Sabre Insurance Share Discussion Threads

[wish i wasnt in rbs] 20/5/2020 09:17

wba - good points.

The reason for pressure to withhold dividends was due to worries that policy claims couldn't be met without raising more capital. So travel, business interruption, etc.
As soon as it's recognised that a company is having no problems there, there would be no reason. Except politics, of course.


Plus they will have additional surplus capital to give away next year from any dividends withheld from this year.

[wba1] 21/4/2020 16:21

Except, of course, that Admiral is barely an insurer. More like an underwriting agency for Munich Re, to whom it lays off huge amounts of its risk and receives a very large % of any surplus profit as commission. So if there is any sort of cap on the profit commission in their deal with Munich Re it would not be their money they are giving away.

[jonwig] 21/4/2020 16:10

A bit unexpected, maybe?

Admiral is to refund £110m of premiums to motor insurance customers because people are driving less during the lockdown, a move that will put pressure on rivals to follow suit.

The group is the first major UK insurer to offer a blanket refund to all customers. Traffic levels have reduced by 70 per cent because of restrictions on movement during the coronavirus pandemic, according to research from RBC Capital Markets, a development that will lead to fewer accidents and lower claims costs for insurers.

“We want to give the money we would have used to pay these claims back to our loyal customers in this difficult time,” said Cristina Nestares, head of UK insurance at Admiral. “We have also already reflected this change in driving behaviour in our pricing for customers and will continue to do so.”

The company plans to return £25 per vehicle insured to customers. That is equivalent to 5 per cent of the average annual motor insurance premium at the end of last year, according to data from the Association of British Insurers.

Admiral says the refund will apply to 4.4m vehicles. It has also committed to spending £80m on other measures, including price cuts and help for NHS workers.
£25 Amount per vehicle insured that Admiral plans to return to customers

Last week Aviva said it would allow customers to reduce their premiums by going online to change the amount of miles they expect to drive this year but it stopped short of a blanket refund for all customers.

In the US, insurers have been more proactive about refunding premiums during the past few weeks.

Groups including Geico, Allstate and State Farm have between them pledged to return billions of dollars to customers. In California, the state regulator has insisted that insurers return premiums for the months of March and April, and potentially for May as well if the lockdown continues.

Shares in UK motor insurers such as Admiral and Hastings have performed relatively well since the crisis started, outperforming the FTSE All-Share index. Admiral shares rose 3 per cent in response to the refund news on Tuesday, and they are now only 3 per cent below their level in mid-February.

But analysts have warned that the crisis will cause problems for motor insurers in the medium term, despite falling traffic levels. The closure of body shops and the low availability of spare parts could drive up repair costs, while the end of social distancing could lead to increased travel and greater risk of accidents.

[jonwig] 17/4/2020 10:20

wba - good points.

The reason for pressure to withhold dividends was due to worries that policy claims couldn't be met without raising more capital. So travel, business interruption, etc.
As soon as it's recognised that a company is having no problems there, there would be no reason. Except politics, of course.

[wba1] 17/4/2020 09:54

Fair comment by IC and I am holding Sabre in my long term account. But they already have excess capital and, unless they pay that special divi they will simply depress ROE to be seen as politically correct.

Of course, they could use the capital to write more business - but the fact that IC complained about their lack of growth just shows that IC do not understand the retail insurance market. It is a commodity market these days. The only exception is niche risks, and that is where Sabre specialise. Significant growth would require them to write more mainstream business, which is much less profitable unless you can write the volumes of the likes of Direct Line. Just look at the awful underwriting performance of Hastings over the years, whilst trying to compete with the big boys.

Best to remain a small insurer but one which understands its niche and is able to achieve a COR 10-20% better than the mainstream.

[jonwig] 16/4/2020 18:38

IC, buy at 272p:

If there is a criticism of Sabre’s business model, it is a lack of growth. But in the current circumstances this does not seem like a reason to overlook what remains a highly cash-generative business with a defendable position in a market where demand is structurally supported. Numis’s annual forecast assumes an 8.5p special will be declared for 2020 at some point, giving the shares a 7.7 per cent yield. If this ends up deferred, too, then Sabre’s capital will only build. Buy.

[jonwig] 08/4/2020 14:48

rolo - no, the 8.1p final will be paid, but the special has been deferred - maybe to the interims.
It's a PR exercise, as I don't see much direct covi risk here.

[rolo7] 08/4/2020 13:22

Dividend cancelled?

[jonwig] 07/4/2020 07:39

Final results:



The important ratios seem to be within target range.
Special dividend absent, but unless something very unexpected happens it could be added to the next interim. I guess companies which are too generous to their shareholders (or their directors)will attract adverse comment.

[wba1] 05/4/2020 11:39

From The Scottish Mail on Sunday;

INVESTORS hunting for shares that are less exposed to the virus crisis might want to take a look at car insurer Sabre Insurance.

While major companies have been slashing their dividends left, right and centre, number-crunchers are predicting that Sabre will on Tuesday unveil a special dividend alongside its annual results.

That will mean the FTSE 250 company pays a larger dividend than it did last year with pre-tax profits expected to come in around the same as the year before at £61million.

Most shares have gone into reverse recently, but Sabre appears to have dodged the worst of it.

[jonwig] 26/3/2020 07:37

A leak? Quite likely I think. I'm not happy that companies are being advised to hold back results. They should be able to present the year's figures without giving future guidance.
Cancelling dividends seems to be the fashion! With this company, the dividend is a prime reason to invest.

[wba1] 25/3/2020 16:40

I am wondering if there has been a leak of results or outlook statement (including their view on the impact of the pandemic on loss ratio). I know they were sold off for no reason in the panic, but a near 20% increase in one day when other insurers with a majority of private car business (such as Hastings and Direct Line)have had much smaller recoveries suggests some reason behind the rise.

[jonwig] 24/3/2020 10:57

Interesting, thanks.

[wba1] 24/3/2020 10:05

Sabre is almost exclusively private car business (may be a few light commercial in there), which will see the greatest reduction in risk exposure. It also has reserves exclusively in bonds and cash (so only exposure to either rising interest rates - unlikely this year - or corporate bond default). On a cautious view that loss ratio may decrease by 10 points (equivalent to a 50% reduction in claims for 3 months and some tail effect) this would deliver an additional £20m to the 2020 bottom line. But I would expect Sabre (like any general insurer) to smooth the profit impact by overreserving for 2020 accident year or holding back prior year releases. But however you cut it, it is good news for Sabre profit. Either a big benefit for 2020 results or a smoothed benefit over 2-3 years.
My only concern is that I have worked with both Keith Morris (ex Sabre owner and chair) and Patrick Snowball (current chair) in the past. Morris is very impressive. Snowball was a complete clown - but I doubt even he can stuff this up.

[jonwig] 19/3/2020 08:18

Direct Line says:

Within Motor the Group anticipates lower Motor claims frequency in the short term as the UK government increasingly advises against non-essential travel.
Can we have 300p back please?

[jonwig] 10/3/2020 14:41

FY results 24 March.

[jonwig] 29/2/2020 08:41

Possible virus-related upside for pure motor insurers?

• less economic activity, fewer vehicles on the road;

• increased voluntary or compulsory self-isolation, fewer vehicles on the road;

• increased online shopping: one van tootling about rather than a dozen cars.

(Just a naive thought.)

[jonwig] 23/10/2019 06:43

Citywire:

Peel Hunt has downgraded Sabre Insurance (SBRE) after the shares ticked up but continues to back its ‘defensive qualities’.

Analyst Andreas van Embden downgraded his recommendation from ‘buy’ to ‘add’ with a target price of 295p on the shares, which were trading at 296p yesterday.

He said a ‘solid performance’ from the group pushed the shares above the target price, prompting a downgrade.

‘Sabre remains a defensive holding in the motor sector, with attractive margins delivering circa 20% returns, a modest exposure to the Financial Conduct Authority pricing review, and a 7% dividend yield providing valuation support,’ said van Embden.

‘However, it is not immune to the price cycle despite its niche underwriting focus; as such, we believe the value proposition is largely driven by the yield it offers until the cycle turns.’
Fair comment, I guess.

[jonwig] 10/10/2019 07:28

Trading statement:



All good, I guess. And not affected by regulatory threats directed at the practice of punishing customer fidelity.

[jonwig] 20/9/2019 15:54

Is there a bid coming here? From the US? UK insurers have been snapped up at various points in the past few years, and weak GBP is tempting. Trade volumes quite high.

"Buy while stocks last."

[jonwig] 30/3/2019 06:27

IC makes a useful point:

Sabre is also relatively unaffected by the Financial Conduct Authority review into dual pricing, essentially the differance in premium rates offered to new and existing customers, because it does not use this practice. Nor does it use behavioural factors such as pushing rates higher on customers deemed less likely to shop around.

and concludes:

The strong solvency ratio has allowed a 6p a share special dividend. Progress in the coming year is likely to bring more of the same, with flat premium income, but the shares are worth having for the dividend. Buy

[jonwig] 28/3/2019 19:56

Results presentation:

[jonwig] 28/3/2019 09:33

Yes, the combined ratio probably tells why: Sabre 70.6% vs Admiral 89.3%. And, as they say (repeatedly) they aren't chasing volume.

[wish i wasnt in rbs] 28/3/2019 09:28

Sabre Insurance Group plc (the "Group", or "Sabre"), one of the UK's leading private motor insurance underwriters? - sales £210m v Admiral £3.28bn

Leading in profit terms Sabre profit after tax £50m Admiral £390m