At a capital markets session for investors and analysts last week, Geoff Carter (pictured), CEO of Sabre Insurance, announced the group’s target of hitting at least £80 million by 2030 – and its roadmap to reaching that ambitious milestone.
In a Press interview with Insurance Business following the session, he noted that how refreshing it was to be able to sit down with the market and explain where its growth strategy could take the business in the medium term. Sabre’s ambition is to completely clear that £80 million marker, he said, and given that it made £23 million last year, and consensus puts it on course to hit £47 million this year, it’s “a reasonable step up”.
Three core pillars underpin its strategy, he said –an adjustment in the margins of its current core product, a “step to the left” that will allow Sabre to write more business, and the launch of a new direct motorcycle proposition. The margins adjustment will see the group have a bit more flex in the margins of its current core non-standard product, i.e. its high average premium business.
“Then we’re taking what we describe as a ‘step to the left’ in terms of us being on £1,200 average premium while the market’s on just under £600,” he said. “If we just take a little step to the left and have a slightly lower margin on that business, we can write potentially significantly more business. Because the policies are distributed in the UK by average premium, and there are a lot more policies at £600 than there are at £1,200. There's a delta and a gap in between them, where we think we can make a difference.”
The third piece is around its motorcycle strategy, Carter said, and it’s something that has been in the works for a couple of years now. Now that it has got rates that it’s happy with, Sabre is launching what it believes is the UK’s first online motorcycle insurance brand in Q1 2025. It will be entirely sold online and promoted through price comparison websites, using online chat support rather than call centres.
Carter noted that, in addition, the group is looking to launch with some new brokers next year, which ties in neatly with its ambitions for its motorcycle offering. Sabre used to have two partnerships, MCE and Bennetts, and MCE entered into administration, he said. “When MCE went bust, we actually managed off that portfolio over the last year or so, on a direct basis. That gave us a lot of information on how we could launch our direct product on an online-only basis because that’s how we managed off the MCE business.
“Our view is that the motorcycle market falls into two buckets. There are those who are very loyal to their brokers and they like being in the Bennetts’ club, or they have an affinity with the brands that Atlanta or Swinton have. And then there are people who just buy on price. Our direct product is really aimed squarely at those who are just buying on price, and who want to know that it’s underwritten by a big, reputable company – hence why we’re using the Sabre brand.”
He underscored, however, that Sabre is still equally committed to doing business through the broker market in the market as well. There’s a strong segmentation between those who are brand or club-sensitive and those who are price-sensitive, he said, and one is not likely to convert the other either way. What is interesting to see, he said, is that those looking for the backing of a broker in this market tend to be more ‘sticky’ than customers tend to be in other motor segments, including car.
On why the time was right for the launch, he highlighted that Sabre’s work with MCE gave the business the confidence to know this wouldn’t be beyond them. It’s no easy task to manage off a portfolio you don’t really want to manage off, he said, and it was a big job, with the last portfolio transferred off about a month and a half ago. “At the same time, our teams internally have spent probably the last year or so building the new rates for motorcycle, and it's on an entirely new pricing infrastructure,” he said.
“Building that infrastructure meant we could launch on direct as well as through brokers. So, the three things came together very nicely for us - new rates, new brokers and new direct [capabilities], they all just came together at the same time.”
Looking to 2025, Carter highlighted that the year ahead will be one of “transition” for the business as it starts to roll out its offerings. But while 2025 is a year of transition, he expects 2026 to be the year when the numbers start to reflect the work that has been done and the impact that it’s having on the market. Addressing the state of the motor insurance market more broadly as the New Year approaches, he shared his belief that claims inflation is still running fairly high – probably at eight or nine per cent.
“Some of the pricing surveys and trackers that have come out have said there’s virtually no price put through for a lot of insurers this year,” he said. “That's not what we've done. We've continued to price to cover claims inflation. I think the market has probably got slightly over competitive in Q3 and Q4. Some people hope that will correct in early 2025, others think it might take longer.
“So, that'll be the interesting bit to see going into 2025 - do people stay overly competitive for too long? In which case the 25 and 26 results may not look great. Or does that all correct fairly early next year? That's the really interesting one to watch.”
