Sabre Insurance Group – Valued at £326m, this year making £50.9m profits, earnings of 15.6p and paying a handsome 13.9p per share dividend – shares too cheap at 130.50p, brokers valuation 200p

19.03.2025

Yesterday morning saw Sabre Insurance Group (LON:SBRE), one of the UK’s leading motor insurance underwriters, delivering some fairly impressive results for last year.

It recorded a big profits surge to record premium income as a result of strict underwriting.

However, the market, as yet, has not grasped the attractions of this £326m-capitalised group.

The Business

The Dorking, Surrey-based group provides private car and motorbike insurance through a broad network of insurance brokers with car insurance also being sold directly through its ‘Go Girl’ and ‘Insure 2 Drive’ brands.

It has a diversified book of business and broad underwriting footprint with a bias towards the higher average premium segment.

The company is looking to maintain its focus on the UK private motor insurance market whilst diversifying into other vehicle underwriting opportunities.

Its aim is to continue to provide brokers and direct customers with quotes across the entire risk spectrum and ensure the group continues to deliver market-leading underwriting performances, together with controlled and attractive growth over the long term.

Yesterday’s 2024 Final Results Announcement

On just a 5.0% increase in its gross written premiums, for the year to end-December 2024, at £236.4m (£225.1m), the group delivered a massive 105.9% increase in its pre-tax profits at £48.6m (£23.6m).

It also reported a 44.4% improvement in its dividend payments to 13.0p (9.0p) per share.

Management Comment

CEO Geoff Carter stated that:

"We are extremely pleased with our performance in 2024, demonstrating strong cycle management over the past twelve months.

We grew strongly in the first half of the year when market conditions were attractive, and we maintained our strict underwriting discipline despite a steep decline in market prices during the second half.

This allowed Sabre to deliver a strong financial performance and robust capital position for the business. 

We were delighted to announce our Ambition 2030 growth strategy in December last year and are encouraged by the early progress we have made as we continue to invest in the growth of the business.

Loss ratios on core Motor Vehicle and Motorcycle are excellent and underpin this strategy, while our complementary growth initiatives are progressing as planned.

Sabre Direct, our in-house Motorcycle brand, is being soft launched in March, and core Motor Vehicle pricing tests are planned for H2 2025, in-line with the timeline set out at our recent Capital Markets Event. 

We continue to expect profit growth from Ambition 2030 to be weighted towards the second half of the six-year period as these initiatives gain further traction and momentum - complementing our core business.

As a result of our strong performance, we have proposed a significantly increased dividend of 13p per share alongside our first share buyback programme, through which we intend to distribute a further £5m of excess capital during 2025.

This is an evolution of our existing capital management framework and reflects our view that the strategic objectives set out in Ambition 2030 will generate, rather than require, additional capital.

While our plans to deliver sustainable growth will not be a "straight-line" evolution, the next few years will be exciting as we build on the strong 2024 result and deliver sustainable medium-term growth in GWP, profit and shareholder returns."

Broker’s Views

At Panmure Liberum, analysts Abid Hussain and Barrie Cornes, rate the group’s shares as a Buy, looking for a Target Price of 200p.

For the current year to end-December they see gross written premiums of £251.0m (£236.0m), with pre-tax profits of £50.9m (£48.6m), generating earnings of 15.6p (14.5p) and paying out a dividend of 13.9p (13.0p) per share.

Their estimates for next year are for £268.0m gross written premiums, with £55.3m profits, earnings of 17.0p per share and a 14.9p dividend.

For 2027 the analysts look for £295.0m premiums, £60.6m profits, 18.6p earnings and a 16.0p per share dividend.

The brokers considered that:

“Sabre’s Management has managed the underwriting cycle successfully, maintaining positive earnings throughout the period of elevated claims inflation, moving well ahead of peers.

This has positioned the group to take market share and recover margins to target levels.

However, the share price continues to trade as if margins will remain weak or volumes will not materialise due to competition or both.

The evidence clearly points to material improvements in both.

The new focus on earnings growth will help re-rate the stock as it executes against the plan.”

Analyst Philip Kett at Jefferies is impressed at the group’s intention to buy-back £5m of its shares, to bridge the gap between its growth ambitions and the current cyclical downswing.

His Buy rating has a 145p Target Price.

My View

These shares, which were up to 182p a year ago, are now looking really quite undervalued at the current 130.50p, capitalising the whole group at just £326m.

They have not performed well since my early January Profile, but they still make a very attractive purchase at these levels.

(Profile 10.01.2025 @ 134p set a Target Price of 170p)