Geoff Carter (pictured) and his team at Sabre Insurance Group are well-versed in banging the drum of a ‘profitability over volume’ strategy regardless of whether or not the wider industry has wanted to hear the tune for years now.
It’s an approach that’s paying dividends for the motor insurer which yesterday posted its full-year 2023 results, revealing a 31% year-on-year increase in GWP while its profit after tax grew to £18.1 million from £11.1 million in 2022. Digging deeper into the results in an interview with Insurance Business, CEO Carter noted that Sabre’s improved COR – 86.3%, compared to FY 2022’s 93.4% – was the key takeaway, given the firm’s focus on the margin first.
“We’ve had a pretty good combined ratio for the year, heading back towards our normal targets,” he said. “Then almost secondary to that is our really good growth. We grew by 31%... and probably the most important thing is private car, where we grew by over 47% which is just an astonishing level of growth for one year.”
Examining some of the factors behind the growth Sabre has seen in private car, Carter pointed towards the recent ABI data on how market prices have continued to rise. The second half of the year saw strong growth coming through as providers across the market started to correct their pricing. Sabre’s results have been driven by its pricing discipline in recent years, he said, which have laid the foundations to capitalise on current market conditions.
Staying the course with its profitability over volume strategy has been tough going, he said, because it has meant holding your nerve even when you feel you’re one of only a few providers pricing properly. It’s good to see Sabre’s strategy paying off and to see that its message on pricing correctly is starting to be heard, acknowledged and actioned across the wider market.
“We’re still seeing really good growth coming through for the first quarter,” he said. “We haven't seen any tailing off of our volumes. Claims inflation we still see at 10%, so we don't really see claims inflation reducing. And we haven't seen any signs - apart from one or two limited examples – of pricing coming down in Q1. So, it feels like pricing discipline is broadly being maintained at this point.”
Looking at Sabre’s agenda for the period ahead, Carter highlighted that the business is expecting to grow from 10-20% this year. As to what that looks like, he pointed to its car account, which is already primed and ready for further profitable growth. Sabre is very happy to continue working closely with the broker market, he said, and has no intention of moving away from its broker distribution channels.
Turning to its bike and taxi accounts, Carter pointed to how its motorcycle business delivered close to long-term target profitability, and almost halved its loss ratio last year – from 114% to 65%. Looking to how this will evolve, he touched on plans to further expand Sabre’s bike distribution, which will likely include signing up a few new distribution partners to the business.
“What we’re looking for is people who have expert knowledge of the market,” he said. “There are some very good bike insurance brokers who we’d be very happy to deal with. For us, we need to be convinced that they can work with us on our profit-first, not growth-first strategy. We are pretty certain we have some broking partners out there who will buy into our philosophy of profit-first and looking to grow an account sustainability. That’s who we’re looking for.”
On taxi, he noted that the conditions in the market are still quite ugly and the account is still in a developmental phase with premiums being constrained until market conditions improve.
“Our view is that there are still some people who are under-pricing and that we’re not going to grow the taxi account until we think the market is in a sensible place,” he said. “So, we’re very happy to trade sideways and we should see the loss ratio improve this year. We do expect taxi to make a profitable contribution in 2024 but not at our target levels. Then we’ll see what the market does.”
Looking to 2024, Carter said he expects the insurer’s profits to rise substantially compared to 2023. Market consensus projected Sabre roughly doubling in the last year, which did happen, and it’s a similar story for 2024.
“The executive team has been exactly the same for the last few years,” he said. “Below the exec team, we’ve got some really good new people joining and we’ve been able to promote quite a lot of people over the last year. And we’re looking to pay some good bonuses and pay raises for this year.
“As company profitability improves, we’re looking to share that with staff as we go. Our culture is incredibly important to us and we couldn’t be more pleased with how well everyone supports the business.”
