI share Net Gross RI share Net Gross RI share Net
GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k
-------------------- --------- --------- -------- -------- --------- -------- ---------- --------- ----------
UNEARNED PREMIUM
RESERVE
At the beginning of
the period 87,350 (7,905) 79,445 99,877 (7,570) 92,307 99,877 (7,570) 92,307
Charged to the
profit or
loss account (4,284) 7,905 3,621 (7,100) 7,570 470 (12,527) (335) (12,862)
-------------------- --------- --------- -------- -------- --------- -------- ---------- --------- ----------
Total at the end of
the period 83,066 - 83,066 92,777 - 92,777 87,350 (7,905) 79,445
-------------------- --------- --------- -------- -------- --------- -------- ---------- --------- ----------
3.1.2 Movement in deferred acquisition costs
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------- ---------- ---------- ------------
DEFERRED ACQUISITION COSTS
At the beginning of the period 14,791 16,211 16,211
Net decrease during the period (293) (790) (1,420)
--------------------------------
Total at the end of the period 14,498 15,421 14,791
-------------------------------- ---------- ---------- ------------
3.2 Receivables arising from insurance and reinsurance contracts
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
---------------------------------------------- ---------- ---------- ------------
Due from brokers and intermediaries 18,886 17,554 11,374
Due from policyholders 20,203 23,862 22,702
Due from reinsurers - - -
Less: provision for impairment of broker and
intermediary receivables (100) (100) (100)
---------------------------------------------- ---------- ---------- ------------
Total at the end of the period 38,989 41,316 33,976
---------------------------------------------- ---------- ---------- ------------
The carrying value of insurance and other receivables
approximates to fair value. There are no amounts expected to be
recovered more than 12 months after the reporting date.
3.3 Payables arising from insurance and reinsurance contracts
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------- ---------- ---------- ------------
Insurance creditors 1,746 1,273 1,034
Amounts due to reinsurers 2,477 2,482 5,212
Total at the end of the period 4,223 3,755 6,246
-------------------------------- ---------- ---------- ------------
Payables arising from insurance and reinsurance contracts are
expected to be settled within 12 months. The carrying value of
payables approximates fair value.
3.4 Insurance claims
Unaudited at 30 June Unaudited at 30 June Audited at 31 December
2021 2020 2020
Gross RI share Net Gross RI share Net Gross RI share Net
GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k GBP'k
----------------------- -------- --------- -------- -------- --------- -------- --------- ---------- --------
Movement in claims
provision(1) 39,686 (7,192) 32,494 35,474 2,673 38,147 96,525 (15,933) 80,592
Movement in claims
handling
provision 166 - 166 (23) - (23) (119) - (119)
Claims handling
expenses
allocated 3,878 - 3,878 3,977 - 3,977 7,637 - 7,637
Net insurance claims 43,730 (7,192) 36,538 39,428 2,673 42,101 104,043 (15,933) 88,110
----------------------- -------- --------- -------- -------- --------- -------- --------- ---------- --------
(1) The movement in the claims provision includes both the
movement in the provision for claims outstanding and claims paid
during the period.
4. FINANCIAL ASSETS
The Group's financial assets are summarised below:
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------------------- ---------- ---------- ------------
Debt securities held at fair value through
other comprehensive income 236,812 249,538 246,281
Loans and receivables 13 75 84
Cash and cash equivalents 24,411 37,254 37,904
-------------------------------------------- ---------- ---------- ------------
Total financial assets 261,236 286,867 284,269
-------------------------------------------- ---------- ---------- ------------
4.1 Debt securities at fair value through other comprehensive
income
The Group's debt securities held at fair value through other
comprehensive income are summarised below:
Unaudited at 30 June Unaudited at 30 June Audited at 31 December
2021 2020 2020
GBP'k % holdings GBP'k % holdings GBP'k % holdings
------------------------------ ---------- ----------- ---------- ----------- ----------- ------------
Government bonds 85,077 35.93% 221,888 88.92% 121,859 49.48%
Government-backed securities 85,676 36.18% - 0.00% 84,210 34.19%
Corporate bonds 66,059 27.89% 27,650 11.08% 40,212 16.33%
Total debt securities 236,812 100.00% 249,538 100.00% 246,281 100.00%
------------------------------ ---------- ----------- ---------- ----------- ----------- ------------
4.2. Loans and receivables
The Group's loans and receivables comprises of:
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------------- ---------- ---------- ------------
Other debtors 15 75 86
Provision for expected credit losses (2) - (2)
-------------------------------------- ---------- ---------- ------------
Total loans and receivables 13 75 84
-------------------------------------- ---------- ---------- ------------
The estimated fair values of loans and receivables are the
discounted amounts of the estimated future cash flows expected to
be received.
4.3. Cash and cash equivalents
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
--------------------------------- ---------- ---------- ------------
Cash and cash equivalents 24,411 37,254 37,904
--------------------------------- ---------- ---------- ------------
Total cash and cash equivalents 24,411 37,254 37,904
--------------------------------- ---------- ---------- ------------
Cash and cash equivalents include money market funds with no
notice period or penalty for withdrawal.
The carrying value of cash and cash equivalents approximates
fair value. The full value is expected to be realised within 12
months. While cash and cash equivalents are also subject to the
impairment requirements of IFRS 9 the identified impairment loss
was immaterial.
4.4. Investment income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------------------------- ---------- ---------- ------------
Amounts recognised in profit or loss
Interest income on financial assets using effective
interest rate method
Interest income from debt securities 759 879 1,680
Investment fees (153) (165) (331)
Interest income from cash and cash equivalents 4 54 68
----------------------------------------------------- ---------- ---------- ------------
Total investment income 610 768 1,417
----------------------------------------------------- ---------- ---------- ------------
4.5. Net gains/(losses) from fair value adjustments on financial assets
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
--------------------------------------------------- ---------- ---------- ------------
Other Comprehensive Income
Fair value gains on debt securities (2,197) 1,570 2,415
Expected credit loss through OCI 21 38 21
--------------------------------------------------- ---------- ---------- ------------
Net fair value (losses)/gains on debts securities
through other comprehensive income (2,176) 1,608 2,436
--------------------------------------------------- ---------- ---------- ------------
5. FINANCIAL LIABILITIES
The Group's financial liabilities are summarised below:
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------------------------- ---------- ---------- ------------
Financial liabilities at amortised cost
Lease liabilities 317 320 194
Trade and other payables, excluding insurance
payables 5,941 5,984 5,530
Total financial liabilities 6,258 6,304 5,724
-------------------------------------------------- ---------- ---------- ------------
5.1. Trade and other payables, excluding insurance payables
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------- ---------- ---------- ------------
Trade and other creditors 309 672 1,345
Other taxes 5,632 5,312 4,185
-------------------------------- ---------- ---------- ------------
Total trade and other payables 5,941 5,984 5,530
-------------------------------- ---------- ---------- ------------
6. OTHER OPERATING INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
------------------------------------------------ ---------- ---------- ------------
Marketing fees 264 406 834
Fee income from the sale of auxiliary products
and services 66 53 113
Administration fees 681 446 1,224
------------------------------------------------ ---------- ---------- ------------
Total other operating income 1,011 905 2,171
------------------------------------------------ ---------- ---------- ------------
The Group provides only one product to clients, which is motor
insurance, which is written solely in the UK. The Group has no
other lines of business, nor does it operate outside of the UK.
Information is reported to the chief operating decision makers and
the Board on an aggregated basis. Strategic and financial
management decisions are determined centrally by the Board. Premium
numbers are disclosed on the face of the profit or loss account and
does not have a separate disclosure note. Other income relates to
auxiliary products and services, including marketing and
administration fees, all relating to the motor insurance business.
The Group does not have a single client which accounts for more
than 10% of revenue.
7. OPERATING EXPENSES
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Notes GBP'k GBP'k GBP'k
------------------------------------------------- ------ ---------- ---------- ------------
Employee expenses 7.1 7,292 7,154 13,518
Property expenses 151 188 394
IT expenses including IT depreciation 2,456 2,201 4,965
Other depreciation 21 23 45
Industry levies 2,802 2,914 5,170
Policy servicing costs 1,229 1,410 2,463
Other operating expenses 1,177 1,131 3,055
Expected credit loss on financial assets 4.5 21 38 23
Impairment loss on owner occupied properties - - 65
------------------------------------------------- ------ ---------- ---------- ------------
Operating expenses before adjustments for
deferred acquisition costs and claims handling
expenses 15,149 15,059 29,698
Adjusted for:
(3,878
Claims handling expense reclassification ) (3,977) (7,637)
Movement in deferred acquisition costs (58) 199 309
------------------------------------------------- ------ ---------- ---------- ------------
Total operating expenses 11,213 11,281 22,370
------------------------------------------------- ------ ---------- ---------- ------------
7.1. Employee expenses
The aggregate remuneration of those employed by the Group's
operations comprised:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
--------------------------------------------------- ---------- ---------- ------------
Wages and salaries 5,321 5,075 9,568
Issue of share-based payments 653 746 1,648
Social security expenses 778 930 1,460
Pension expenses 241 258 511
Other staff expenses 299 145 331
--------------------------------------------------- ---------- ---------- ------------
Employee expenses before adjustments for deferred
acquisition costs and claims handling expenses 7,292 7,154 13,518
Adjusted for:
Claims handling expense reclassification (3,092) (3,008) (5,696)
Movement in deferred acquisition costs (236) (420) (26)
--------------------------------------------------- ---------- ---------- ------------
Total employee expenses 3,964 3,726 7,796
--------------------------------------------------- ---------- ---------- ------------
Employee costs of GBP3,092k (30 June 2020: GBP3,008k and 31
December 2020: GBP5,696) have been classified as part of claims
handling expenses (Note 3.4). Wages and salaries include a net
movement in deferred acquisition costs (Note 3.1.2) of GBP236k (30
June 2020: GBP420 and 31 December 2020: GBP26k).
8. TAX CHARGE
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
--------------------------------------------------- ------------------------- ---------- ------------
Current taxation
Charge for the period 4,119 5,432 9,452
4,119 5,432 9,452
--------------------------------------------------- ------------------------- ------------
Deferred taxation
Origination and reversal of temporary differences 41 (177) (128)
41 (177) (128)
--------------------------------------------------- ------------------------- ------------
Current taxation 4,119 5,432 9,452
Deferred taxation 41 (177) (128)
--------------------------------------------------- ------------------------- ---------- ------------
Tax charge for the period 4,160 5,255 9,324
--------------------------------------------------- ------------------------- ---------- ------------
Tax recorded in other comprehensive income is as follows.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
------------------- ---------------------------- ---------- ------------
Current taxation - - (31)
Deferred taxation (402) 306 463
------------------- ---------------------------- ---------- ------------
(402) 306 432
------------------- ---------------------------- ---------- ------------
From 1 April 2023, The Finance Act 2021 increases the UK
corporation tax from 19% to 25%. This means that the for any
temporary differences expected to reverse on or after 1 April 2023,
the new tax rate of 25% will be relevant. The Group has deferred
tax balances accordingly. The impact of this adjustment on the
deferred tax balances is not material.
9. DIVIDS
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
30 June 2021 30 June 2020 31 December 2020
pence pence pence
per share GBP'k per share GBP'k per share GBP'k
------------------------------------- ----------- -------- ----------- ------- ----------- --------
Amounts recognised as distributions
to equity holders in the period
Interim dividend for the current
year - - - - 9.5 23,680
Final dividend for the prior year 11.7 29,168 8.1 20,190 8.1 20,190
11.7 29,168 8.1 20,190 17.5 43,870
------------------------------------- ----------- -------- ----------- ------- ----------- --------
Proposed dividends
------------------------------------- ----------- -------- ----------- ------- ----------- --------
Interim dividend in respect of the
current year (1) 3.7 9,250 9.5 23,750
------------------------------------- ----------- -------- ----------- ------- ----------- --------
(1) Subsequent to 30 June 2021, the Directors declared an
interim dividend for 2021 of 3.7p per ordinary share. This dividend
will be paid on 16 September 2021. This dividend will be accounted
for as an appropriation of retained earnings in the year ended 31
December 2021 and is not included as a liability in the Statement
of Financial Position as at 30 June 2021.
The trustees of the employee share trusts waived their
entitlement to dividends on shares held in the trusts to meet
obligation arising on share incentive schemes, which reduced the
dividends paid for the period ended 30 June 2021 by GBP82k (30 June
2020: GBP60k and 31 December 2020: GBP130k).
10. RELATED PARTY TRANSACTIONS
There has been no change in any of the relationships as
disclosed in Note 17 of the 31 December 2020 Annual Report and
Accounts.
11. CONTINGENT LIABILITY
In 2019 HMRC issued a determination in relation to the 2015
corporation tax filing of a subsidiary of the Group, which is
currently dormant. In Q2-2021 further determinations were received
in respect of 2016 and 2017 on the same basis. This asserted that
the interest rate applied on intercompany debt, and the resultant
allowable expense, was inconsistent with transfer pricing rules and
was excessive. The excess interest per the determination is
GBP6.5m, tax relief for which equates to a reduction in the Group's
overall tax liability of GBP1.3m. The Directors obtained
professional advice both at the time the return was filed and
subsequent to the determination, and are satisfied that the Group's
application of transfer pricing rules was correct. As such an
appeal has been raised against the determination. The Board does
not consider it likely that the subsidiary will be required to
resubmit its 2015, 2016 or 2017 filings.
12. SUBSEQUENT EVENTS
Other than the declaration of an interim dividend as disclosed
in Note 9, there have been no material changes in the affairs or
financial position of the Company and its subsidiaries since the
statement of financial position date.
DIRECTORS' RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
The condensed consolidated financial statements for the six
months ended 30 June 2021 have been prepared in accordance with
International Accounting Standard 34 ("IAS 34") as adopted by the
UK.
The interim management report includes a fair review of the
information as required by:
- DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of the important events that have occurred during the
first six months of the current financial year and their impact on
the condensed set of consolidated financial statements and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
- DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
impacted the financial position or performance of the Group during
the period; and any changes in the related party transactions from
the Group's consolidated financial statements for the year ended 31
December 2020 that could do so.
Signed on behalf of the Board
Geoff Carter
Adam Westwood
Chief Executive Officer
Chief Financial Officer
26 July 2021 26 July 2021
INDEPENT REVIEW REPORT TO SABRE INSURANCE GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the condensed
consolidated statement of profit or loss account, condensed
consolidated statement of comprehensive income, condensed
consolidated statement of financial position, condensed
consolidated statement of changes in equity, condensed consolidated
cash flow statement and the related notes 1 to 12. We have read the
other information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2.1, the annual financial statements of the
group will be prepared in accordance with UK adopted IFRSs. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the 'Basis for Conclusion'
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
26 July 2021
APPIX - FINANCIAL RECONCILIATIONS
ADJUSTED PROFIT BEFORE TAX
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------- ---------- ---------- ------------
Profit before tax 22,161 27,750 49,122
----------------------------------- ---------- ---------- ------------
Add:
----------------------------------- ---------- ---------- ------------
Amortisation of intangible assets - - -
----------------------------------- ---------- ---------- ------------
Exceptional items - - -
----------------------------------- ---------- ---------- ------------
Adjusted profit before tax 22,161 27,750 49,122
----------------------------------- ---------- ---------- ------------
ADJUSTED PROFIT AFTER TAX
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------- ---------- ---------- ------------
Profit after tax 18,001 22,495 39,798
----------------------------------- ---------- ---------- ------------
Add:
----------------------------------- ---------- ---------- ------------
Amortisation of intangible assets - - -
----------------------------------- ---------- ---------- ------------
Exceptional items - - -
----------------------------------- ---------- ---------- ------------
Tax on exceptional items - - -
----------------------------------- ---------- ---------- ------------
Adjusted profit after tax 18,001 22,495 39,798
----------------------------------- ---------- ---------- ------------
NET LOSS RATIO
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------- ---------- ---------- ------------
Net insurance claims 36,538 42,122 88,110
-------------------------------- ---------- ---------- ------------
Less: Claims handling expenses (3,878) (3,977) (7,637)
-------------------------------- ---------- ---------- ------------
Net claims incurred 32,660 38,145 80,473
-------------------------------- ---------- ---------- ------------
Net earned premium 72,739 84,672 165,707
-------------------------------- ---------- ---------- ------------
Net loss ratio 44.9% 45.1% 48.6%
-------------------------------- ---------- ---------- ------------
EXPENSE RATIO
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------- ---------- ---------- ------------
Total expenses 17,569 18,606 36,670
-------------------------------- ---------- ---------- ------------
Plus: Claims handling expenses 3,878 3,977 7,637
-------------------------------- ---------- ---------- ------------
Net operating expenses 21,447 22,583 44,307
-------------------------------- ---------- ---------- ------------
Net earned premium 72,739 84,672 165,707
-------------------------------- ---------- ---------- ------------
Expense ratio 29.5% 26.6% 26.7%
-------------------------------- ---------- ---------- ------------
COMBINED OPERATING RATIO
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------- ---------- ---------- ------------
Total expenses 17,569 18,606 36,670
-------------------------- ---------- ---------- ------------
Net insurance claims 36,538 42,122 88,110
-------------------------- ---------- ---------- ------------
54,107 60,728 124,780
-------------------------- ---------- ---------- ------------
Net earned premium 72,739 84,672 165,707
-------------------------- ---------- ---------- ------------
Combined operating ratio 74.4% 71.7% 75.3%
-------------------------- ---------- ---------- ------------
SOLVENCY COVERAGE RATIO - PRE DIVIDEND
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
------------------------------ ---------- ---------- ------------
Solvency II net assets 107,465 127,859 122,500
------------------------------ ---------- ---------- ------------
Solvency capital requirement 58,132 58,624 60,327
------------------------------ ---------- ---------- ------------
Solvency coverage ratio 184.9% 218.1% 203.1%
------------------------------ ---------- ---------- ------------
SOLVENCY COVERAGE RATIO - POST DIVIDEND
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------------- ---------- ---------- ------------
Solvency II net assets 107,465 127,859 122,500
----------------------------------------- ---------- ---------- ------------
Less: Final dividend (9,250) (23,750) (29,250)
----------------------------------------- ---------- ---------- ------------
Solvency II net assets (post dividend) 98,215 104,109 93,250
----------------------------------------- ---------- ---------- ------------
Solvency capital requirement 58,132 58,624 60,327
----------------------------------------- ---------- ---------- ------------
Solvency coverage ratio - post dividend 169.0% 177.6% 154.6%
----------------------------------------- ---------- ---------- ------------
RETURN ON TANGIBLE EQUITY
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------------- ----------- ----------- ------------
IFRS net assets at year end 252,422 271,770 266,400
----------------------------------------- ----------- ----------- ------------
Less:
----------------------------------------- ----------- ----------- ------------
Goodwill at year end (156,279) (156,279) (156,279)
----------------------------------------- ----------- ----------- ------------
Closing tangible equity 96,143 115,491 110,121
----------------------------------------- ----------- ----------- ------------
Annualised closing tangible equity * 104,894 114,236 110,121
----------------------------------------- ----------- ----------- ------------
Opening tangible equity 110,121 111,138 111,138
----------------------------------------- ----------- ----------- ------------
Average tangible equity 107,508 112,687 110,630
----------------------------------------- ----------- ----------- ------------
Annualised adjusted profit after tax ** 36,002 44,990 39,798
----------------------------------------- ----------- ----------- ------------
Annualised return on tangible equity ** 33.5% 39.9% 36.0%
----------------------------------------- ----------- ----------- ------------
* Annualised closing tangible equity is a proxy of the expected
closing IFRS tangible equity as at 31 December 2021. This is equal
to the closing tangible equity as at 30 June 2021, plus the profit
after tax for the 6 months to 30 June 2021, less the interim
dividend paid of GBP9,250k (30 June 2020: GBP23,750k). No
adjustment to the 31 December 2020 closing tangible equity has been
made.
** Half year adjusted profit after tax for 30 June 2021 and 30
June 2020 annualised. No adjustment to the full year adjusted
profit for the period 31 December 2020 has been made.
RETURN ON OPENING SCR
Unaudited Unaudited Audited
at at at
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
----------------------------------------- ---------- ---------- ------------
Opening SCR 60,327 59,495 59,495
Annualised adjusted profit after tax ** 36,002 44,990 39,798
----------------------------------------- ---------- ---------- ------------
Return on SCR 59.7% 75.6% 66.9%
----------------------------------------- ---------- ---------- ------------
** Half year adjusted profit after tax for 30 June 2021 and 30
June 2020 annualised. No adjustment to the full year adjusted
profit for the period 31 December 2020 has been made.
GROSS EARNED PREMIUM
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'k GBP'k GBP'k
-------------------------------------- ---------- ---------- ------------
Gross written premium 78,220 86,938 173,235
Movement in unearned premium reserve 4,284 7,100 12,527
-------------------------------------- ---------- ---------- ------------
Gross earned premium 82,504 94,038 185,762
-------------------------------------- ---------- ---------- ------------
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END
IR DQLFLFDLXBBD
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