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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sabre Insurance Group Plc | LSE:SBRE | London | Ordinary Share | GB00BYWVDP49 | ORD GBP0.001P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -2.40 | -1.37% | 172.20 | 169.60 | 172.80 | 173.00 | 169.40 | 173.00 | 140,242 | 16:35:18 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Insurance Carriers, Nec | 158.32M | 10.11M | 0.0404 | 41.93 | 423.5M |
From Apr 2021 to Apr 2024
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
Hot Features
Premium
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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July 27, 2021 02:00 ET (06:00 GMT)
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