Annual Report and
Accounts 2022
Keeping our
customers on
the road
02
Strategic Report
02 Introduction
03 The Sabre journey
04 Our Investment Case
06 Chair’s Letter
08 Market Context
10 Chief Executive Officer’s Review
13 Our Values
14 Our Strategy
16 Our Business Model
17 Key Performance Indicators
19 Principal Risks and Uncertainties
29 Viability Statement
31 Section 172 Statement
35 Chief Financial Officer’s Review
38 Responsibility and Sustainability
50 FCA Consumer Duty
51
Corporate Governance
52 Chair’s Governance Letter
53 Board of Directors
56 Governance Report
62 Audit Committee Report
65 Risk Committee Report
67 Nomination and Governance
Committee Report
69 Remuneration Committee Report
72 Directors’ Remuneration Policy
78 Annual Report on Directors’
Remuneration
88 Directors’ Report
91 Statement of directors’
responsibilities in respect of the
financial statements
Contents
92
Financial Statements
93 Independent Auditor’s Report
100 Consolidated Profit or Loss Account
101 Consolidated Statement of Comprehensive Income
102 Consolidated Statement of Financial Position
103 Consolidated Statement of Changes in Equity
104 Consolidated Statement of Cash Flows
105 Notes to the Consolidated Financial Statements
163 Parent Company Statement of Financial Position
164 Parent Company Statement of Changes in Equity
165 Parent Company Statement of Cash Flows
166 Notes to the Parent Company Financial Statements
170 Financial Reconciliations
173 Shareholder Information
174 Directors, Advisers and Other Information
SABRE ONLINE:
sabreplc.co.uk
52
Check Sabre’s financial results
for the year
Hear from Sabre’s
Chair, Andy Pomfret
92
Find out about how our values
underpin our strategy
13
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2022
01
Introduction
We are a motor insurer based in the UK, with a track record of market-leading
underwriting performance across the cycle and a diverse, multi-channel
distribution strategy.
We are rising to
meet the challenge.
Sabre Insurance Group is a UK-based motor insurer,
providing fairly priced policies to a wide range of
customers with a particular focus on those who are less
well served by mass-market insurers. We benefit from
our pricing expertise, experience and vast historical
data in the more ‘specialist’ areas of the market.
2022 presented a fresh challenge to the insurance
market, with rapid inflation requiring immediate
adjustments to pricing and significantly increasing
claims costs. Sabres agile model and tightly controlled
feedback loops allowed fast and accurate re-pricing
of policies, limiting the impact of inflation and providing
a strong base from which the business can grow.
Key financial highlights
The business returned to growth in 2022
due to the introduction of motorcycle
business and the expansion of our taxi
insurance product. The combined
operating ratio was high by historic
standards, a result of the rapid increase
in inflation during the year and strain
generated through the rapid growth
ofthe two new products.
161%
Pre-dividend solvency
coverage ratio
154%
Post-dividend solvency
coverage ratio
4.5p
Dividend per share
£171.3 m
Gross written premium
£12.8m
Profit before tax
96.0%
Combined operating ratio
Strategic Report Governance Financials
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Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
02
The Sabre journey:
How we support our customers
CHOOSING THE RIGHT POLICY
Most customers will find the right policy for them
by entering their details into a price comparison
website and choosing their policy based on a
comprehensive list of quotes from a number of
insurers. We aim to provide a fair price for almost
everyone who requests a quote, meaning that
we can service customers others can’t reach.
BUYING A SABRE POLICY
We sell policies directly to customers through
our brands Go Girl and Insure2Drive, and
through insurance brokers, meaning that our
policies often sit behind well-known household
names. This diverse distribution network allows
us to provide our policies to the largest possible
customer base, and gain the direct customer
insights through operating our own brands.
BEING A SABRE CUSTOMER
Whether you buy a policy through
Sabre’s direct brands or through a
broker, you can be assured of excellent,
expert customer service. Our direct
brands are managed through a
specialist, UK-based call centre while
our network of brokers operate to the
quality expected by some of the UK’s
largest customer brands.
YOU’RE IN SAFE HANDS
Sabre is a successful and profitable
Group, with a very robust balance sheet.
The Group holds considerably more
capital than that which is required to
meet its expected liabilities, and
operates a low-risk model, meaning that
you can be assured that we will be there
when you need to make a claim.
IF THE WORST HAPPENS
Sabre’s dedicated claims handling team are
experts in their field, targeting fast, fair claims
payments. We will thoroughly investigate claims
we believe to be fraudulent, to ensure that honest
customers continue to get the best deal possible.
We operate a ‘zero backlog’, transparent culture,
as we understand that no customer should be left
in the dark when making a claim.
RENEWING YOUR POLICY
Sabre has always priced renewals the
same as new policies as we feel this is only
fair to the customer and trust in our
bespoke fully-automated pricing model.
Our purpose
To provide motor insurance, available to the
widest possible range of drivers, based upon a
fair, risk-based pricing model that is consistent
across all customers. Generate excess capital
andreturn this to shareholders, or reinvest in
thebusiness in order to increase future returns.
Strategic Report Governance Financials
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Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
03
Our Investment Case
A Resilient Business
Sabre operates a highly disciplined approach to underwriting,
targeting a combined operating ratio below 80%. This is a target
margin high above industry norms and means that even in years
where costs are significantly greater than expected, the Group
has been able to deliver an underwriting profit.
Importantly, our underwriting discipline means that we have taken
pricing action early where market conditions change, meaning
that future claims costs are fully covered and underwriting
performance is expected to recover quickly from the one-off
shock caused by the unexpected, rapid inflation in 2022.
Motor insurance is a compulsory purchase for motorists.
As a specialist provider, primarily in non-standard markets,
Sabrehas a defensive position.
The Group is required to hold excess capital, which is known
asits Solvency Capital Requirement (“SCR”). In addition,
theGroup prefers to hold net assets, on a regulatory basis,
atbetween 140%-160% of this requirement. This means
theGroup holds a significant excess of assets over liabilities,
providing a strong balance sheet able to withstand the most
extreme foreseeable shocks.
A resilient
business
modelin an
uncertain world
Sabres business is positioned
toperform well in the current
environment. The Group possesses
anumber of competitive strengths
which have enabled a long-term track
record ofmarket-leading underwriting
performance, reliable cash generation
and attractive growth where market
conditions are favourable.
Whilst rapid and unexpected inflation
in 2022 reduced profits in the
short-term, the Groups sharp focus on
underwriting means that we expect a
strong recovery into 2023 and beyond.
READ MORE
Chief Executive Officer’s
review on page 10
READ MORE
Our business model
on page 16
Group Solvency Capital Ratio
(%)
100
160
180
120
140
200
220
240
Pre-dividend solvency capital ratio
Post-dividend solvency capital ratio
FY
2022
HY
2022
FY
2021
HY
2021
FY
2020
HY
2020
FY
2019
HY
2019
FY
2018
HY
2018
FY
2017
Preferred operating range – Higher
Preferred operating range – Lower
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Context
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and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
04
Attractive and diversified markets
that offer significant growth
opportunities
Sabre’s market share of c. 303k policies represents a very small share of the total motor insurance
market, leaving considerable scope for market share growth when market conditions become
favourable. This growth is expected to be generated in each of our three main business areas:
Motor vehicle – Our core historic market, in which we exercise high-quality underwriting to
achieve market-leading margins
Taxi – A market we expanded into in 2022, having linked with an expert partner, allowing for
rapidgrowth into the sector
Motorcycle – We entered this market at scale in 2021 and expect to grow our footprint
andcontinue to enhance the quality of underwriting as we gain experience in the sector
Reliable Dividend Flow
Sabre’s core business is fundamentally capital-generative. Some capital is used to fund future growth,
while the majority of capital generated by the Group has historically been returned to shareholders by
way of an ordinary and special dividend. Since IPO the Group’s dividend payout ratio has remained
above 98.4% of earnings.
2022 has been a challenging year for the industry and for Sabre, with unprecedented levels of inflation
impacting in-year earnings. However, the Group has continued to pay a dividend to shareholders,
equivalent to 111% of 2022 profit after tax.
Low-Risk and Capital-Light
The Group manages risk in order to reduce volatility in the result and limit the amount of regulatory
capital required to be held, while balancing this against maximising
earnings generation.
While the Group holds significant financial investments, these are invested in relatively low-risk
and capital-light assets, primarily government-backed assets and highly rated corporate bonds.
These assets are the fuel used to power the Group’s exceptional target underwriting returns,
rather than being a major source of income. In this way investment volatility is reduced and
Management’s focus remains fully on generating and protecting underwriting returns.
Reinsurance is used to limit exposure to individual large claims. Sabre purchased cover from
reinsurers such that for any claim over £1m, the amount above £1m is met by the reinsurer.
Thisreduces year-on-year volatility and the capital that the Group is required to hold.
Optimised for Growth
The Group operates a technologically-focused approach to underwriting excellence, and is constantly
optimising pricing opportunities while deploying best-in-class underwriting and claims teams.
We will consider entering new partnerships or executing acquisitions where we see good value
opportunities in areas which would complement our operations, bringing differentiated experience
(such as the MCE and Freeway relationships).
READ MORE
Risk Committee report
on page 65
READ MORE
Principal risks and
uncertainties on
page 19
READ MORE
Risk Committee report
on page 65
READ MORE
Principal risks and
uncertainties on
page 19
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About Sabre Chair’s letter Market
Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility and
Sustainability
FCA
Consumer Duty
05
Sabre Insurance Group plc Annual Report and Accounts 2022
Our purpose
To provide motor insurance, available to
the widest possible range of drivers, based
upon a fair, risk-based pricing model that
is consistent across all customers. To
generate excess capital and return this
toshareholders, or reinvest in the business
in order to increase future returns.
ANDY POMFRET
Chair
Introduction
I introduced my statement last year on the hopeful note that the worst
of the COVID-19 pandemic was behind us and was looking forward to
returning to a “new normal” in the near future. While, happily, I had
been proved right in my optimism in that regard, we had only just
started to see the emergence of the tragic war in Ukraine and were
yetto see or understand the full impact on the economy both here
inthe UK and around the World. I suggested that events would have
abearing on already stretched supply chains and rising inflation,
however the extent to which costs were impacted created a shock
tous and across the motor insurance industry.
Motor insurance is in itself, of course, about estimating the costs
attached to a policy, which may not come to pass for several years
after a policy is sold. So, a rapid and unexpected increase in costs
would inevitably have an immediate impact on our earnings, as was
the case in 2022. This, along with the natural strains generated
through running-in the motorcycle and taxi businesses, led to a result
for the year which was, by Sabre’s high standards, disappointing.
However, the Group’s clear strategy ensured that appropriate actions
were taken to limit the impact and provide a solid base from which
theGroup can grow.
Strategy
Our strategy remains to price every risk appropriately to maintain
atarget combined operating ratio across the Group. This has the
advantage of not only generating strong profits and a robust balance
sheet in normal circumstances, but also of providing significant
headroom to absorb one-off shocks to profitability such as that
experienced in 2022. While the Group’s profitability may have
suffered, the Group nonetheless generated a positive underwriting
result against an industry backdrop where many, or perhaps most,
competitors endured underwriting losses.
It is our view that despite some recent price increases, motor
insurance remains materially under-priced in the UK, as was the case
throughout 2022. Given our pricing discipline, we have seen market
share reduce in the motor line as our price increases have continued to
outpace the industry – although we expect to benefit from that when
industry pricing corrects. Despite this, we have grown the business
year-on-year, achieved through the Group’s motorcycle product and
the significant expansion of its taxi business, both of which we
discussed in detail in last years report. I expect that in the coming
years these will contribute meaningfully to profit, having been a slight
drain in 2022.
READ MORE:
Principal
risks and
uncertainties
on page 19
Chair's letter
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and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility and
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FCA
Consumer Duty
06
Sabre Insurance Group plc Annual Report and Accounts 2022
Inflation and the cost of living
I have already discussed how inflation has impacted our underwriting
performance during the year through increasing the cost of claims.
Theeffects of rapid, significant increases in inflation have been much
wider-reaching, and we have been mindful of this as we have made
strategic and operational decisions during the year. As outlined in this
report we have supported our people through appropriate “cost of
living” allowances and bonuses.
We have considered the needs of our customers throughout. We are
obliged to raise our policy prices in line with inflation – that is core to
our strategy and in line with our values – however, we have continued
to be mindful of vulnerable customers and have sought to support our
customers through both quick and efficient services and ensuring that
we fulfil our consumer duty in respect of all products, in particular
where we provide premiums on finance.
Of course, the current economic environment also impacted our
balance sheet, with the value of bonds held across our portfolio
subject to significant decline. However, we have matched our asset
and liability position, meaning that there was little impact on our
regulatory balance sheet and, as we generally hold all of our bonds
until maturity, we do not expect to realise any losses as a result.
Consequently, we should see a gradual increase in the yield across
ourinvestment portfolio over time.
Result and dividend
The results of the business are covered in some details in the rest of
the Report and Accounts, and in particular in the CEO’s and CFO’s
reports. So, I will avoid duplicating the points here.
I am encouraged that the Management Team identified issues early
and took assertive corrective action. This positions us well for a rapid
recovery and future success.
In spite of profit falling below our expectations, we have recognised
that the Group ended the year with a strong balance sheet and excess
capital. Our dividend policy is to distribute 70% of profit after tax by
way of an ordinary dividend and, in addition, to pay a special dividend
comprising any further capital in excess of that which we consider
required to keep our regulatory capital within our preferred range of
140% to 160%. I am pleased to note that we have declared a total
dividend of 4.5p in respect of 2022. Less the interim dividend of 2.8p
already paid, this means that we will distribute a further 1.7p by way
ofa special dividend.
Outlook
Set against a challenging year, our outlook is positive. We took decisive
pricing and reserving action when rapid inflation took hold, and as such
expect an improvement to our loss ratios into 2023. We have also
taken significant pricing action on the motorcycle and taxi lines, which
includes not only price increases but also enhancements to the
sophistication of underwriting, which means we expect improvements
in the loss ratios across those lines. It is our hope and expectation that
the early signs of industry-wide price increases seen towards the end
of 2022 continue, and allow for a meaningful recovery of the Group’s
motor market share.
ESG
The Board continues to spend a great deal of time on these important
areas. The result of our work is highlighted in the Responsibility and
Sustainability section Pages 38 to 49.
The Board
I would like to thank Ian Clark for stepping in as interim chair of the
Audit Committee at the end of 2021. I am pleased to confirm that we
have recruited a new Non-executive Director, Alison Morris, to the
Board and that she has been appointed as Chair of the Audit
Committee. We are currently undergoing a process to recruit an
additional Non-executive Director to the Board. We remain aware of
the benefits of bringing increased diversity to the Board and are keen
to increase diversity where possible.
Finally, I would like to thank our employees, customers, suppliers,
Management and other stakeholders who have continued to support
us in 2022. I look forward to continuing to develop and grow the
business for their, and our shareholders, benefit.
ANDY POMFRET
Chair
13 March 2023
We took decisive pricing
and reserving action when
rapid inflation took hold”
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Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
07
Cyclicality in the UK motor insurance market
The UK private motor insurance market has historically exhibited
pricing cyclicality driven by competitive dynamics, as well as social,
economic and regulatory factors.
In times of lower competitive intensity, price levels tend to rise.
However, pricing increases typically enhance industry profitability,
resulting in industry participants reducing prices to increase volumes
and new entrants joining the market.
This increased competition can cause prices to fall, which can reduce
underwriting profitability across the industry and may, in turn, lead
market participants to reduce volumes or seek to exit the market,
reducing competitive intensity and leading to prices rising again.
The pricing cycle can also be impacted by regulatory changes,
such as pricing interventions or restrictions on claimant activity.
Current market conditions
Since December 2018, average motor insurance premiums have
decreased by 2.4% across the industry, whereas we believe that the
costs associated with claims have increased significantly, with inflation
in claims costs at approximately 5% per year in 2018, increasing to
inflation at approximately 12% per year in the last quarter of 2022.
Clearly, the compound impact of inflation has not been met by industry
price increases. Despite some evidence that prices have increased in
recent months, we do not consider that these increases are sufficient
to cover current levels of inflation or to compensate for historic
inflation. Therefore we consider that the market remains ‘soft,
although prices are potentially entering a ‘hardening’ part of the cycle.
Historically, pricing has corrected following ‘soft’ periods, creating
‘hard’ market conditions.
In 2022, we introduced significant price increases in order to meet
thesudden, unexpected increase in the level of overall cost inflation.
Having taken this action, Sabre can continue to make more modest
increases reflecting current inflation with no significant additional
upward adjustment. As such, we expect to increase in
competitiveness as market prices fully correct to reflect inflation.
This is core to our strategy. As the gap between premium pricing
andthe costs of servicing policies increases, we expect the potential
pricing correction to become more substantial.
Drivers of cost inflation
In previous years, we have described why claims cost inflation was
significantly ahead of wider economic inflation. Now, we continue to
see evidence that claims costs across the motor insurance industry
are rising, but against a backdrop of wider economic inflation. Key
elements of inflation include:
The costs of car parts
The costs of hire vehicles and extended hire periods
Care costs for seriously injured people
The increased frequency of thefts, and the value of vehicles stolen
Industry levies, such as that paid to the Motor Insurance Bureau
andinto the Financial Services Compensation Scheme
Wage inflation
Will cost inflation increase or decrease?
It is not possible to predict exactly how cost inflation will develop;
however, we have identified several factors which will impact costs
going forward:
There is some indication the costs of car parts will continue to rise
Used car prices are showing some evidence of stabilisation
The cost of hire vehicles is impacted by the time taken to carry out
repairs. If part availability increases, costs could reduce
Care cost inflation, which is largely driven by wage inflation for care
workers, could rise significantly as the potential pool of care staff
from the EU decreases
The total impact of whiplash reforms enacted in 2021 remains
uncertain
We expect industry levies to continue to rise in line with increases in
the expected costs of compensating the victims of uninsured drivers
What does cost inflation mean for Sabre?
Cost inflation is factored into our policy pricing – we charge an amount
based on what we expect to pay out over the period of that policy
(generally 12 months), factoring in our prudent view of inflation. As all
of the inflationary factors are market-wide, we expect that market
price increases will reflect this inflation, but as discussed earlier, this is
likely to come in ‘jumps’ as the market transitions from ‘soft’ to ‘hard’.
As we saw in 2022, sudden unexpected increases in inflation can
negatively impact profitability. Similarly, lower than expected inflation
can be beneficial to earnings.
Market Context
Underlying
market
conditions
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Statement
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Statement
CFO Review Responsibility
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Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
08
Current
market
issues
Political and regulatory
In our previous Annual Report and Accounts, we commented that the
environment, in so far as it relates to motor insurance, had rarely been
so tumultuous. We cited the introduction of whiplash reform in 2020
and the run-up to the FCAs pricing practices legislation which came
into force on 1 January 2022. By comparison, 2022 has seen a period
of ‘bedding-in’ of these rules, as insurers have adapted to operating in
the new environment. We have seen adjustment to market pricing as a
result of the FCA’s pricing practices review, which effectively stopped
insurers charging more for renewed business than for an equivalent
new customer (known as ‘price walking’ – a practice Sabre did not
employ). We still consider the impact of whiplash reforms to be
uncertain. Whilst we have seen some reduction in the frequency of
certain types of claim, the overall impact on costs of personal injury
claims has not yet settled, with a firm precedent yet to be set. We
continue to be cautious on this.
Wider uncertainty has been a feature of 2022s political landscape,
with several changes within the government casting a long shadow
over the legislative agenda. We have seen relatively little impact of this
on those issues directly related to motor insurance, notwithstanding
the overall impact on the economic environment discussed later.
There continues to be continued regulatory focus on Consumer Duty,
and on policing recently enacted rules such as the pricing review.
Wehave complied fully with all current requirements, none of which
required significant strategic or operational change within the business.
We present a statement of compliance on page 50 of this Report.
Economic
During 2022, economic issues moved from a rather technical subject
toan everyday talking point impacting everyone’s lives in a meaningful
way. For Sabre, and much of the insurance market, the two significant
economic factors remain inflation and interest rates. Inflation has been
discussed at some length throughout this Report, with costs rising across
the claims spend and operational costs, such as salaries and maintenance
of the Group’s IT network. The increase in interest rates has contributed
to the yields on low-risk assets increasing considerably. This means that
the market value of these assets reduces – meaning purchasers of those
assets can generate better returns. A consequence of this is that the
market value of Sabre’s investments has reduced. This has little
real-world impact, as these assets are all bonds which the Group holds
tomaturity, meaning the cash flows from these bonds are known at
purchase and are not affected by temporary reductions in their value.
Theimpact on the Group’s regulatory balance sheet strength is also small,
as while the value of the Group’s asset portfolio has declined, the Group’s
liabilities have been discounted to reflect the time value of money – and
the impact of this discounting is inherently linked to risk-free yields.
Social
2022 saw a shift in social dynamics, with the realisation that it is
unlikely that wage inflation will meet increasing household costs,
andthat the difference could be significant. With a potentially material
impact on the spending power of households, all companies must
consider the impact that their actions will have on society, as well
asthe impact that this societal change will have on them. Sabre has
always aimed to price its policies fairly, not exploiting any group of
customers while fairly reflecting increased costs. This is underlined in
the Group’s adherence to the robust Consumer Duty rules with which
we will continue to comply with fully. Selling a product that is
effectively compulsory, rather than being reliant on discretionary
spend, means that Sabre has historically shown great resilience during
periods where customer spending power has reduced. In addition, the
Group’s exceptionally strong controls over claims spend has mitigated
increases in fraudulent behaviour, which is sometimes a feature of a
challenging economic environment.
We do our best to support customers in financial difficulty, whilst
providing easy access to fairly priced insurance for everyone.
Technological
Technological change continues apace, not only in the means of
propulsion in vehicles switching from internal combustion to electric,
but in the way that insurance is developed, marketed and sold to
consumers. We continue to invest in cutting-edge pricing techniques,
such as machine learning, as well as partnering with some of the most
technologically advanced distributors within the insurance market,
ensuring that our policyholders get the fairest price and enjoy the best
possible customer experience.
COVID -19
From an operational perspective, the impact of COVID-19 is now
minimal. The new ways of working introduced during the pandemic
have been implemented in various forms as ‘business as usual’, with
ahybrid working model and far greater use of teleconferencing being
just two examples. The motor insurance market appears to have
settled, in terms of traffic volumes, but supply chains continue to be
under pressure not just from the fallout from COVID-19, but also Brexit
and now the war in Ukraine. Motor insurance pricing appears to be
showing some adjustment to post-COVID conditions, with price
increases reflecting the return to ‘normal’ behaviours.
Sabres business model is designed to
withstand, adapt to, and thrive within
a changing environment.
Strategic Report Governance Financials
About Sabre Chair’s letter Market
Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility
and Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
09
Reflecting on my Review in the 2021 Annual Report, I was struck by
the sense of optimism as we looked into 2022. We had remained
consistent in our strategy of margin over volume, meaning that Sabre
started to emerge from the trough of a cyclical soft market and
on-going Pandemic issues with strong foundations in place. However,
our industry – and many others – have since been impacted by the
unforeseen, once-in-a-generation geopolitical event and subsequent
extraordinary period of inflation.
The impacts of the rapid increase in inflation were as significant for
motor insurance as the impact of the pandemic. While we addressed
the inflationary impacts early and assertively – ahead of many of our
peers – this backdrop has still led to a disappointing performance by
our own standards. We do believe that our prompt action restricted
some of the potentially very significant financial impacts from the
rapid, unprecedented inflation, and we believe that Sabre will recover
fairly rapidly towards our target levels of performance whilst still being
able to capitalise on some exciting growth opportunities.
Looking back on 2022
The market backdrop has made 2022 a frustrating year. In the early
stages of the year we saw market price increases emerging, which
webelieve was in response to the FCA pricing review. However, this
encouraging positive trend was interrupted by events out of our control.
At the start of Q2 the unfortunate events in Ukraine led to the now
well-publicised but unexpected and rapid increase in underlying cost
inflation. We, along with the rest of the market, were then faced with
acombination of challenges, either directly due to the conflict or
asaresidual consequence from either the pandemic or Brexit.
Theseincluded:
Inability to source parts for repairs, driving extended repair times
andconsequent increases in car hire costs
Lack of new car supplies driving up used car prices – dramatically
increasing the cost of theft and total losses
Severe shortage of staff in the car repair and healthcare industries
resulting in cost increases
The need to reflect increased healthcare costs across all open
claimreserves
The fact that polices over the past 12 months had been priced
against claims inflation assumptions which proved to be too low
Other increases in overhead costs across the Group’s operations
This required a one-off adjustment to our reserves and an increase
inour (by market standards) already high claims inflation assumption.
Delivered growth and profitability despite
challenging market conditions. Well-positioned
torecover margins, whilst growing further, thanks to
assertive rating and response and focused strategy.
READ MORE:
Principal
risks and
uncertainties
on page 19
Chief Executive Officer's Review
GEOFF CARTER
Chief Executive Officer
£171.3 m
Gross written premium
£12.8m
Profit before tax
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Insurer hosted pricing has been a feature of the market for broker-
based insurers for several years, being introduced to speed up rate
deployments by avoiding ‘software house’ rate change processes.
Wehave deliberately waited until now to carry out this initiative – as
we had no interest in rapid price changes to manage volumes – and
bywaiting we have seen costs and implementation challenges reduce
significantly. Following implementation, we will be able to begin the
roll-out of more complex rating models that have been developed by
our pricing team.
Our existing direct administration platform has served us well for many
years, but lacks customer self-service functionality. Our ambition
following roll-out is to transition the vast majority of customer
interactions online, and invest the operational savings into pricing.
Market – Continuing uncertainty
There are still areas of ongoing uncertainty and opportunity.
Coming into early 2023 we have maintained a prudent view of claims
inflation, with a current forward-looking assumption of 8% to 10%.
Forclarity, this is on top of our relatively high assumptions in previous
years, so others may experience higher cost inflation from a lower
assumed base. There are reasons to suspect some elements may
soften as the year develops, such as used car prices or parts
availability, but there is limited evidence of this so far. Conversely,
carecosts may inflate further, and it feels unlikely that repair costs
willreduce dramatically.
We will maintain a cautious approach here – we were amongst the
first to spot adverse trends developing and will apply equal rigour
tospotting opportunities.
The recent Court of Appeal decision on mixed injury cases, and
subsequent ABI-facilitated decision to seek leave to appeal to the
Supreme Court, means there is a risk of an elongated period of
uncertainty for the total costs of small injury claims. We will maintain
our conservative view on the benefits of these reforms pending clarity.
We believe the 1 January 2023 motor reinsurance renewals (ours was
at 1 July 2022) resulted in average increases in the range of 15% to
20% across the broader market. We will monitor developments and
reflect any likely cost changes in reinsurance in our pricing.
Throughout, we have stuck rigorously to our underlying philosophy
that to ensure long-term success, volume must be an output not a
target. We have continued to have focus on ensuring all polices are
priced correctly for the current environment. In order to meet rises in
the cost of claims, we have increased prices by nearly 30% in 2022,
and by over 50% since January 2020.
In 2022 we continued to expand our position in the motorcycle and taxi
insurance markets through partnerships with MCE and Bennetts, and
Freeway Insurance respectively. We regularly review new business
opportunities but have a very high hurdle for returns before committing
resources to them. These partnerships increase our long-term growth
opportunities while maintaining margin discipline.
We saw benefits, in premium growth terms, from our new motorcycle
and taxi partnerships in 2022. In some ways the timing was slightly
unfortunate, in that we did not expect these to generate a significant
contribution to profit in the first year, but did not anticipate the
concurrent profit challenges on our motor book in the initial year of these
relationships as well as the claims inflation impacts on these portfolios.
While we knew elements of the motorcycle book required extensive
re-underwriting and pricing to get to a sustainably profitable level, the
scale of this was greater than anticipated and so the product
performed below expectations. However, our re-underwriting efforts
have to date been successful and the product is now on a firm
pathway to profitability in 2023. In conjunction with MCE insurance,
we have since launched an innovative subscription (pay-by-mile)
product for motorcyclists.
The taxi portfolio got off to a slightly slower than assumed start as
ourpartner needed to re-platform their administration systems and
they share our philosophy of writing for profit not volume in a difficult
market. This re-platforming exercise is now complete and we
focussing on capitalising on the growth opportunities ahead as rates
inthis market increase.
The overall impact of reduced ‘core’ motor volume meant these
first-year products were a greater than planned proportion of our
totalbusiness – putting additional pressure on the overall loss ratio.
Given the extraordinary market challenges the business had to operate
within, I am pleased with the motor loss ratio of 61%, and the progress
we have made in setting up motorcycle and taxi for a sustainable,
profitable, future.
Looking forward
Whilst the previous section is perhaps a little downbeat, that is not
atall how we feel as a business as we look ahead to 2023.
We anticipate that 2022 loss ratios across the market will be seen,
inretrospect, as a speedbump rather than the start of a trend.
At the end of 2022, we were writing new business across the portfolio
at around our target COR, with significantly improved expected loss
ratios for bike and taxi.
Our very early call on inflation and immediate pricing actions to
correctthis, regardless of the effect on volumes, means we anticipate
a relatively rapid bounce back towards our target normal levels of
profitability through 2023 and into 2024, albeit that inflation will
providesome overhang in 2023.
Whilst some encouraging signs of market price increases started to
emerge towards the end of 2022, we expect that the market will still
need to implement further substantial increases to achieve
underwriting profitability, and while the timing is uncertain, we expect
this will provide attractive opportunities for organic growth. Indeed,
this is supported by our volumes in the most recent weeks of 2023,
which have been encouraging.
The irrational pricing decisions of some market participants means our
motor premium at the end of 2022 was a little less than planned,
which will clearly impact both 2023 earned premium and consequently
our expense ratio.
In 2022 we reviewed numerous new partnership opportunities,
however we always have a very high hurdle before we commit
resources and are especially wary of distraction in what is still a
complicated market. We will continue to review potentially attractive
additional distribution routes going forward, but our primary focus is on
our current portfolios.
For our core motor product, we currently occupy less than 1% of the
market. We believe this position will provide additional medium-term
growth opportunities.
New developments
It is extremely pleasing that we are making great progress with the
deployment of two important new initiatives – insurer hosted pricing
and re-platforming our direct administration system. Both of these
areon schedule to be rolled out in Q3 this year, and are being
implemented entirely by our own teams without any consultancy
support or spend.
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During the recent periods
we have remained
focused on supporting
customers both through
the COVID-19 challenges
and the emerging cost
ofliving crisis.
People
Our people have shown considerable commitment during the recent
challenging years, for which we are extremely grateful, and we have
sought to reciprocate. We maintained full employment during the
pandemic and have continued to pay the annual Christmas and
performance bonuses. Additionally, we paid all staff an £800 cost
ofliving allowance over the winter period.
We continue to enjoy excellent engagement scores, and very low
levels of turnover.
During 2022 we have been actively recruiting in anticipation of
futuregrowth opportunities, which has also created a need for
severalpromotions.
Customers
During the recent periods we have remained focused on supporting
customers both through the COVID-19 challenges and the emerging
cost of living crisis. We have ensured our processes are appropriate for
customers who may find themselves in vulnerable circumstances.
In addition, we stepped in to offer cover to customers of MCE
Insurance following the previous underwriter being placed into
administration and policies cancelled.
Environmental, social and corporate governance
(“ESG”)
We have continued to make excellent progress in this important area.
Full details of our environmental and social reporting are contained in
the Sustainability and Responsibility report. We have enhanced our
corporate values, including a key value measure of ‘Fair to the Planet.
Alongside this we have taken several significant steps to improve our
impact on the environment, including a full refurbishment of our head
office. This investment will significantly enhance the working
environment for our people, and help us take further steps towards
ournet-zero ambitions. We have also continued to support a number
of charities.
Summary
While 2022 was a challenging year in terms of result, I am delighted
that we have maintained extremely firm foundations whilst delivering
growth and underwriting profit. We have demonstrated our strong
solvency position and proposed a special dividend – and have
positioned ourselves well for growth as many competitors seek to
address their own performance. I believe our 2022 performance will
look creditable in market terms and rebound quicker than many others.
We anticipate that market price changes, as well as our own
development initiatives will support organic growth.
I very much hope to be able to report strong progress along these
lines next year.
GEOFF CARTER
Chief Executive Officer
13 March 2023
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Sabre Insurance Group plc Annual Report and Accounts 2022
12
Our Values
Sabre’s
values
underpin
our strategy
A FAIR and FOCUSED business
Fair to the planet
We recognise that all organisations, big and small,
havearesponsibility to act in the best interests of our environment
and society as a whole. We have set out a road map to net zero,
which includes making changes now to minimise the impact of
our business on climate change. We believe that companies can
be a force for good, and through our Charity Committee we
support local organisations who we believe make a real
difference to people’s lives. Further information on our climate
commitments can be found on pages 44 to 49 and a summary
ofour charitable programme can be found on 43.
Fair to partners
We enjoy excellent working relationships with all of
ourpartners, including our brokers, key suppliers and
outsourced operations. Through the challenging period
ofthe last two years, we have worked closely with our
partners to assist in their continued success. Further
information on how we work with our partners can be
found on page 44.
Fair to customers
At the core of our business sit our customers. Fair treatment
of our customers is ingrained in the DNA of our business,
be it through provision of high-quality insurance at a fair
price for (almost) everyone, fast and efficient handling of
claims or high-quality customer administration through our
UK-based call centre. Further information on how we work
with our customers can be found on page 39.
Fair to employees
Sabre’s greatest asset is the talented group of individuals
who keep the business running every day, from the pricing
and product teams generating our cutting-edge policies,
through to the expert claims team achieving fair customer
outcomes while robustly managing fraudulent claims.
Westrive to place the right people in the right roles at the
right time, while maintaining a happy and safe working
environment. Further information on how we work with
ouremployees can be found on pages 40 to 42.
Focused on our strategy
Our strategy is simple, clear and well understood by our
stakeholders. This is discussed in detail on page 14, but can
bedistilled further into one thing: focus. Focus on profitability
through obsessive management of our pricing and rigorous
discipline. Focus on long-term growth by engaging in the right
development projects at the right time, drawing on our core
strengths. Focus on attracting and retaining top talent to
achieve all of this. And, more recently, focus on the wider needs
of stakeholders, through our sustainability and responsibility
programme, which is discussed in detail on pages 44 to 49.
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1. Disciplined
Underwriting
Sabre operates a sophisticated,
actuarially-driven pricing
strategy utilising an agile
proprietary module. Each risk
is individually modelled and
priced using Sabre’s advanced
pricing algorithm, built upon
years of data collection and
expert analysis.
We maintain a robust and
extensive claims management
operation, combined with
counter-fraud expertise, to
ensure that we operate an
efficient, transparent and
fairprocess.
We hold a unique and extensive
catalogue of claims data,
compiled from more than 19
years of successful, consistent
underwriting. This allows us to
price accurately across the UK
motor insurance market. Our
proprietary data is further
enhanced through the use
ofthird-party validation
andenrichment.
We enter new, complementary
markets cautiously and only
when adequate margins can be
achieved with an acceptable level
of pricing certainty.
2. Risk
Management
We seek to maintain a
conservative approach to
riskmanagement, through
focusing on allowing
acceptable underwriting risk
while minimising other risks
within the business.
We maintain sufficient capital to
allow operational resilience and
meet regulatory requirements
under all reasonably foreseeable
outcomes. Our target is to hold
140% to 160% of our SCR.
We manage our underwriting risk
through maintaining absolute
discipline in pricing and focusing
on our core strength of
underwriting UK motor business.
Exposure to large individual
claims is managed through
prudent use of reinsurance. In
exchange for a proportion of our
income, a panel of high-quality
reinsurers takes the cost of any
individual loss over £1m.
We keep our operations simple,
which makes the monitoring of
key risk issues straightforward.
We hold considerable invested
assets to back our underwriting,
but do so in very low-risk, primarily
government-backed, assets.
3.Controlled
Growth
Throughout its history, Sabre
has grown where market
conditions allow, without
compromising profitability.
The UK motor insurance market is
historically cyclical, with periods of
low pricing (soft’ market) followed
by market price increases (‘hard
market).
Sabre aims to underwrite at
a broadly consistent margin,
irrespective of market conditions.
As claims costs are generally
inflationary, we will increase
our prices year-on-year to cover
that cost.
Sabre becomes more
competitive when the insurance
market hardens.
We aim to enter any market
upturn from a position of
strength, where we are able to
grow without generating excess
operational or capital strain.
Volume is an output from
disciplined underwriting, and we
will not allow it to become a target.
We develop complementary
products cautiously and enter
intonew markets where we
areconfident that we can apply
Sabre’s abilities in pricing and
claims handling.
4. Operations
Non-core operations are
outsourced, while expertise
isretained in-house.
Generally, volume-dependent
administrative tasks are
outsourced, allowing maximum
operational flexibility.
Our team consists of talented
people making good decisions
every day. We invest in our
people, making sure that they
have the appropriate training and
skills to work well consistently
and apply Sabre’s core values
ineverything they do.
As we grow, further automation
will allow staff costs to remain
relatively stable.
5. Distribution
Brokers account for
approximately 71% of the
gross written premium in
2022, with the remainder
being sold through our
directbrands, Insure2Drive
and GoGirl.
The vast majority of motor
insurance policies originate
through price comparison
websites.
Broker relationships allow
ustoleverage their well-
established brands, customer
relationships and retail pricing
capabilities, as well as providing
privileged access to certain
customer groups.
Operating our own direct
brands ensures that we can
offer our products to those
customers not served by
traditional brokers, while
allowing us a direct line of
sightto customer and price
comparison site data.
Our
Strategy
Our key
business
principles
Strong returns
and cash
generation
Market-leading
underwriting
performance
Controlled
and attractive
growth across
the cycle
These principles
manifest in our five
strategic priorities:
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Estimated size of the
female insurance
market in the UK:
c.304k
live policies
Hailey’s car insurance was
due to be renewed next
month, and she was worried
that her renewal premium
would be too expensive.
Hailey’s
story
Case study
Hailey was 20 years old, had passed her driving test last year and
had recently had an accident, all of which Hailey expected would
contribute towards a higher premium.
Hailey used a price comparison website to compare the different
prices in the market. To Hailey’s surprise, Go Girl Insurance came
upwith the cheapest price, which she thought was very reasonable
given her previous accident and limited driving experience. Although
she was unfamiliar with the brand, Hailey decided to buy the Go Girl
Insurance policy.
After almost a year of trouble-free driving, Hailey was involved in an
accident where she drove into the rear of a third party. She was very
shaken up by this accident and knew that she was at fault. Hailey
reported this accident to Go Girl Insurance immediately, as she
wanted to get her car fixed as soon as possible and knew it can
takea long time for these things to resolve.
After receiving the notification that Hailey had been involved in an
accident, Go Girls expert claims department contacted Hailey. After
making sure that Hailey was okay, they requested some information
to gain a better understanding of what had happened. Go Girls
claims handlers quickly put the wheels in motion to send an
engineer out to look at Hailey’s car.
The damage suffered meant that Hailey’s car was deemed a “total
loss” as engineers were unable to repair the vehicle for less than the
cost of a replacement. Go Girl Insurance contacted Hailey to discuss
her options and Hailey decided that she would like to be paid the
pre-accident value of the vehicle so that she could start looking for a
new car as soon as possible. Hailey was very worried that she was
going to be offered an extremely low value and that Go Girl
Insurance would take a long time to pay out the money.
Go Girl Insurance calculated the value of Haileys vehicle and made
an offer to Hailey within four days of the accident date. Hailey was
over the moon with Go Girl Insurance’s valuation of the vehicle.
Hailey accepted the offer from Go Girl and the money was paid into
her account the next day. It was only five days in total from the day
of the accident to the date that Hailey received the money.
Really helpful and
fast service
My car was written off … I was
covered by Go Girl. They offered
a cheaper premium than anyone
else and were extremely helpful
with my claim. It was dealt with
quickly and after I was informed
my car would be written off I
received the money quickly too.
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1
2
3
4
5
Our Business Model
Indirect
distribution
The Group has
established a broad
network of almost
1,000 insurance brokers
across the UK over
the course of more
than20 years.
Direct
distribution
Go Girl
Launched in 2011
toappeal to young
female drivers.
Insure2Drive
Launched in 2010
asageneral motor
insurance product.
DriveSmart
Launched in 2022,
short-term, flexible
policies sold direct
tocustomers.
Price
Comparison
Websites
(“PCWs”)
PCWs are websites that
enable customers to
obtain and compare
quotes from a wide
variety of insurers and
brokers. We work with
all of the major PCWs.
In-house
Pricing and Claims
management
The Group has a streamlined operating
model, with certain functions where
the Directors believe the Group has
significant expertise (such as pricing
and claims management) being
maintained in-house and certain core
functions outsourced to third-party
providers, whom the Directors believe
can improve efficiency and provide
scale optionality.
Partners
Customer support
Telephone sales and phone and email
based customer support for the direct
brands are outsourced to Right
Choice, a specialist motor insurance
broker based in the UK.
FNOL and repair management
First Notice Of Loss and repair
management are outsourced to the
Innovation Group, which provides
support to the insurance, fleet,
automotive and property industries.
Information technology
The Group uses a cloud-based
infrastructure as a service provider,
such that the Group’s IT infrastructure
is hosted by a third party on virtual
servers with state of the art security
and no single point of failure.
Price distribution
Policy prices are distributed to brokers
via a number of specialist software
houses. These software houses
typically provide brokers with sales
and administration systems, as well
as enabling brokers to access policy
prices set by the Group.
Specialist Distribution
We distribute our motorcycle and taxi
products primarily through established
brokers, who bring valuable insight
into the sector.
Strong cash
generation
Our underwriting discipline and
streamlined operating model give
us confidence that we can deliver
our target dividend pay out ratio
ofa minimum of 70% of profit
after tax.
Premium growth
We anticipate high single-digit
growth in gross written premium
across the insurance cycle, while
maintaining our target combined
operating ratio.
Maintaining expertise
We continue to refine our
underwriting model to drive
increasingly accurate, customer-
focused pricing. We aim to retain
and develop superior levels of
expertise in underwriting and
claims management at all levels
within our business.
Strong balance sheet
Our focus on profitability allows
us to deliver value to shareholders
while maintaining a strong balance
sheet, operating with an excess
regulatory capital target, of 140%
to 160% of our SCR.
Our inputs Our channels Our operating model Value creationHow we manage risk
Analysis
and pricing
expertise
Strong broker
relationships
Proprietary
data
Experienced
senior and
operational
team
Long-standing
management
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Claims experience
Dealing with our customers
both fairly and quickly while
focusing on the identification of
fraud and effective management
of injury claims.
Proprietary
dataset
Extensive dataset,
compiled from more than
19 years of underwriting
experience.
Proprietary and agile
pricing model
Disciplined, actuarially
driven pricing strategy
utilising a proprietary
and agile model.
Underwriting
discipline
Maintaining price
discipline throughout
the insurance cycle.
Sabre Insurance Group plc Annual Report and Accounts 2022
16
2022 171.3
2021 169.3
2020
173.2
2022 27.3
2021 28.3
2020 26.7
2022 96.0
2021 79.4
2020 75.3
2022 68.7
2021 51.1
2020 48.6
Key Performance
Indicators
How our KPIs link to Sabre’s strategy
Sabre’s strategic priorities are outlined on page 14
of this report.
The most fundamental of these is underwriting
profitability, and as such Sabre’s KPIs focus on
measures of profitability – specifically loss ratio,
expense ratio, combined operating ratio and
adjusted profit after tax. As the Group is focused
on managing risk, maintaining an appropriate
solvency coverage is important, so solvency
coverage ratio is considered a KPI.
The Group monitors its growth, and intends to
grow when market conditions allow, as such
thelevel of gross written premium forms a KPI.
Effective deployment of capital is also considered
an overarching element of Sabre’s strategy, which
is measured through return on tangible equity.
PERFORMANCE
For performance
on all our KPI's
please see
CFO’s review
pages 35 to 37
Gross written premium
£’m
Net Loss Ratio
%
Expense Ratio
%
Combined Operating
Ratio %
£171.3 m 68.7% 2 7. 3 % 96.0%
Denition
The Groups gross written
premium (“GWP”) comprises all
premiums in respect of policies
underwritten in a particular
financial period, regardless of
whether such policies relate
inwhole or in part to a future
financial period. The ability to
underwrite policies and generate
premium is a key measure of
the Group’s implementation of
its strategy, and the Directors
believe this measure is an
appropriate quantification of
how successful the Group is
at achieving its strategy.
Denition
Net loss ratio measures net
insurance claims, less claims
handling expenses, relative
to net earned premium
expressed as a percentage.
Net claims incurred is equal to
gross claims incurred less claims
recovered from reinsurers. Net
earned premium (“NEP”) is
equal to Gross Earned Premium
(“GEP”) less reinsurance
premium ceded during the same
period in respect of which NEP
is measured. GEP is equal to the
sum of GWP and the movement
in the unearned premium
reserve for a particular period.
Denition
The Group’s expense ratio is
ameasure of total expenses
(which comprises commission
expenses and operating
expenses), and claims handling
expenses, relative to NEP,
expressed as a percentage.
Denition
The Group’s COR is the ratio
oftotal expenses (which
comprises commission
expenses and operating
expenses), and net insurance
claims relative to NEP,
expressed as apercentage.
Aim
To maintain growth in GWP
when this can be done without
compromising the underwriting
profitability or broader efficiency
of the Group.
Aim
To maintain our underwriting
discipline such that our loss ratio
remains broadly consistent,
contributing to a COR of 70%
to80%.
Aim
To minimise operating
expenditure within the business
and optimise the efficiency with
which we do business in order
to allow for achievement of a
COR of 70% to 80%.
Aim
Sabre seeks to achieve a COR
of70% to 80% on all business
underwritten. Accordingly, the
loss and expense ratios need to
be managed to ensure they
contribute to the preferred
level of profitability.
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2022 10.1
2021 30.1
2020 39.8
2022 12.4
2021 29.2
2020 36.0
2022 12.8
2021 37.2
2020 49.1
2022 161.4
2021 207.9
2020 203.1
How our KPIs link to Directors'
remuneration
Executive Directors’ and senior management’s
remuneration is based on both financial and
non-financial measures, with a primary focus
onthe financial performance of the Group.
Thisisachieved through a ‘profit pool’ whereby
participants are entitled to a maximum bonus
equal to a percentage of the Group’s adjusted
profit before tax, which is then modified according
to performance against individual performance
goals. The Group’s Long-Term Incentive Plan is
underpinned by measures which include return on
tangible equity and solvency coverage ratio. Each
of the KPI’s either contribute towards the Group’s
profit or report the Group’s resultant capital
position and are therefore aligned with this
remuneration approach.
PERFORMANCE
For performance
on all our KPI's
please see
CFO’s review
pages 35 to 37
Adjusted profit after tax
£’m
Solvency coverage ratio
%
Return on tangible
equity
%
Profit before tax
£’m
£10.1m 161.4% 12.4% £12.8m
Denition
The Group’s adjusted profit
after tax measures profit
fromoperations, net of tax,
adjusted to offset the effect
ofamortisation of intangible
assets and exceptional expenses
excluding tax which do not relate
to the Group’s underlying
performance (such as fees
incurred in connection with
acquisitions or capital markets
transactions).
Denition
The Group is required to
maintain regulatory capital at
least equal to its SCR. The SCR
is calculated based upon the
risks presented by the Group’s
operations and the various
elements of its balance sheet.
The Group’s solvency coverage
ratio is the ratio of the Group’s
regulatory capital in a particular
point in time to its SCR for the
same period, expressed as
apercentage. Solvency
coverage ratio is stated before
the final dividend declared in
respect of 2022.
Denition
The ability to generate profits
while maintaining capital at an
appropriate level is an important
part of the Group’s strategy,
and the Directors believe that
Return on Tangible Equity is
an appropriate quantification of
how successful the Group is in
achieving this strategy. Return
on tangible equity is measured
as the ratio of the Group’s
adjusted profit after tax to its
average tangible equity over the
financial year, expressed as
apercentage.
Denition
Profit before tax as presented
inaccordance with UK-adopted
international accounting
standards, comprising
International Accounting
Standards (“IAS”) and
International Financial Reporting
Standards (“IFRS”) and the
requirements of the Companies
Act 2006.
Aim
This is a function of Sabre’s
other KPIs and we intend to
deliver sustainable profit growth
over the medium term.
Aim
To maintain a post-dividend
solvency ratio in the range of
140% to 160%, taking into
account specific foreseeable
requirements for capital.
Aim
To make efficient use of the
capital available to the business
and achieve broadly consistent
returns year-on-year.
Aim
Through careful management
of expenses and skilled
underwriting, we intend to
deliver sustainable profit growth
over the mediumterm.
RECONCILIATION
TO IFRS MEASURES
A reconciliation
between IFRS
and non-IFRS
measures is
given on pages
170 to 172.
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Principal risks and
Uncertainties
Risk management
Managing risk effectively is core to
Sabres strategy, and is integral to
delivering sustainable long-term growth
for its investors. The Board is responsible
for prudent oversight of the Groups
business and financial operations,
ensuring that they are conducted in
accordance with sound business
principles and with applicable laws and
regulations, and to ensure fair customer
outcomes. This includes a responsibility
to articulate and monitor adherence to
the Board’s appetite for exposure to all
risk types. The Board also ensures that
measures are in place to provide
independent and objective assurance
on the effective identification and
management of risk, and on the
effectiveness of the internal controls
inplace to mitigate thoserisks.
The Board has set a robust risk management strategy and framework
as an integral element in its pursuit of business objectives and in the
fulfilment of its obligations to shareholders, regulators, customers,
employees and suppliers.
The Group’s risk management framework is proportionate to the
risksthat we face. Our assessment of risk is not static; we continually
reassess the risk environment in which the Group operates and ensure
that we maintain appropriate mitigation in order to remain within our
risk appetite. Management recognises that risks must be identified,
monitored and mitigated appropriately, to ensure their negative impacts
on the Group are minimised. Whilst accepting that some elements of
risk are core to the operation of the Group, it is important to identify and
accept only the risks which generate a positive return for the Group.
Todo this, risk is managed in the first line of defence by Management,
is reviewed and challenged by the second lines of defence – the Risk
and Compliance functions and the third line of defence – Internal Audit.
Further information regarding the management of risk by the Group can
be found in the Risk Committee Report on pages 65 and 66.
The Board recognises that it is both necessary and desirable for the
Group to assume and accept an adequate level of risk in pursuing its
strategy, but notes that this must be maintained within acceptable
limits. TheGroup generally is risk-averse and operates the business to
take advantage of its good utilisation of its operational resources and
its strong ability to price risks at a consistently profitable level. The
Group does not tolerate risks which impact the Group’s key objectives
of the preservation of capital and the reliable and consistent
performance of the Group. Whilst developing its risk appetite,
Management considers its stakeholders, including customers,
employees, regulators, shareholders and suppliers.
The Group has adopted a straightforward risk appetite reflective of its
continued strategic focus on generating returns through underwriting
activity whilst limiting exposure to all other areas of risk.
The Group’s risks are summarised on the followingpages:
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Underwriting
Sabre acknowledges that accepting underwriting risk is core to its
business. Sabre does, however, aim to ensure that the only material
risk accepted by the Group is ‘pure’ pricing risk and that this risk is
keptwithin an acceptable tolerance. Underwriting risk is managed
inparticular with reference to the Group’s pricing and claims
management activity, and through prudent use of reinsurance.
Pricing
Pricing is based on the clear objective to achieve a positive margin
atall stages of the insurance cycle such that the target combined
ratiois better than 80%, although ideally it will be closer to 75%. It is
recognised that some new products may take some time to achieve
the target combined ratio. Sabre will tolerate a lower level of written
premiums if market competition conditions dictate prices that are
lower than those required by Sabre. The volume of business will
beconstrained by pricing policy to remain within:
the Solvency II capital requirement; and
the operational capacity available to effectively manage and service
the business and the consequent claims volumes arising there from.
Reserving
The Group sets reserves at an Actuarial Best Estimate (“ABE”) of
expected total claims cost, plus an appropriate risk margin/adjustment.
Risk margin is defined as the amount carried in excess of the case
reserves and claims incurred but not reported (“IBNR”); it is a buffer
against volatility.
As the Group recognises that the reserves held in respect of incurred
claims require a significant degree of judgement, when setting these
itaims to:
hold reserves in accordance with the appropriate accounting or
regulatory framework.
calculate its reserves on a consistent basis over time.
Insurance
Risk area
Risk appetite
Reinsurance
The Board will determine the levels of risk retention (reinsurance
limits) based on an assessment of the risk frequencies (with
reference to the capital model and any other relevant analysis)
andwill determine the acceptability of the reinsurer based on a
strong credit quality and a diversification of the exposure amongst
apanel of reinsurers. Advice from the reinsurance broker will also
beconsidered.
In general terms, Sabre will operate a reinsurance strategy that is
prudent and defensive by maintaining an attachment point (excess
over which the cost is picked up by the reinsurer) that is lower than
the theoretical optimum level so as to protect against higher than
predicted frequencies of large losses and thus a greater than
predicted impact to net claims cost.
Claims management
Sabre’s claims management function is designed to minimise
anyrisk associated with claims handling. Sabre manages this risk
primarily through providing strong controls, authority levels, rigorous
review processes and a robust internal claims training programme
and ensuring that under-resourcing within the claims team is not
reached. Sabre outsources only those operations which are deemed
as routine, and are therefore low-risk.
Product development
All material product developments have a project risk assessment
completed, ensuring that related risks are identified and where
possible mitigated.
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In general, the Group attempts to minimise operational risk across the
business through close monitoring of key risk areas including IT and
systems, people, regulatory exposure, outsourcing, financial crime,
taxation and accounting. The Group aims to comply fully with all
applicable laws and regulation, including General Data Protection
Requirements (“GDPR”). Supply chain management is seen as key
toensuring operational risk is minimised, particularly where processes
are outsourced to a third party. The risk of fraud or error is considered
to be pervasive across all business areas, and as such all processes are
developed in such a way as to minimise exposure to such risks.
IT systems and infrastructure
Sabre has a zero-tolerance approach to risk with regard to the security
of sensitive customer and Group data, and considers maintaining the
integrity of the Group’s policy and claims data as paramount. As such,
the Group is prepared to invest in the ongoing enhancement of IT
security protocols throughout the business. Sabre recognises that
cyber threats evolve and the Group has implemented mechanisms
tocontinually monitor for cyber threats to the business. This is
complemented by continual training for our employees to ensure all
methods of cyber-attack are kept front of mind when dealing with
customer data.
Outsourced operations
The Group outsources various business services/activities such as
management of financial investments, elements of claims handling
and information technology services. Sabre have consistent
monitoring and elements of executive reporting in place to ensure
our material outsourcers maintain their required level of performance.
New material outsourcers undergo an initial assessment process
which promotes good decision makingand enables Sabre to support
the business and protect its customers. 
The aim of this process is to minimise the following risks:
Customer detriment
Financial damage
Reputational weakness/harm
Failure to meet legal and regulatory requirements
Insufficient Data security controls
Inadequate contractual protection
Sabre is willing to accept the risk of working with third parties and
material outsourcers for core business activities.
Operations
Risk area
Risk appetite
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Financial crime
Sabre dedicates considerable resource to the monitoring and rebuttal
of fraudulent claims, although this is done having considered the
commercial financial benefits of pursuing and investigating potentially
fraudulent activity. We will not tolerate any breach of financial crime
laws and regulations (e.g. bribery, corruption, and money laundering,
sanctions, or tax evasion facilitation) that apply to our business and the
transactions we undertake. We do not tolerate transactions with any
sanctioned individuals. We allow commercial transactions with
politically exposed persons (PEPs) insofar as they meet our general
underwriting acceptance criteria.
Taxation
Sabre always seeks to pay the correct, fair amount of tax. If in doubt,
Sabre will generally take the lower risk/higher-tax approach, where
thedifference is not significant. In the case of significant technical
challenges with regard to taxation, Sabre will engage appropriate
external tax specialists. Sabre’s taxation strategy is published on the
Group’s website and approved by the Board on an annual basis.
Processes are designed to minimise the risk of error in the Group’s
reporting and payment of both direct and indirect taxes. Sabre takes
azero-tolerance approach to deliberate facilitation of tax evasion in any
country and has procedures in place to prevent it. We also expect the
same from our employees and third parties providing services for or
onour behalf.
Accounting
Sabre maintains straightforward and transparent accounting systems
and invests in sufficient resources within the Finance Team to ensure
the accuracy and consistency of financial reporting. Sabre has zero
tolerance for material inaccuracies in financial reporting, whether
generated through fraud or error.
Capital management
The Group’s primary capital requirement is to ensure that the Group’s
assets outweigh its liabilities at all times, that these liabilities can be
met through sufficient liquid reserves and that this is the case under all
reasonably foreseeable scenarios. This will generally be achieved by
the Group adhering to its SCR. The Group’s policy is to ensure that at
all times and under all reasonably foreseeable scenarios, the Group’s
net assets on a Solvency II basis exceed its SCR. This applies equally
to any regulated subsidiary of the Group. It is the current view of
Management and the Board that this is achieved through maintaining
an SCR of at least 140% at all times. All material decisions and all
distributions of capital will be made having considered the impact
onthe Group’s solvency capital ratio.
Investment management
The Group’s investment approach is to maintain good liquidity; to
preserve capital and to invest in low-risk stable investments that
attract a yield that is sufficient to provide a reasonable return on
therequired capital. Proper regard is given to the credit standing
ofcustodians and counterparties. Investment guidelines are set to
ensure that the Group’s investment manager adheres to the Group’s
investment policy, which expands upon these core guidelines. Sabre
has no tolerance for loss of invested assets through fraud or error.
TheGroup has no tolerance for entering into transactions with
legally prohibited counterparties.
Resilience and nancial standing
The Group considers its resilience from both an operational and
capital perspective. Aside from managing current and projected
capital to within appropriate levels, we assess our operations
throughout the business to identify processes which are key to
thebusiness and for which failure of such processes would cause
significant harm to either the business or its customers. Where such
processes are identified, we ensure that sufficient controls and
continuity plans are in place to mitigate the risk. We also carefully
manage the Group’s exposure to material counterparties and set
robust levels of liquidity for the Group.
Counterparty
Sabre minimises counterparty risk where possible and monitors
thestability and performance of brokers closely. Sabre would refuse
to do business with a broker were it to appear to display evidence
offinancial distress, rather than accept an increased risk of default,
however Sabre does acknowledge that in allowing brokers credit
terms, there will always be some residual degree of counterparty
default risk. Sabre does accept a degree of default risk on its direct
instalment policies, however the rate of default must remain
acceptable in the context of the interest rate gains on such policies.
The Group aims to hold all material exposures with strongly rated
counterparties and to diversify such exposure where possible.
Primarily, this relates to the Group’s management of its exposure
toreinsurers.
Finance and
Capital
Risk area
Risk appetite
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Governance
The Group aims to operate a simple governance structure, with clear
reporting lines and direct accountability. Sabre complies fully with the
Senior Managers Certificate Regime and Solvency II (“SII”) rules
which provide for an adequate framework to manage the Group’s risk
in this regard. In following these rules, the Group ensures those setting
the strategy are fit and proper and that the Board is sufficiently diverse
and effective. Sabre will obey the spirit and letter of the laws and
regulations which applies to it, including the UK Corporate Governance
Code. Where it does not comply with the UK Corporate Governance
Code, a full explanation will be provided.
Governance and
Compliance
Risk area
Risk appetite
Compliance
Sabre aims for complete compliance with all rules and regulations,
whilst minimising the cost to the business of non-value adding
regulatory activities. Key regulatory measures, such as:
Solvency II
Senior Managers and Certification Regime
Insurance Distribution Directive
FCA Fair Value
FCA General Insurance Pricing Practices
FCA Vulnerable Customers Guidance
FCA / PRA Operational Resilience
FCA Consumer Duty
are monitored closely by the Board. Sabre ensures adequate time
and resources are dedicated to the resolution of upcoming and
emerging regulatory issues to ensure there is minimal risk of
non-compliance. Sabre will obey the spirit and letter of the laws and
regulations which applies to it, notably regarding compliance, set by
the Prudential Regulatory Authority (“PRA”) and Financial Conduct
Authority (“FCA”).
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Economic disruption
The Group operates solely within the UK, and as such is subject
torisks pertaining to the economic and political stability within the
country. In the past year, both national and global events have resulted
in high interest rates, high inflation and some political uncertainty, all of
which are factored into the Group’s risk management framework.
Climate and ESG
Sabre recognises that the size and nature of climate-related risks is
changing globally and within the UK. The impact of this is assessed
with regard to both the Group’s insurance products and the
operations of the Group itself. Furthermore, we continue to see risks
attached to other societal factors, such as lack of diversity. We see
risk not only in the effectiveness of the Group’s operations and
profitability, but also in the increased legal and regulatory
requirements, and stakeholder expectations.
Macro Risks
Risk area
Risk appetite
Risk area
Risk appetite
People
People are central to Sabre’s business, and management are mindful
of the need to maintain a safe and comfortable work environment.
Sabre manages employees in a manner which minimises the risk of
dissatisfaction through the payment of fair wages and the provision of
a healthy work-life balance. Sabre vets new employees and carries out
continual random background checks on employees. Sabre complies
with the spirit and letter of the laws and regulations which applies to
itregarding its employees.
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Key elements Description Mitigation
Pricing
Change from
prior year:
Failure to price risks effectively can result
inworse-than-expected loss ratios or
significant unexpected changes in volumes
ofbusiness written. This includes appropriate
estimation of the increasing cost of claims,
through both historic trends, such as repair
costs, and emerging considerations such
asclimate change andthe impact of
legalreforms.
The Group operates a highly sophisticated
pricing model which is built upon fully tested
scientific principles. The model is updated
only when sufficient data has beencollected
and analysed tosupport such a change.
Management continually monitors the market
for pricing developments, but prioritises
maintenance of strong margins over the
volume of business written. Expected
behavioural changes, such as a reduction
inmiles driven due to travel restrictions,
areprojected and built into theGroup’s
pricing models.
We consider the impact in the changing
profile of physical risks related to climate
change in pricing our policies.
Changes in the costs of claims settlements
which could relateto climate change are
captured in our normal-course reviews
ofpolicy pricing. The pricing of all new
products is carefully assessed and
closelymonitored by the Chief Actuary
andhis team.
Claims
management
Change from
prior year:
A consistent approach to the management
ofclaims is essential for the accurate pricing
of policies based upon claims experience
andis key to limiting the indemnity cost of
such claims.
The Group ensures that all claims employees
are appropriately trained in the ‘Sabre Way’ of
managing claims, ensuring a fair outcome for
both the claimant and the Group. Sabre uses
outsourced specialists to deal with the first
notification of loss and as such this ensures
that the projected volume of claims which
will be handled by the business is not in
excess of the capacity of skilled claims
handlers available to the claims team.
Assessment of Principal Risks and Uncertainties
The Directors confirm that they have undertaken a robust assessment of the principal risks
and uncertainties, and emerging risks that the Group faces – this includes those that
threaten the business model, future performance, solvency or liquidity of the Group.
Set out in the following table is an overview of the principal risks the Board believe could
threaten the Group’s strategy, performance and reputation, and the actions Management
take to respond to and mitigate those risks.
All such risks are appropriately captured in the existing risk management framework.
Particular risk issues considered by the Board during the year include:
increase in interest rates and inflation
the implementation of new products – motorbike and taxi
IFRS 17 implementation
changes regarding Consumer Duty
the impact of climate change on Sabre’s business and operations
cyber security
increased cost of living and the impact on customers and employees
Having given both new and evolving risks due consideration, the Directors continue to
consider insurance activity to present the most material risk to the Group, in particular the
estimation risk of reserving and the ability to price premiums correctly.
At the time of writing this report, the war in Ukraine was continuing. Although Sabre is a
UK-based business, global issues, such as those in Ukraine, have a significant impact on the
Group. The Group has reviewed the impact on its risk profile from the crisis and has updated
the individual risks accordingly, notably increases in inflation and energy costs, and supply
chain issues.
The following table shows the main risk categories and the way Sabre assesses and
controlsthem:
Insurance
CHANGE
Increase Decrease No change
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Key elements Description Mitigation
Reserving
Change from
prior year:
Inappropriate estimation of the ultimate cost
of claims incurred can lead to corrections in
future periods which could have a detrimental
impact on the Group’s capital position and
profitability. Further, incorrect reserving can
lead to errors in the pricing of new policies due
to a poor view of the profitability of business
already written. Estimates made in relation to
inflationary, or potentially inflationary, factors
such as legal reform, and climate change are
equally relevant to reserving.
There is a consistent and cautious approach
to reserving with a risk margin held above the
actuarial best estimate. The Group’s actuarial
function analyses and projects historic claims
development data and uses a number of
actuarial techniques to both test and forecast
claims provisions. In addition, the External
Auditors assess the adequacy of the
Group’sreserves.
Large losses
Change from
prior year:
A small number of random very large claims
could have a significant impact on the
short-term profitability and capital position
ofthe Group.
Reinsurance is purchased on an excess-of-
loss basis to limit the impact of large
individual losses and catastrophic events.
Reinsurance
Change from
prior year:
Should reinsurance become unavailable at an
acceptable cost, the Group’s profit would
become considerably more volatile and its
capital position would suffer.
The Group ensures that pricing decisions are
taken on the basis that the gross loss ratio
should be preserved in the long term, such
that reinsurers achieve satisfactory returns
through their relationship with Sabre. This
ensures the greatest possible appetite for
reinsurers to renew with Sabre. Sabre
maintains an open and transparent
relationship with all reinsurers on its panel.
Key elements Description Mitigation
IT systems
and
infrastructure
Change from
prior year:
The Group operates bespoke IT systems and
is reliant on the accurate recording, storage
and recall of data. Failure of these systems
could result in the business being unable to
price or process new business, or manage
claims effectively. IT systems are supported
by a third party and hosted in external data
centres. This creates a dependency on
thesesuppliers.
The Group operates a small number of key
systems which are overseen by a highly
experienced team of bespoke systems
specialists. A robust backup and recovery
plan is in place toensure continuity of
systems in the event of local system failure.
The Group has sought to avoid any identifiable
single points of failure, and maintains
continuity solutions for all keyservices.
IT systems
and cyber
security
Change from
prior year:
Loss of data, including personal data, could
lead to significant financial or reputational
detriment. Theft of the Group’s intellectual
property could impact the ability of the Group
to compete in the market. This is an area of
increasingly complex regulation, including the
GDPR.
The Group addresses issues such as the
GDPR proactively, establishing working
groups which report to the Executive
Committee where required. The Group takes
a zero-tolerance approach to the risk of loss
of personal data or its own intellectual
property and has a framework of system-
level and other operational controls to
ensureit is appropriately safeguarded.
The Group’s remote working capability has
been implemented in such a way that the flow
of data is unchanged, with employees having
limited, remote access to virtual machines.
The Group has continual vulnerability
scanning in place and permanent remediation
plans, as and when required.
Outsourcing
Change from
prior year:
The use of outsourced functions in routine
operations, such as customer services,
exposes the Group to the practices and
procedures prevalent at the outsourced
operation.
The Group monitors its outsourced
operations closely, throughregular audits and
monitoring of key performance metrics.
Distribution
Change from
prior year:
Whilst the Group accesses the market
through brokers throughout the UK,
muchofits business is written through
arelatively small number of large brokers.
It is therefore particularly exposed to the
failure of those brokers.
The Group monitors its exposure to its broker
partners on a continual basis and continually
reviews the financial stability and solvency
ofits larger brokers.
OperationsInsurance
CHANGE
Increase Decrease No change
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Finance and Capital
Key elements Description Mitigation
Interest rate
Change from
prior year:
The Group invests primarily in government-
backed securities and other fixed-interest
securities and is therefore exposed to the
impact of interest rate movements on the
value of these investments. The valuation
and creditworthiness of such assets can be
impacted by macro-economic factors, such
as political uncertainty and economic factors.
The investment portfolio is relatively
short-term, limiting the impact of interest rate
movements on the valuation of invested
assets. The maturity profile of these
investments is designed to match the pattern
of outgoing claims payments, such that on a
Solvency II basis the impact of any
movement in interest rates is mitigated by a
converse movement in the value of claims
liabilities, which are discounted on the
regulatory balance sheet.
The appointment of an investment manager
ensures that investment decisions are made
on the basis of the most up-to-date and
relevant information.
Counter
Party
Change from
prior year:
The Group is exposed to counterparty default
risk in four main areas: investment assets,
amounts due from customers, amounts
duefrom brokers and amounts due from
reinsurers. Failure to recover funds due from
counterparties could result in write-offs
which would reduce profit and damage the
Group’s capital position. Similarly, excess
exposure to poorly rated counterparties can
increase Sabre’s capitalrequirement.
The creditworthiness of the Group’s
counterparties has been considered in the
context of the economic uncertainty. We
have not identified any material deterioration
in the quality of our financial assets and
receivables.
The Group invests primarily in government-
backed securities and a diverse selection of
highly-rated corporate bonds, which carry a
very low risk of default.
The Group operates a robust programme of
credit control and performs due diligence on
broker partners as relationships are entered
into and continually through the life of those
relationships.
The financial security of reinsurers is
considered when selecting panel members
and reviewed on a regular basis.
Liquidity
Change from
prior year:
Inadequate monitoring of liquidity could
resultin the inability to meet liabilities as
theyfall due.
The Group maintains sufficient cash reserves
at all times to meet its best estimate of
short-term liabilities and monitors this
position continually. Whilst the Group
considers its investment portfolio to consist
of actively traded assets and therefore liquid,
it ensures that the maturity of its investment
portfolio is matched to its ongoing cash
requirement.
Key elements Description Mitigation
Capital
management
and solvency
position
Change from
prior year:
If the Group fails to maintain adequate
solvency capital, this could result in
regulatory intervention which may limit
profitability or the ability of the Group to
distribute capital. Some issues impact
primarily on the solvency position but do
notaffect the trading result of the Group.
The Group has strong governance in place to
monitor its solvency position on a continual
basis, including forecast solvency and
scenario testing, primarily as part of the
Group’s Own Risk and Solvency Assessment
(“ORSA) process. The Group ensures that
key elements of judgement, such as
reserving, are reviewed by the Audit and
RiskCommittees and undergo appropriate
independent scrutiny.
Financial
crime
Change from
prior year:
Financial crime, whether internal or external,
could result in material loss of assets and
significant reputational risk. Financial crime
can include misappropriation of assets or
fraudulent activity designed to misrepresent
the financial performance or position of
theCompany.
Ownership and management of operational
risks sit with the first line business functions.
Whilst substantial internal controls are in
place to mitigate the risk of financial crime,
the Group considers its culture and ‘tone
from the top’ to be key in raising awareness
of external crime and limiting the risk of
occurrence of internal financial crime.
Taxation
Change from
prior year:
Sabre is liable for a number of taxes in the UK
including corporation tax, insurance premium
tax, value added tax and payroll taxes. The
Group would be subject to sanction or
penalties if these taxes are misreported due
to error or poor judgement.
The Group’s operations are straightforward,
entirely within the UK, and the Group does not
operate any form of tax avoidance. Where
areas of complexity are identified, or new
material transactions are entered into, the
Group will engage external tax advisors. The
Group’s annual corporation tax calculations and
returns are reviewed by external tax advisors.
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Sabre Insurance Group plc Annual Report and Accounts 2022
27
People
Key elements Description Mitigation
Employees
Change from
prior year:
The quality of our employees is central to the
success of Sabre, and the potential loss of
employees or the inability to recruit quality
and diverse employees may have an adverse
impact on the performance of the Group.
The Group seeks to attract, retain and
develop its employees by:
Creating a hardworking and enjoyable work
environment
Induction process
On the job training
Appraisals
Annual pay reviews
Benefits and discounts
Community involvement/initiatives
Employee roundtables with the CEO
Appointment of a Non-executive Director
who is responsible for engagement with
employees
Governance and Compliance
Macro Risks
Key elements Description Mitigation
Compliance
Change from
prior year:
The Group is subject to the PRA and FCA
regulatory regimes, including prudential
regulation by the PRA and FCA. This
regulation dictates elements of the Group’s
operational activity such as the manner in
which customers are treated and the
recruitment and development of employees.
The FCA continues to focus on fair market
pricing which, whilst well managed through
the Group’s risk appetite, nonetheless
increases conduct risk for the Group. Failure
to comply fully with prevailing regulation can
lead to monetary or other sanctions which
may impair the Group’s ability to function.
Recent FCA policy statements on GI Pricing
Practices and Value Measures Reporting will
result in the Group having to demonstrate it
understands its target market and how fair
value will be delivered to the end consumer.
The FCA Consumer Duty which comes into
effect on the 31 July 2023 will mean the
Group has a regulatory responsibility to
deliver good outcomes for retail customers.
The Group has an extremely low appetite for
accepting any risk other than that which
relates to the underwriting of its insurance
policies, and therefore its decision-making
reflects this in relation to conduct risk and
other regulatory matters. The Group operates
a risk management framework which is
approved by the Board. The Group monitors
legal and regulatory developments in the UK
and closely monitors its exposure to
regulatory risk. The Group culture ensures
the interests of our customers and their fair
treatment are paramount. The Group’s Head
of Compliance reviews and monitors
operational activity to ensure regulatory
requirements are adhered to. The Group
engages with the PRA and FCA regulators on
all relevant consultations. The Group in
accordance with regulatory requirements has
appointed a Non-executive Director to be the
Consumer Duty Champion. The Groups
Head of Compliance is overseeing the
implementation of FCA Consumer Duty
requirements across the business.
Legal
Change from
prior year:
The Group operates within the UK and is
therefore primarily subject to the requirements
of UK law. Further to those regulatory and data
protection laws (discussed separately), the
Group is exposed to employment law,
Companies Act legislation and taxlaw.
Non-compliance with laws can result in
financial sanctions or impair the Group or the
Group’s Directors’ ability to operate effectively.
The Group has established a robust risk
andcontrol framework and sets the
clearobjective to minimise the risk
ofnon-compliance with all laws and
regulations. A review of all new material
contracts is undertaken.
Key elements Description Mitigation
Inflation
Change from
prior year:
Cost inflation is currently high across the UK
and global economy. In general, the costs
related to insurance claims have experienced
inflation of 7% to 8% for several years, but we
saw this increase to c.12% during 2022. We
expect this wider inflation to not only increase
pressure on claims costs further but also to
impact the Group’s wider expense base.
In setting insurance premiums and in
calculating the expected cost of claims used
for setting the Group’s insurance liabilities,
Sabre uses an up-to-date assessment of the
current inflationary environment. We expect
market pricing to adapt to this increasing cost
base and therefore any price rises applied
should have a low impact on our
competitiveness in the medium-term. We will
continue to monitor and model the changes in
costs and adjust our prices accordingly.
Climate
change
Change from
prior year:
The risk of climate change could have a
negative impact on the earnings or financial
position of the Group. For example, there
could be an impact on the cost of claims in
the long-term due to an increase in the
number of extreme weather events or the
transition to electric vehicles. Further
information on this can be found in the
Responsibility and Sustainability section
ofthis report on pages 38 to 49.
The Group has appointed the Chief Financial
Officer to oversee the management of this risk
and its impact on the Group is reviewed at
least annually at the Group’s Risk Committee.
We have sought to integrate the consideration
of climate risks within the Group’s decision-
making processes and continue to improve the
clarity and usefulness of our disclosures
around climate change. Further information on
the Group’s considerations relating to the
environment and climate change can be found
on pages 44 to 49 of this report.
CHANGE
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Statement
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Sabre Insurance Group plc Annual Report and Accounts 2022
28
Viability Statement
The Board considers the Group’s financial status and viability on a
regular basis as part of its programme to monitor and manage risk. In
accordance with provision C.2.2 of the UK Corporate Governance Code
2018, the Directors have assessed the Group’s prospects and viability
for the three-year period to 31 December 2025, taking into account the
Group’s current position and the potential impact of the principal risks.
The assessment period of three years has been chosen as it is in line
with our business planning horizon. This is consistent with the time
horizon projected for most scenarios assessed through the Groups
ORSA process. The cyclical nature of the motor insurance market
means that projecting for periods longer than three years creates
material uncertainty; however, we do review longer-term strategic
developments and emerging risks over longer time periods.
Assessing viability
In making their assessment, the Board took into account the potential
impact of the principal risks that could prevent the Group from
achieving its strategic objectives. The assessment was based on the
Group’s ORSA process, which brings together management’s view of
current and emerging risks, with scenario-based analysis and reverse
stress testing to form a conclusion as to the financial stability of the
Group. Consideration was also given to a number of other individual
risks and events. In the Boards estimation these events would not
plausibly occur to a level of materiality that would endanger the Group’s
viability. The assessment also included consideration of any scenarios
which might cause the business to breach its solvency requirements
which are not otherwise covered in the risk-based scenario testing.
Conclusion
Based on the consolidated financial impact of the sensitivity analysis
and associated mitigating internal controls and risk management
actions, as described in detail for each principal risk, the Directors
concluded that the Group will be able to operate within its solvency
capital appetite and maintain sufficient liquid investments and cash
reserves to meet its funding needs over the viability period.
Consideration of long-term viability
The assessment of principal risks facing the Group and robust
downside sensitivity analysis leads the Board to a reasonable
expectation that the Group will remain viable, continue in operation
and meet its liabilities as they become due over the viability period
through to 31 December 2025.
The impact of inflation
The current economic environment is one of unexpectedly high
inflation, of an uncertain persistency, along with volatile investment
markets and higher interest rates than in the preceding few years.
Wehave considered the impact of this on the 2022 result as well as
the Group’s performance and position across the planning horizon.
Impact on the 2022 financial position and result
The immediate impact of the rapid rise in inflation during H1 2022 was
twofold. Firstly, the cost of claims already incurred was deemed to be
greater than previously expected, which led to an increase in the
associated claims liabilities. Secondly, the expected cost of claims not
yet incurred on policies already in-force increased, meaning that the
achieved loss ratios in the current year is worse than expected. Both of
these are natural consequences of the estimation involved in selling a
product for which the true cost cannot be known for a number of years.
These contributed to the Group’s high (by historic standards) loss ratio,
however the headroom with which the Group usually operates meant
that an underwriting profit was achieved and hence capital strain
waslimited.
The high interest rates and devaluing of UK-based assets during 2022
had a direct impact on the bonds held within the Group’s investment
portfolio, which are held at market value. The Group’s investment
portfolio consists of diverse, highly rated bonds, predominantly
government-backed. As the Group operates a ‘buy and hold’ strategy,
market value movements are taken through ‘other comprehensive
income’ and unwind during the life of the bond, meaning that the
overall returns are unaffected by short-term market value movements.
The Group’s Solvency II balance sheet was largely unaffected by the
reduction in market values as this was offset by an increase in discount
rates applied to claims liabilities.
The Group’s expected credit loss (“ECL”) provision has also remained
stable throughout the year, but Management is continuously monitoring
the credit quality of the counterparties to which it is exposed.
The Group continuously assessed its SCR during 2022. The Group
achieved a solvency coverage ratio of 161% at year end, in line with
the target ratio of 140% to 160% and did not drop below this range
throughout the year. Refer to Note 2 of the financial statements for
detail on capital management.
The liquidity position of the Group is outlined in Note 6 of the Financial
Statements. The short-term liabilities of the Group remain adequately
covered by the liquid assets. We continue to monitor the liquidity of
our assets and the financial markets, to ensure cash outflows are
appropriately matched. All of the Group’s cash and cash equivalents
are invested in highly liquid money markets and bank deposits.
Short-term impacts
We have taken appropriate pricing action to ensure, as far as is
possible, that policies written today will achieve the Group’s target loss
ratios. However, we expect there to be a tail consequence of the rapid
inflation into 2023, which means that 2023’s expected loss ratio is
likely to remain above historic norms, albeit improved from 2022.
A second-order impact of high inflation is on the volumes of business
written by the Group. Where Sabre seeks to meet the costs of claims
through increasing prices, generally it does so ahead of the rest of the
insurance market, creating short-term pressure on volumes. While we
expect overall market pricing to correct, the nature and extent of such
a correction is uncertain, and as such the level of premium written by
Sabre could remain somewhat suppressed during 2023.
Medium and long-term impacts
While we expect inflation pressures to decrease during 2023 and
beyond, we do consider there to be considerable uncertainty in the
level and persistency of inflation over the medium-term. We will
continue to price our policies cautiously to allow for elevated levels
ofinflation and will maintain a low-risk, diversified balance sheet to
mitigate volatility in the investment markets.
Viability due to inflation
The Group and its operating entity have considered various stress
scenarios related to inflation. These risk scenarios indicate that the
current economic environment will not change the viability status of
the Group and its operating subsidiary. The Group trades from a robust
capital position and is expected to remain well capitalised under all
reasonable financial and operational stress scenarios.
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Sabre Insurance Group plc Annual Report and Accounts 2022
29
The impact of climate change
We discuss the impact of climate change in detail on pages 44 to 49 of
this report. We have assessed the short, medium and long-term risks
associated with climate change. Given the geographical diversity of
the Group’s policyholders within the UK and the Group’s reinsurance
programme, it is highly unlikely that a climate event will materially
impact Sabre’s ability to continue trading. More likely is that the costs
associated with the transition to a low-carbon economy will impact the
Group’s indemnity spend, as electric vehicles are currently relatively
expensive to fix. We expect that this is somewhat, or perhaps
completely, offset by advances in technology reducing the frequency
of claims, in particular bodily injury claims which are generally far more
expensive than damage to vehicles. These changes in the costs of
claims are gradual and as such reflected in our claims experience and
fed into the pricing of our policies. However, if the propensity to travel
by car decreases overall this could impact the Group’s income in the
long term, but this is not expected to be material within the viability
period of three years. We do not consider it plausible that such a
decrease would be as severe as the scenarios that we have modelled
as part of our viability testing exercise.
Scenarios modelled and link to principal risks
This table shows some of the key scenarios modelled as part of our
viability testing exercise, and the risks to which they most closely
relate. Some detail on the types of stresses modelled in each scenario
is given below:
Reserve strengthening: An instantaneous 20% increase in net
reserves
Reinsurer failure: The instantaneous failure of the reinsurer with
which we hold the largest recoverable position
Significant short-term drop in premium: A 50% drop in premium
fora period of three months
Increase in expenses: A 25% inflation in operational expenditure
Above-expected claims costs: 10% increase in net loss ratio
Investment valuations: A 25% decrease in the market value of the
corporate bond portfolio
We have also modelled worst-case scenarios which combine
theseevents.
Scenario
Risk category
Reserve
strengthening
Reinsurer
failure
Short-term
signicant drop
in premium
Increase
in expenses
Above-expected
claims costs
Investment
valuations and cash
ow
Underwriting
Pricing
Reserving
Reinsurance
Claims management
Product development
IT systems and infrastructure
Counterparty
Outsourcing
Financial crime
Taxation
Accounting
Capital management
Investment management
Resilience and financial standing
Governance
Compliance
People
Climate change
Economic disruption
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Statement
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Sabre Insurance Group plc Annual Report and Accounts 2022
30
Section 172 Statement
Fair, risk-based
pricing and
reliable returns
Our purpose
To provide motor insurance,
available to the widest possible
range of drivers, based upon a
fair, risk-based pricing model that
is consistent across all customers.
To generate excess capital and
return this to shareholders, or
reinvest in the business in order
toincrease future returns.
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Sabre Insurance Group plc Annual Report and Accounts 2022
31
Section 172 (1) Statement
This section of the Strategic Report
describes how the Directors have had
regard to the matters set out in section
172 (1) (a) to (f), and forms the Directors
statement required under section
414CZA of the Companies Act 2006.
Stakeholders and our Board
Sabre aims to provide high-quality motor insurance at a fair price,
whilemaking attractive returns for its shareholders under any market
conditions. This can only be achieved through engagement with, and
consideration of, all stakeholders including our employees, customers,
suppliers and regulators.
Stakeholder engagement
The Board recognises that the needs and relevance of different groups
of stakeholders can vary over time, and as such the Board seeks to
understand the needs and priorities of each stakeholder as part of
itsdecision-making. This is integral to the way the Board operates.
Page 33 of the Strategic Report sets out who our stakeholders are and
how our strategy impacts them. We further discuss how we engage
with our key stakeholders, and our own employees, on pages 38 to 40
of the Strategic Report.
Listening to the needs of stakeholders
Our Board interacts with stakeholders through direct engagement as
well as through information provided by Management.
Key engagement activities include:
Appointing a Non-executive Director to be responsible for direct
employee engagement, which involves meeting with employees at
all levels within the business throughout the year in order to discuss
their concerns, ambitions, and views on the business
Review and assessment of the results of annual employee surveys
Engaging with shareholders: at the regular Management roadshows,
attendance at investor conferences and through meetings with
theChair
The Board and Management allow time for informal discussions
with shareholders before and after the Group’s Annual General
Meeting. This is an opportunity to interact with smaller, non-
institutional shareholders
Regular supervisory meetings between individual Board members
and the Group’s regulatory supervisory team, which facilitates wider
discussion of the issues facing the insurance industry as a whole, as
well as Company-specific matters
Reports from Executive Management to the Board on customer
service, including complaints root-cause analysis and whether
customer service metrics have been met
Embedding stakeholder interests within our culture
Through informed discussion at Board level, our Executive Team
carries forward stakeholder consideration into and throughout the
business. Sabre operates a culture of openness and transparency, with
management at all levels working amongst their operational teams,
ensuring that the tone from the top is well embedded in the day-to-day
operations of the Company.
Ensuring stakeholder interests are taken into account
The Board take their responsibilities under Section 172 of the
Companies Act very seriously. The Board is aware that the Directors
ofthe Company must act in good faith, and in ways that promote the
success of the Company for the benefit of its members, and in doing
so have regard to:
the likely consequences of any decision in the long term
the interests of the Company's employees
the need to foster the Company's business relationships with
suppliers, customers and others
the impact of the Company's operations on the community and
theenvironment
the desirability of the Company maintaining a reputation for high
standards of business conduct
the need to act fairly as between members of the Company
This table demonstrates where further information on how the Board
has met these responsibilities is disclosed:
Long-term results Our strategy p14
Chair’s Letter p6
Market Context p8
CEOs Review p10 to 12
Business Model p16
KPIs p17 to 18
Principal Risks and Uncertainties p19 to 28
CFO’s Report p35 to 37
Viability Statement p29 to 30
Audit Committee Report p62 to 64
Risk Committee Report p65 to 66
Employees Business Model p16
CEOs Review p10 to 12
Employees section of the CSR Report p40 to 42
Board Principal Decisions p34
Chair’s Governance Letter p52
Remuneration Committee Report p69 to 71
Directors’ Remuneration Report p78 to 87
Employee Designated NED p60
Stakeholders Strategy Operations p14
Strategy Distribution p14
Strategic Priorities p14
CEOs Review p10 to 12
Business Model p16
CSR Report p38 to 49
Community and
environment
CEOs Review p10 to 12
CSR Report p38 to 49
Directors’ Report p88 to 90
Reputation Strategy Report p14
CEOs Review p10 to 12
Governance Report p56 to 61
Fairness for
shareholders
Strategy Report p14
Governance Report p56 to 61
Remuneration Committee Report p69 to 71
Directors’ Remuneration Report p78 to 87
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Statement
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Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
32
How s.172 is applied across our
stakeholders
Shareholders
Underwriting performance
Delivering consistent and attractive returns on capital.
Risk management
Minimise volatility in result and maximise available capital.
Growth
Increasing value and absolute returns over time.
Operations
Enhancing operational efficiency and minimising cost.
Distribution
A flexible distribution model allows protection of bottom line throughout
the market cycle and responds to emerging customer demand.
Employees
Underwriting performance
Stable business model allows for long-term, rewarding careers.
Risk management
Job security in a supportive, culturally sensitive environment.
Growth
Over time, internal opportunities to develop and grow with the business.
Operations
Skills-based operations allow for fulfilling employment. Conformity
with best practice.
Distribution
Broker-led distribution retains technical skills in-house.
Customers
Underwriting performance
Providing a quote for almost all potential customers, based upon
theexpected cost to us in providing that policy, irrespective of the
individual’s shopping or behavioural habits.
Risk management
Certainty that cover will be honoured and that the Group will retain the
means to settle any claims which fall due. Comfort that we operate in
line with all applicable laws and regulations.
Growth
Over time, scale benefits allow lower prices without sacrificing margin.
Operations
Efficient, consistent service from our claims and front-end
administrative units, along with effective operational controls to allow
for fast, accurate transactions.
Distribution
Obtaining a Sabre quote is easy, whether through a brokers branch,
price comparison website or direct through our brands, meaning
almost everyone has access to a Sabre policy.
Partners
Underwriting performance
Cash-positive business makes Sabre a reliable counterparty.
Risk management
Certainty of liquidity to meet debts as they fall due.
Growth
Become an increasingly valuable trading partner over time.
Operations
Make timely, accurate payments to all suppliers.
Distribution
Fair, consistent terms with our distribution partners.
Regulators
Underwriting performance
Only underwriting business that will meet our target margins and
generate appropriate regulatory capital.
Risk management
Maintaining capital headroom. Minimising conduct risk and ensure full
compliance with legal and regulatory landscape.
Growth
Growing when the market allows, without sacrificing profitability or
capital security.
Operations
Ensuring accurate, timely reporting and close monitoring of regulatory
risk areas.
Distribution
Broker audits and on-boarding processes ensure a fully compliant
customer journey.
Society
Underwriting performance
Providing access to insurance to as wide a group as possible, reducing
the risk of uninsured drivers.
Risk management
Financial stability and strong balance sheet present lowest possible
systemic risk.
Growth
Increasing employment in the local community, while monitoring our
impact on the environment.
Operations
Ensuring efficient use of resources and managing the Group’s impact
on our local environment.
Distribution
Making our product available as widely as possible, at a fair price to all.
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Sabre Insurance Group plc Annual Report and Accounts 2022
33
Key Board decisions during
thefinancial year ended
31December 2022
The Board recognises the importance
ofmaking decisions in a manner
whichensures that all of the Groups
stakeholders are treated consistently and
fairly. This can be demonstrated through
the below key decisions, which were
made by the Board during the financial
year ended 31 December 2022.
Inflation and economic uncertainty
The war in Ukraine, mixed with other local and global factors, created
an environment of significant economic uncertainty and high inflation.
The high-inflation environment presented a number of challenges:
The Board was satisfied that the Group’s low-risk approach to
investments and asset-liability matching sufficiently mitigated the
risk of asset volatility on the balance sheet. The Board reviewed the
Group’s investments to identify any bonds which were exposed to
the conflict in Ukraine, or linked to Russia. None were identified
Directly, costs incurred in servicing insurance contracts (claims
costs) increased significantly and unexpectedly. The Board acted
toensure the financial stability of the firm by challenging
Management’s assessment of future claims costs within the
Group’s claims reserves
The Board supported Management’s actions to increase policy
pricing in line with inflation. While this would inevitably lead to
increased costs to consumers, the Board considered the potential
downsides of under-pricing policies to be far more significant
The Board approved an £800 ‘cost of living’ allowance paid to all
staff in instalments from Q3 2022, to help ease the burden of
increased energy and food costs
The Group’s reinsurance programme was renewed on expiring
terms, significantly limiting the impact of volatility in the costs of
long-term care
Dividend
The Group’s dividend policy states that an ordinary dividend will be
paid based on 70% of the years profit after tax, with the potential
foradditional capital to be distributed by way of a special dividend as
appropriate. The Board assesses whether to pay a special dividend on
an annual basis once the result for the year is known. This decision is
made primarily based upon the financial position of the Group, as
demonstrated through its SCR coverage ratio, as well as projected
capital needs and the wider economic and market backdrop. The
Board considers this to meet the overriding need of all shareholders,
customers, staff and our regulators, for the Company to remain a
solvent, viable trading entity under all reasonably foreseeable
circumstances. The Board also makes a secondary consideration
ofthe expectation of shareholders, understanding that many of the
Group’s investors hold stock in order to benefit from the strong
dividend flow.
During 2022, the Board made the decision to pay a full ordinary and
interim dividend in line with the Group’s policy, as well as a special
dividend reflecting the distribution of excess capital in line with the
expectations of most shareholders. While the interim dividend was
paid in line with the Group’s policy, the Board noted that the
distribution was in excess of the level of capital generated during the
first half of 2022. However, having reviewed the strength of the
balance sheet and detailed capital modelling prepared by Management,
the Board was satisfied that such a distribution was appropriate and in
line with the expectations of the Group’s stakeholders.
Strategy
The Group’s strategy is well documented within this report, and has
changed little in the past two decades. This Board does continually
review the Group’s strategy against its best understanding of the
needs of key stakeholders. In September 2022, the Board held its
annual ‘Strategy day, at which the existing strategy was assessed
primarily against the needs of shareholders, customers, staff and
ourregulators. The Board concluded that the needs of our key
stakeholders were well met through the current strategy. The Board
considered whether continued market softness should drive a change
in strategy, however concluded that the current, focused approach was
likely to give the best long-term result for shareholders as well as the
best prices for customers and the best level of customer service. The
Board considered that the entry into motorcycle and expansion into taxi
insurance would bring useful resilience to the Group’s result, once the
products had fully bedded-in, but that the motor business should
remain the Group’s key priority and most likely area of material growth.
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Sabre Insurance Group plc Annual Report and Accounts 2022
34
In my 2021 report, I highlighted the
strong basis for growth that had
beenset through prudent underwriting
and cautious management throughout
the pandemic. This year, the same
caution has allowed Sabre to
generateunderwriting profit despite
unprecedented economic challenges.
When the impact from the invasion of Ukraine fed through into rapid
inflation in the UK economy, it was clear that all insurers would face
asignificant headwind in profitability. An insurance product by nature
reflects the insurer’s best guess of the total cost of claims attaching
tothat policy, which may not be fully realised for years after the policy
has expired. So, a rapid increase in costs will inevitably mean that
policies already sold will achieve less than planned profit margins,
andclaims already recorded but not settled would cost more than
expected, leading to deterioration in prior-year reserves. This event
occurred after an already extended period of under-pricing in the motor
insurance market. Sabre was not immune to the effects of this, but
was well-placed to face into the challenge because:
While the motor insurance market had been systemically under-
priced for several years, Sabre had met increasing costs of claims
with policy price increases, meaning that the Group was on the
front foot’ when further pressures emerged.
READ MORE:
Principal
risks and
uncertainties
on page 19
Chief Financial Officers Review
High target
margins allow
headroom for
unexpected
events
ADAM WESTWOOD
Chief Financial Officer
Highlights
2022 2021
Gross written premium £171.3m £169.3m
Net loss ratio 68.7% 51.1%
Expense ratio 27.3% 28.3%
Combined operating ratio 96.0% 79.4%
Adjusted profit after tax £10.1m £30.1m
Profit after tax £10.1m £30.1m
Solvency coverage ratio (pre-dividend) 161% 208%
Solvency coverage ratio (post-dividend) 154% 164%
Return on tangible equity 12.4% 29.2%
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Sabre’s core margins were sufficient to absorb deterioration and still
generate an underwriting profit.
Sabre is an agile business with short feedback loops and a sharp
focus on motor insurance costs. As soon as we identified the impact
of rapidly increasing inflation, pricing action was taken. The effects
of this pricing action show through the second half of 2022 and
should support a strong recovery into 2023 and beyond.
Beyond the core motor book, we saw rapid growth in the motorcycle
and taxi lines during 2022, having entered into material partnership
arrangements in November 2021 and February 2022 respectively.
Given the infancy of these lines of business we did not expect a
significant contribution to profit in the first year, however we had
planned to absorb this through increased volumes in the core motor
book. Such increased volume did not materialise in 2022, a direct result
of Sabre’s decisive pricing action set against the wider industrys slow
response to inflation – the Group again trading volume for resilience
and long-term profitability. The introduction of less profitable bike and
taxi business set against lower than expected volumes in motor
therefore had a clear negative contribution to the Group’s net loss ratio.
The expense ratio has decreased year-on-year, to 27.3%, which has
resulted from an increased net earned premium and continued tight
control of costs.
The Group’s profit before and after tax reflects the combined operating
ratio for the year of 96.0%. The year-on-year decrease in profit is
almost entirely attributable to the increase in net loss ratio.
The Board have announced a special dividend of 1.7p, bringing the
total distribution in respect of 2022 to 4.5p. This is reflective of the
Board’s confidence in the strength of the Group’s uncomplicated
balance sheet. Return on tangible equity was 12.4%, the reduction
from the prior-year a result of the Group’s lower profit.
Revenue
2022 2021
Gross written premium £171.3m £169.3m
Gross earned premium £178.2m £165.9m
Net earned premium £153.2m £145.4m
Other technical income £1.8m £2.1m
Customer instalment income £3.3m £3.9m
Interest revenue calculated using the effective
interest method
£1.4m £1.2m
Fair value (losses)/gains on debt securities through OCI (£14.2m) 5.6m)
The trend of reducing overall premium for the last few years has
reversed, with the Group increasing written premium year-on-year.
Beyond the headline figure, the motor line did not grow during 2022 as
anticipated, due to persistent market under-pricing in an extraordinary
inflationary environment. However, the motorcycle line generated
significant additional income of £23.1m (2021: £3.2m), while taxi
contributed £13.3m (2021: £1.5m) to the top line.
Other sources of income remained proportionate to the amount of
business written through the Direct channel, which had become
proportionately smaller during 2022 due to the introduction of the
motorcycle and taxi lines, both of which are sold exclusively
throughbrokers.
Investment income, which reflects the effective interest across
theGroup’s ‘buy and hold’ bond portfolio, increased a little as
reinvestments were made at higher returns. We expect the yield to
continue to increase in the current environment as bonds gradually
mature and are reinvested at higher rates. We have included a
breakdown of investments by maturity on page 139.
While market value losses have been recorded across the bond
portfolio, we do not expect these losses to crystalise as the bonds are
held to maturity and will pull to their par value. The Group does not
hold any non-cash financial investments outside of this portfolio and so
is not exposed to movements in equity or property markets.
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Operating expenditure
2022 2021
Gross claims incurred £125.9m £105.0m
Net claims incurred £112.8m £81.0m
Current-year loss ratio 67.9% 56.0%
Prior-year loss ratio 0.8% (4.9%)
Financial year loss ratio 68.7% 51.1%
Net operating expenses £41.8m £41.2m
Expense ratio 27.3% 28.3%
Combined operating ratio 96.0% 79.4%
The year’s underwriting result is best explained in terms of the
current-year loss and prior-year loss ratios, and the expense ratio,
which together make up the combined ratio, and split between motor,
bike and taxi. Given the infancy of the bike and taxi lines, their impact
on prior-year losses is negligible.
2022 2021
Motor Motorcycle Taxi
All lines
All lines
Net earned premium £132.9m £15.1m £5.2m £153.2m £145.4m
Net claims incurred,
excluding claims
handling expenses £81.7m £17.9m £5.6m £105.2m £74.2m
Current-year loss ratio 60.4% 118.0% 112.8% 67.9% 56.0%
Prior-year loss ratio 1.1% 0.4% (6.0%) 0.8% (4.9%)
Financial year loss ratio 61.5% 118.4% 106.8% 68.7% 51.1%
The underwriting result can be considered in the context of three key
numbers: the prior-year loss ratio, the current-year motor loss ratio and
the motorcycle and taxi loss ratios. Taking each in turn:
The prior-year motor loss ratio, which is usually negative and reflects
the run-off of margins on previously incurred but not settled claims,
was positive in 2022, which means that reserve strengthening was
inexcess of any margin run-off. This strengthening was required to
reflect the increase in expected costs due to the high-inflation
environment. This should not be required in future periods
(notwithstanding further rapid unexpected inflation) as claims recorded
since this adjustment inherently reflect the new cost environment.
The current-year motor loss ratio has increased by c.4% against the
same in 2021. This increase is a result of inflation generating
increased costs on policies which were written prior to March 2022,
along with normal volatility in the current-year result.
In-year performance for motorcycle and taxi business has been
slightly disappointing, with significant pricing action taken during the
year, which we anticipate to bring these loss ratios down materially
in 2023.
The Group’s expense base has remained well under control, despite
inflationary pressures – although we expect these to feed through as
contracts are renewed over the next few years. Such increases are
factored into our current policy pricing. The reduction in expense ratio
is largely due to increasing net earned premium year-on-year.
Taxation
In 2022 the Group recorded a corporation tax expense of £2.6m (2021:
£7.1m), an effective tax rate of 20.7%, as compared to an effective tax
rate of 19.0% in 2021. The effective tax rate approximates to the
prevailing UK corporation tax rate. The Group has not entered into any
complex or unusual tax arrangements during the year.
Earnings per share
2022 2021
Basic earnings per share 4.06p 12.09p
Diluted earnings per share 4.03p 11.9 8 p
Basic earnings per share for 2022 of 4.06p per share is proportionate
to profit after tax. Diluted earnings per share is similarly proportionate
to profit after tax, taking into account the potentially dilutive effect of
the Group’s share schemes.
Cash and investments
2022 2021
Government bonds £87.2m £86.2m
Government-backed securities £80.8m £83.9m
Corporate bonds £61.3m £64.6m
Cash and cash equivalents £18.5m £30.6m
The Group continues to hold a low-risk investment portfolio and cash
reserves sufficient to meet its future claims liabilities. This has resulted
in a stable yield across the portfolio. As most assets are held to
maturity, the yield achieved by the portfolio lags changes in market
yield, with funds generally being reinvested on maturity.
Insurance liabilities
2022 2021
Gross insurance liabilities £257.4m £232.5m
Reinsurance assets £106.3m £103.6m
Net insurance liabilities £151.1m £128.9m
The Group’s net insurance liabilities continue to reflect the underlying
profitability and volume of business written. The slight relative increase
in gross insurance liabilities against 2021 was a result of additional
large claims being recorded against the continued relatively slow
settlement of personal injury claims. The level of net insurance
liabilities held remains broadly proportionate to the volume of business
written, and reflects inflationary increases in the cost of claims.
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 and solvency
The Directors have proposed a total final dividend of 1.7p per share in
respect of 2022. The total amount proposed to be distributed to
shareholders by way of dividends for 2022 is therefore 4.5p per share,
including the ordinary interim dividend of 2.8p per share already paid.
The total ordinary dividend due to be paid according to the Group’s
policy is entirely covered by the interim dividend, therefore the entire
final dividend is considered ‘special’ according to the Group’s policy.
Excluding the capital required to pay this dividend, the Group’s SCR
coverage ratio at 31 December 2022 would be 154% This is consistent
with the Group’s policy to pay an ordinary dividend of 70% of profit
after tax, and to consider passing excess capital to shareholders by
way of a special dividend.
ADAM WESTWOOD
Chief Financial Officer
13 March 2023
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Our
Customers
Our
Partners
Our
Community
Our
Environment
Our People
Our
Shareholders
A responsible
and sustainable
business
Operating Sabre as a responsible
and sustainable business is a key
element of our long-term strategy.
We have developed a framework
for our actions which forms an
important reference point when
directing the Groups activities. We
are committed to doing our part in
building a sustainable future.
Our responsibility and
sustainability framework:
Responsibility and Sustainability
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Sabre’s business is built around the customer, with a goal
to provide access to fairly priced motor insurance for
almost everyone. We want our customers to experience
high-quality customer service and peace of mind.
Pricing
We price all of our policies based upon our estimate of the ultimate
cost to us of providing that policy including paying claims,
administrative expenses and taking a consistent margin regardless
ofthe premium level. Each uniquely priced policy is based upon our
view of the risks presented by it, considering both the person and the
vehicle insured. This assessment is based on our bespoke fully-
automated pricing model, using our experience represented by many
years of claims data. Because we seek to offer premiums to almost
everyone, we have generated a deep pool of data, which allows us to
provide the best possible, risk-adjusted prices.
Our Customers
Customer experience
We strive to ensure an easy, efficient service to all of our customers
however they reach us. This could be through our extensive broker
network, or directly to us through our own brands, Go Girl and
Insure2Drive. This includes providing a straightforward sales process
andknowledgeable, well-staffed UK-based call centre.
Claims
Most of our business is sold online or through our network of brokers,
which means our first contact with customers is often when they
make a claim. We understand this can be a stressful process and
seekto make it as easy as we can, to provide a ‘no hassle’ service
forhonest customers and third parties. Where we believe individuals
are making false or exaggerated clams we will defend our position
robustly to allow us to continue offering competitive premiums to all
ofour customers. We engage with excellent partners, with whom we
agree a strong suite of service-level parameters, which are monitored
regularly, to ensure customers receive great service at all touch points
– whether by our own team or outsourced partners.
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Our people are core to the success of the Group, and
weseek to create a positive and collaborative working
environment for all of our employees. Sabre’s culture
provides our employees with an open, honest and
professional working environment which recognises the
importance of a healthy work/life balance. The Group
operates from a single site in Dorking, Surrey and as at
31December 2022 employed 153 people. We are pleased
to say that over 52% of our employees have been with the
Group for ten or more years, which is an increase from
51% last year.
Employee policies & Code of Conduct
Policies are in place to support and develop our employees. Examples
ofthese include policies addressing equal opportunities, acceptable
behaviour, flexible working, and health and safety. The policies and
practices are consistent with the Group’s values and support the
long-term success of the business through supporting its employees.
During 2022 all employee policies were reviewed to ensure that they
were fit for purpose. All employee policies are available through the
employee portal which allows for easier access and greater transparency.
The Company has a Code of Conduct, which outlines expected
behaviours of employees. It further requires all employees to
understand the definition of, and the harms related to harassment.
Training related to expected employee conduct is required to be
completed annually, and by all new joiners.
Employee survey
Since 2018 the Group launched an annual Satisfaction Survey to all
employees to monitor the culture of the Group. In 2022 the all-
employee Satisfaction Survey was issued again to assist with
understanding how employees are feeling about their work and the
Company. All employees are encouraged to provide feedback, this
assists the Company with increasing engagement, productivity and
retention. As a consequence of previous surveys, the new benefits
platform was introduced as was the hybrid working model. The
response rate to the survey this year was 57% (2021: 63%) and
showed that our employees feel valued, foresee themselves working
here in a years’ time and reaching their full potential.
Remuneration
Sabre provides remuneration to its employees through salaries,
bonuses, benefits, pensions and all-employee share plans as detailed
below:
Salaries
All employee salaries are reviewed annually. During the review, a
benchmarking exercise is completed comparing roles within the
insurance industry to those in the Group, to ensure fair salaries for
current employees.
Bonus
Employees are also eligible to receive a performance-related annual
bonus as a reward for achieving the objectives and tasks set during
their appraisals. During the year 100% of eligible employees received
aperformance-related bonus. During the year the Company also paid
each employee a net Christmas bonus of £1,000.
Our People
Communication with employees
Sabre encourages internal communication through a two-way dialogue
between the Leadership Team and employees. Throughout the year
we have:
hosted regular ‘CEO lunches’, where Geoff Carter hosts a lunch with
teams across the Group
held ‘Listen & Learn’ sessions, where Karen Geary, the Non-
executive Director responsible for employee engagement hosted
Q&A sessions with employees
continued to use ‘Ask Sabre, an email facility, which allows
employees to raise questions regarding the business
held employee-wide presentations at Full Year and Half Year by
Geoff Carter to update employees on the Group’s financial results
and answer any questions they may have in relation to the result
announcements to the market
operated a Company Suggestions Box which is a facility to post
suggestions anonymously
completed an Employee Satisfaction Survey, this is sent yearly to all
employees to allow them a safe space to provide feedback
anonymously to the Leadership Team
held twice yearly appraisals for all employees. These are held in a
one to one setting with the employee and manager
operated a dedicated Whistleblowing Hotline through which
employees can report any concerns anonymously and provided
annual training and regular reminders regarding whistleblowing
In addition to the above, during 2022 we implemented the below to
further support our employees:
introduced an Employee Portal, which allows employees an element
of self-service as well as a communication function
overhauled the employee appraisal process to increase transparency
for employees regarding performance and development
streamlined HR processes and implemented a new employee
database
introduced Happiness Surveys, a survey sent monthly to all
employees to score their happiness from one to ten to help monitor
employee morale and wellbeing
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Benets
The Company operates a generous benefits package including
holidays, pensions, private healthcare, salary extras employee portal,
eye tests, yearly flu jabs, performance bonus, a life assurance policy,
and support towards professional qualifications.
During 2022, Sabre implemented a formal hybrid working model
whereby all employees are able to work from home for a maximum
oftwo days per week. This model allows employees to retain the
benefits of working from home, which were highlighted during
COVID-19 lockdowns, while maintaining a collaborative, primarily
office-based culture.
During 2022, the Group introduced free private health insurance to its
employees: this covers not only the medical side but also employee
health and wellbeing. This is offered through incentives to exercise
more, a selection of discounted gym memberships, dietary advice,
free workshops such as how to stop smoking to mental health advice
to promote a healthier lifestyle. All of the incentives are rewarded with
lifestyle points which can be exchanged for instant discounts, from
free cups of coffee to discounted spa breaks. The year also saw the
introductions of our salary extras platform; this provides employees
with discounts for a number of supermarkets, retailers or days out,
which is especially helpful during the cost of living crisis. Through the
platform employees can apply for an interest free technology loan with
an additional discount of 5.5%.
As part of Sabre’s commitment to contributing towards a greener
environment, the Group offers an electric car scheme for employees.
Electric cars do not release direct emissions into the environment,
resulting in a greener and economic way to commute to the workplace.
There is a further benefit of purchasing an electric vehicle through a
salary sacrifice scheme as it generates tax savings for the employee.
The Group also offers a cycle to work scheme to all employees, this
has a tax saving benefit to the employee and they can typically save
between 24-42% of the cost of a bike and or accessories.
Pensions
The Company operates a pension scheme with a maximum matching
employer contribution of up to 10% (grade dependent) for all new
employees and also continues to operate a non-contributory policy
scheme for eligible employees. 98% of employees participate in a
Company pension.
Foundation Certificate in People Management, Chartered Institute of
Personnel and Development
Chartered Management Accountant Qualification, Chartered
Institute of Management Accountants
Mental Health First Aider, St John Ambulance
Mental Health Champions, St John Ambulance
First Aid Qualification, St John Ambulance
All of these qualifications are paid for by the Group, employees are
further supported through the provision of study leave.
Employee wellbeing
The Group invests significantly into employee wellbeing, whether this is
overall mental health, the physical or emotional health or the economic
health of our people. The Group constantly strives to provide support and
resources to create an open and collaborative environment in which to
work. This is supported by our mental health champions and first aiders.
Number of Mental Health First Aiders:
2
Number of Mental Health Champions:
7
Cost of Living Support
The significant increase in the cost of living, experienced by many in 2022
impacted wellbeing across the Group. To help support our employees
with the sudden increase in the cost of living, the Group awarded a cost
of living allowance to be paid to all employees (outside of the Executive
Team) over the five months from October 2022 to February 2023. Also,
Sabre arranged financial wellbeing seminars to inform employees around
all aspects of financial wellbeing from debt management, savings
accounts, mortgage rates explained as well as a separate session which
looked at the options around retirement and pensions. The sessions were
split by age group and were specific to the individual’s needs. Over 29%
of employees attended a financial wellbeing seminar.
All-employee share plans
Sabre operates two all-employee share plans, which allow employees
an easy and cost-effective route to become shareholders in the Group.
At the time of listing, employees were granted free shares in Sabre,
without performance conditions through the Company’s Share
Incentive Plan (“SIP”) and Long-Term Incentive Plan (“LTIP”). The
finaltranche of these LTIP awards vested in 2020. The SIP has been
exercisable since December 2020, and in December 2022 the shares
became exercisable without attracting tax. In 2019, the Group expanded
the SIP, allowing employees to purchase Partnership shares to a
maximum of £1,800 a year, with the Group matching shares purchased
through the plan at a 1:3 ratio. In 2022 23% participated in the SIP.
In 2022, the Group launched its fifth Save As You Earn (“SAYE”) grant,
allowing employees to purchase shares in the Group at a reduced rate.
The Group allows employees to contribute the monthly maximum
monthly contribution of £500, in line with the maximum allowed under
the Plan, and provides the maximum discount of 20% when the option
price is set. The 2022 SAYE grant saw 32% of employees participate.
As at 31 December 2022, 48% of employees were participating in one
of the Company’s SAYE grants.
Training
The Group operates a compulsory e-training programme for all
employees, which focuses on the Company’s needs and includes
topics such as anti-bribery and corruption, whistleblowing and modern
slavery. The Group offers ongoing training to all employees and
external courses for newly promoted employees where appropriate.
During 2022 the Group provided training for 20 of its managers,
through a two-day course provided by an external provider. The
content was bespoke, covering topics from effective appraisals, time
management as well as effective communication. The Group
recognises the importance of investing and nurturing its people to
create effective managers who can influence their teams and
contribute towards the Group’s success. It is planned to hold a
Women’s Leader Training Event in early 2023, which has been
designed to better equip our female employees with the tools to
navigate challenges within the workplace and to develop the critical
leadership skills to effectively guide, influence and mentor others.
During 2022, the Company supported employees with the
followingqualifications:
Foundation Insurance Test, Chartered Insurance Institute
Diploma in Insurance, Chartered Insurance Institute
International Certificate in Financial Services Risk Management,
Institute of Risk Management
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Inclusivity, diversity and equality
The Group is committed to the elimination of unlawful and unfair
discrimination and values the differences that a diverse workforce
brings to our organisation. We encourage inclusivity, diversity and
equality among our workforce, whilst eliminating unlawful
discrimination. During the recruitment and interview process we
ensure fair, non-discriminatory and consistent processes are followed,
and Sabre has a policy of (where practical) advertising all roles
internally to allow employees to progress and develop. Sabre also
supports working parents through shared parental leave, enhanced
maternity and paternity leave and where possible embraces flexible
working for our employees.
Equality, diversity and inclusivity policy
Sabre’s equality, diversity and inclusivity policy aims:
to promote equality, fairness and respect for all our employees
to ensure that the Group does not discriminate against an individual,
specifically due to their age, disability, gender reassignment,
marriage and civil partnership, pregnancy and maternity, race,
religion or belief, sex and sexual orientation
to avoid all forms of unlawful discrimination
Sabre provides compulsory diversity and inclusiveness training
annually to all employees. There is an assessment at the end of each
training, which must be passed before completion, thus ensuring a
level of understanding is reached. These modules are designed to help
employees and enable them to understand how their attitudes and
behaviour towards each other can have a negative or positive impact
on the workforce as a whole.
The Group operates a Religious Holidays Policy, for employees
whowish to observe special religious holidays or festivals. All
employees, whatever their religion or belief, will be treated equally
inthis and all respects.
Gender pay gap
Whilst Sabre has fewer than 250 employees, and therefore is not
required to submit a formal statement on its gender pay gap, Sabre
has committed to publish its Gender Pay Gap Report on an annual
basis. Sabre believes that by publishing this information, the Group is
ensuring accountability with regard to gender pay. Sabre’s Gender Pay
Gap Report is available on the Group’s website: https://www.sabreplc.
co.uk/about-us/corporate-governance/gender-pay-gap-report-2022
Sabre has reviewed employee salaries and can confirm that those
employees with the same job titles and similar length of service are
paid similar amounts, as illustrated in the Companys Gender Pay
Gap2023.
Sabre’s approach to Data Protection
Sabre has GDPR Oversight Committee (the ‘Committee’) which is
chaired by our Data Protection Officer. The Committee meets regularly
to review GDPR compliance. The Committee is attended by
representatives from across the business, including Compliance and
Risk, and the Executive Team. A standing agenda for the meeting
ensures that all breaches are reviewed, emerging risks considered, and
any further actions or training is identified. The Data Protection Officer
reports to the Chair of the Risk Committee, and provides the Risk
Committee with a regular update regarding GDPR and any breaches
orissues relating to GDPR.
Employees are trained, at least annually, on data protection legislation
and the Company’s requirements when handling data. This includes
online training courses, which include a marked assessment on
completion to ensure understanding. Additional ad-hoc training is
provided to update on any specific changes or points of interest.
Number and % of women on the Board
Female 38%
Male
63%
3
5
As at 31 December 2022
Female 29
%
Male
71
%
2
5
As at 31 December 2021
Total
100%8
Total
100
%
7
3/8
38%
Number and % of women on the Executive Team**
Female 20%
Male
80%
1
4
As at 31 December 2022
Female
20%
Male
80%
1
4
As at 31 December 2021
Total
100%5
Total
100%
5
1/5
20%
Number and % of women on the Leadership Team**
Female 33%
Male
67%
3
6
As at 31 December 2022
3/9
33%
Female
29%
Male
71%
2
5
As at 31 December 2021
Total
100%9
Total
100%
7
Number and % of women in senior roles (reporting to members
of the Leadership Team)**
Female 39%
Male
61%
9
14
As at 31 December 2022
Female
35%
Male
65%
7
13
As at 31 December 2021
Total
100%23
Total
100%
20
9/23
39%
Number and % of women working for Sabre
Female 42%
Male
58%
64
87
As at 31 December 2022
Female
43%
Male
57%
65
86
As at 31 December 2021
Total
100%151
Total
100%
151
64/151
42%
**Includes directors of subsidiaries
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Since 2019, Sabre has operated a Charity Committee
toprioritise and plan fundraising events throughout the
year. Our chosen charities are St Barnabas & Chestnut
Tree House. Sabre has continued to support them and
anumber of other charities throughout the year.
St Barnabas House offers palliative care to people in the local
community, both at the hospice and in the comfort of the patient’s own
home. Chestnut Tree House is a children’s hospice caring for over 300
children and young adults with progressive life-shortening conditions.
This year has continued to see the effects of COVID-19 but as
restrictions eased Sabre were able to start hosting charity events once
more. A staff party which saw employees gather for food, cocktails
and music was well supported. A raffle was held at the event to raise
money for St Barnabas & Chestnut Tree House. Sabre continued to
support both local and national charities throughout 2022. Dorking
Foodbank being a local charity in which both monetary and food
donations were made in December.
By the end of the financial year, Sabre and its employees had raised
£6,385 for St Barnabas & Chestnut Tree House. The total donations by
the Group and its employees amounted to £23,713, of which £2,316
was raised by employees (2021: £1,010) and £21,397 donated by
Sabre (2021: £22,180).
£23,713
Total donation to charity
Our community
Charities we supported in 2022:
African Revival
Breast Cancer Research
Children in Need
Easy Surrey Domestic Abuse Services
Insurance against Dementia
MacMillan
Prostate Cancer UK
St Barnabas & Chestnut Tree
Stem4
Stockport Children’s Charity
The Special Lioness
Ukraine Humanitarian Appeal
Young Minds
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Our Environment
Outsourced operations
We engage in several key outsourcing arrangements. In each case,
wehave developed a fair set of measurable service levels and fee
structures designed to deliver best value for both parties. We conduct
regular reviews of our key outsourced operations to ensure that they
reach the expected levels of employee and customer welfare as well
as meeting any regulatory requirements.
Our relationships with partners are designed to be
mutually beneficial, fair, and in the best interests of
allstakeholders.
Suppliers
We select our suppliers based upon the value that they can bring to
the business and consideration of their core business principles. We
consider material suppliers not only in economic terms, but against
their governance and environmental credentials.
Commercial terms with our suppliers are negotiated in order to deliver
the best value to our shareholders, while also ensuring partners can
earn a reasonable profit and sustain a mutually beneficial ongoing
relationship. We seek to ensure that all of our suppliers are paid the
correct amount, on time.
Brokers
Approximately 71% of our premium income was sourced through
brokers in 2022. Our philosophy when entering into business with
brokers is simple: we will provide a fair and sustainable price, available
to as many of their customers as possible. In return, they commit to
treat their customers fairly, to collect the correct premium from the
customer and pass it to us, and to make best efforts to ensure that
thepolicy details provided to us are correct.
We aim to offer fair terms to all brokers, reflecting their long-term
profitability to us. We therefore do not offer scheme discounts or other
incentives, which might demonstrate preferential treatment in favour
of a particular broker.
Our broker on-boarding and audit processes give us the comfort that
our brokers are providing customers with a good quality of service
while adhering to our high standards.
Our Partners
Our consideration of the environment falls into two,
equally important, categories. Firstly, we must assess,
andwhere possible, mitigate the risks of the changing
environment on our business. Secondly, we must consider
the impact of our business, both directly and indirectly,
on the environment, in particular the impact of
greenhouse gas emissions and their contribution
toclimate change.
We recognise that stakeholders are increasingly interested in both
ofthese issues and as such we look to ensure that we continually
review and enhance our efforts and disclosures in these areas, with
particular reference to guidance and rules issue by our stakeholders,
including the recommendations of the Task Force on Climate-Related
Financial Disclosures (“TCFD”) and various statements made by our
regulators, and the Streamlined Energy and Carbon Reporting
(“SECR”) requirements.
During 2022, we worked with Mazars to assist with our carbon
footprint analysis and climate-related risk assessment.
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Governance over climate change
The Board takes the ultimate responsibility for identifying and
mitigating risks in relation to climate change, and in minimising the
Group’s negative impact on the environment. The Board will consider
the impact on the Group's carbon footprint and any other climate-
related factors when assessing material strategic or tactical decisions.
Climate-related risks and opportunities form a standard agenda item
for the Group's Risk Committee, with a summary fed back to the
Group's Board. A member of the Board, Adam Westwood (CFO), has
been tasked with taking responsibility for the climate-related strategy
and subsequent implementation and reporting. Adam has received
training from a specialist team at Mazars, to assist him in this role.
Climate-related risks and opportunities are a standing agenda item
forboth the Board and Risk Committee and, where appropriate
willinclude updates as to goals and targets set within our net-zero
roadmap and any other relevant metrics as they are developed. Further
detail on the activities of the Board and Risk Committee can be found
in the Governance section of this report on pages 56 to 91.
The Management team takes a collegiate approach to the
implementation of the Group's climate goals, with the CFO taking
responsibility for leading the overall project. Climate-related targets,
including progress towards the Group’s net-zero target, are included
within Management's (including Executive Directors’) performance
objectives, which feed directly into remuneration. The CFO is assisted
by the Group's Head of IT and Facilities in monitoring and improving the
Group's operational carbon footprint. Information about climate change
is disseminated throughout the Group through the Sustainability
Forum, an employee-run Group responsible for assisting the CFO
indeveloping and implementing climate initiatives. The Group’s
Environmental Policy forms part of the core induction pack and
additional training is delivered as and when necessary.
Strategy for climate change
Climate-related risks and opportunities have been identified and,
where appropriate, incorporated into the Group's risk register.
Theshort, medium and long-term aspects of each risk have been
considered. These risks are summarised in the table below.
Each of these risks has a varying impact of the long, medium and
short-term. We define long-term risks as those impacting beyond a
five-year time horizon, medium-term one to five years and short-term
anything impacting within one year. Although most risks apply from
now, with increasing likelihood and severity across subsequent time
horizons, we have noted where we believe there may be a more
significant step-up in the risk.
Risk/opportunity Description
Physical
operational
Primary time
horizon:
medium-term
The physical risks generated by climate change relate to a
changing weather system prevailing over the environment
in which we operate. This could include an increase in
temperature but is more likely to manifest in an increase in
the number and severity of extreme weather events, such
as flooding, windstorms, snow and hail.
Operationally, such a change in the weather could impact
the ability of employees to attend the office or for the office
or other equipment to be able to be used in the ‘normal’ way.
There is the related risk of failure of key IT infrastructure
due to extreme weather events in the vicinity of the related
hardware. We have assessed this risk under a number of
scenarios and concluded there is a low probability of such
events occurring until at least 2090. We do not consider any
of our key locations to be exposed to high-impact weather-
related events and therefore no preventative action is required.
Physical
liability
Primary time
horizon:
medium-term
It appears clear that an increased number of unpredictable
extreme weather events will increase the overall cost of
claims. While this has much lower potential to have a
material impact than in, for example, home insurance,
nonetheless this could have a bearing on the cost of claims
over time. Our base case scenario is that such events will
increase in frequency, but this increase will be slow and
over a long period of time, and hence will be reflected in
policy pricing across the market in the same way as any
other inflationary factor. The more significant risk is that
of a more immediate, unexpected and un-priced weather
event (such as extreme hail), which could cause significant
damage very quickly. We primarily manage this risk through
our insurance pricing mechanisms, including short
feedback loops between our claims and pricing teams.
Transitional
market
reduction
Primary time
horizon:
long-term
The transitional risks (i.e. the impact of moving to a
low-carbon economy) are complex.
We see the transition as impacting the Group in the
following ways:
An increase in the number of vehicles powered by
electricity (or other alternative fuels) as opposed to
traditional internal combustion engines
The move away from cars towards mass-transit
A move to car-sharing or using cars for a smaller number
of journeys
The introduction of ‘low/ultra-low/no emission zones’
Increased social stigma attached to using a petrol/diesel car
Increased costs of traditional fuel
Introduction of additional carbon taxes
Change to the costs in repairing electric vehicles as
compared to petrol cars.
We expect that the number of private cars which require
insurance (and hence Sabre’s core market) will reduce over time.
This could inhibit the Group's ability to grow and hence requires
strategic consideration. Sabre’s competitiveness and policy
count are monitored by management, and shifts in types of
insured vehicle are closely monitored by the pricing team.
Risk/opportunity Description
Transitional
market change
Primary time
horizon:
medium-term
We expect that that there will be a greater demand for
policies which appeal specifically to owners of electric
vehicles (the transitional market change risk). We also
expect that the cost profile of repairs will change, and hence
there is a potential liability cost related to transitional market
change. We note that the developments of potential new
markets presents both a risk and an opportunity.
Litigation
Primary time
horizon:
long-term
There is a chance that the transition to a low-carbon economy
or the occurrence of physical risks could lead to litigation risk.
For a Group such as Sabre, which could be seen as
‘contributing’ to the climate problem, we could find ourselves
directly litigated against for those impacted negatively by,
forexample, rising sea levels. Perhaps more likely (but still
unlikely) is that litigation is taken in order to stop us being
ableto undertake our normal-course of business.
There is also a potential litigation risk attached to
investments which could generate valuation downgrades.
While there is little direct mitigation available, the
management team ensure that they remain up to date with
regard to legal and regulatory developments in this area.
Investments
Primary time
horizon:
long-term
Sabre has an investment portfolio spread across corporate
bonds, gilts and government-backed assets. Each individual
investment is exposed in some way to the physical and
transitional risks related to climate change. Each investment
is also an indirect exposure to the carbon footprint of the
counterparty.
Given the short-tail nature of our investments (average
duration c.2 years) the risks attached are far lower than they
may be within other large investors, nonetheless we must
consider the risk attached to each investment as we enter into
it in order to remain alert to our true exposure to climate-
related risks. We have designed our investment guidelines
tolimit exposure to particularly damaging industries.
The impact of climate-related risks and opportunities on Sabre's
business, strategy and financial planning has been assessed and
understood, as outlined above. Strategic decision-making takes
potential future climate-related risks and opportunities into account,
along with the wider stakeholder considerations outlined elsewhere
inthis report.
The Board takes climate-related risks and opportunities into
consideration when considering the allocation of capital. ESG
credentials are considered within the Group's investment portfolio,
although given the short-term nature of investments held this is
relatively light-touch in respect of investments currently held, with
greater consideration given to the evolution of the portfolio towards
the Group's net-zero target.
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The resilience of the Group's strategy with respect to climate-related
risks has been assessed, with the assistance of a specialist team
fromMazars.
Sabre’s exposure to risks associated with climate change has been
quantified and stressed under several different scenarios, covering
theexposure from investments and insurance liabilities. We have
considered each of the above risks in developing our scenario analysis.
We have previously assessed the risks related to physical liability on a
quantitative basis, as explained in our findings noted below. This year,
we have enhanced our analysis through a detailed review of our
physical operational risk, also discussed below.
Our key findings, which are consistent with those identified in our
previous analysis, were that:
1. Sabre’s investments are in cash or short-term (less than five years)
fixed interest bonds. Cash carries very little risk from climate change as
it is liquid and is not tied up with carbon-intensive activities. Assuming
these bonds are held to maturity, then the key investment risk that
Sabre carries is if one of the issuers of the bonds default. Sabre’s
portfolio is well diversified, and all securities are with carriers with
credit rating BBB or above. Furthermore, Sabre’s portfolio is not
materially exposed to the key sectors exposed to the largest degree of
direct climate change risk. In summary we do not believe that Sabre’s
investment portfolio is materially exposed to the risk of climate change.
2. Sabre’s insurance portfolio is a core part of our profit before tax.
Sabre provides cover for numerous perils and the key perils exposed to
the risk of climate change risk are flood and windstorm. Over the past
12 years windstorm and flood claims have been less than 1% of
Sabre’s GEP. Insurance policies are annual contracts that can be
repriced as the understanding of risks develops. If a policy generates
high claims in one year, Sabre can intervene by declining a renewal or
increasing the premium for the next year. Sabre’s portfolio carries
some climate-related risk; however, historically claims from climate-
related perils have been low and the risk can be managed by
monitoring loss ratios. Therefore, Sabres risk from climate-related
perils on our insurance portfolio is low.
3. Sabre’s flood capital requirement makes up less than 2% of our total
SCR. If Sabre’s flood SCR was uplifted by 20%, this would cause less
than a 1% increase in Sabre’s total SCR. Therefore, Sabre’s SCR could
tolerate some increase in climate capital requirements.
With regard to physical operational risk, we have considered the
exposure of the Group’s head office, outsourced customer service
location and two key data centres to heatwaves, heavy precipitation
and a rise in sea level. Along with this, we have considered our insured
risks by postcode, and so have enhanced our physical liability risk
analysis through this exercise. We have considered this in the context
of three Shared Socioeconomic Pathways (‘SSP’s), being:
SSP 1 “sustainability pathway”, generally the best-case scenario
where warming is below 1.5oC by the end of the century after a
brief overshoot. This is consistent with the Paris Agreement target
SSP2 “middle of the road pathway” approximately in-line with
Nationally Determined Contribution emissions levels, thereby
representing our current path
SSP5 “fossil fuelled development pathway”, generally the worst-
case scenario with emission levels and warming projected to be
veryhigh
Across the UK, there is a clear upward trend for all extreme heat
indicators. Compared to baseline results, for both heatwave frequency
and duration, the initial increase is slow before rapidly increasing
towards 2090. Heatwave frequency increases consistently across
allpostcodes covered. Extreme precipitation indicators show less
consistent trends across the UK, with fluctuations under SSP2 and
SSP5 particularly evident. 62 of our insured postcodes are included
inthe ‘severe’ sea level rise category, however the percentage risk
category varies greatly. For Sabre’s four operational sites, only one
isatrisk from sea-level rise, albeit at ‘moderate’ risk by the year 2100.
This analysis has confirmed that there is no raised level of short
ormedium-term operational risk in respect to climate change, and
hashighlighted that exposure to climate-related events should be
considered when making long-term decisions about the Group’s
operational structure. It has also confirmed that there is no immediate
concern regarding concentration risk of insured vehicles within
high-risk zones.
Managing climate-related risks
A formal risk management process, including a risk register, is in place
which fully considers climate-related risks and opportunities. The risk
register is updated regularly with climate-related risks being included
as a standard agenda item during 2022 for the Management Risk and
Compliance Forum. Where relevant, the Group's policies are adapted
to reflect climate-related risks. Identified climate-related risks are
integrated into the Group's overall risk register and risk management
process. Further information on the Group’s risk management
processes is provided in the Principal Risks and Uncertainties section
of this report on pages 19 to 28 of this report.
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Our investments
When Sabre diversified from gilts into corporate bonds, we introduced
a ‘climate-friendly’ term to our investment agreement whereby ‘green’
assets should be purchased in favour of less ‘green’ assets where the
assets provide similar returns and profiles. In 2022, we introduced a
further restriction on investment into certain organisations whose
activities were not consistent with our ESG outlook. The Company’s
Investment Committee monitors the ‘green’ credentials of the
investment portfolio through regular reporting by our investment
manager, Goldman Sachs Asset Management.
Our influence over entities in which we hold corporate bonds is
limited, and we do not hold any equity investments in any entities not
directly controlled by the Group. As such, we can exert influence only
through our investment choices as described above.
Our product
The provision of motor insurance, our core operation, is generally
environmentally light on a direct basis i.e. excluding any consideration
of the environmental impact of the vehicles we insure. Most of our
policies are sold online, and administered remotely. However, there are
elements of our product offering which can generate a positive impact
on the environment. Importantly, we underwrite a significant number
of policies for electric and hybrid vehicles. We are happy to take these
policies on, and believe that in having done so historically we are able
to better price these risks accurately.
Our metrics and targets
The Group uses its suite of pricing and policy performance information
to monitor the impact of climate risks on the business, such as sales
volumes, types of vehicles insured, claims frequency and severity and
the incidence of severe weather events (which remain immaterial). The
primary physical liability risks are therefore monitored and addressed
through our normal pricing and reserving processes, while longer-term
transitional risks are addressed through monitoring the volumes of our
product sold and projecting these volumes into the future. These targets
are therefore in line with our wider corporate objectives of maintaining
our combined operating ratio within our target range through an
appropriate response to liability risks while growing the business across
the insurance cycle. We do not consider it to be possible, appropriate
orstrategically relevant at this time to set more specific targets with
respect to climate-related risks and opportunities, beyond those which
are disclosed below.
The Group has significantly enhanced quantitative climate-related
disclosures, with the addition of Scope 3 emissions, stated
retrospectively from 2019 onwards. Emissions are contextualised
withreference to the Group's employee numbers and gross written
premium. We have also taken the opportunity to enhance the accuracy
of previously reported figures where possible, and derive a consistent
basis for year-on-year comparison.
The greenhouse gas (‘GHG’) emissions data for the Group is set out
adjacent, alongside prior years. We are pleased to see the continued
decline in our GHG emissions.
We believe our operational activities are consistent with a scenario
well-below 2°C, however we have not fully aligned with science-based
targets at this stage. We have not set out specific targets with regard
to our activities as a holder of invested assets beyond the long-term
goal of net-zero emissions across the portfolio by 2050. We expect to
reduce emissions across the portfolio in a controlled manner over time,
but must remain somewhat reactive to the net-zero aspirations of
investee (and potential investee) entities.
The emissions data is measured in tonnes of carbon dioxide equivalent
(“tCO
2
e”) and covers:
i. Scope 1 emissions being direct emissions resulting from
combustion of fuel and operation of facilities
ii. Scope 2 emissions being indirect emissions from purchased grid
electricity and other energy for own use
iii. Scope 3 emissions, being other indirect emissions which occur in
the Group’s value chain
Tonnes of CO
2
e/year 2022 2021 2020
Scope 1 41.8 60.5
Scope 2 42.9 42.8 54.2
Operational footprint 42.9 84.6 114 .7
Scope 3, excluding insured emissions 22,673.0 23,673.0 20,280.0
Total footprint, excluding insured emissions 22,715.9 23,757.6 20,394.7
Number of FTE
*
employees 154 142 151
Operational footprint per employee 0.28 0.59 0.76
Gross written premium £171m £169m £173m
Operational footprint per £m GWP 0.25 0.50 0.66
Building energy usage (KWh) 200,237 201,683 232,607
* Full-time equivalent (“FTE”)
The footprint is calculated in accordance with the GHG Protocol and
Carbon Trust (“CT”) guidance on calculating organisational footprints.
Activity data has been converted into carbon emissions using
published emissions factors or appropriate estimation techniques.
Separately, for the first time in 2022, we report an estimated footprint
related to our insurance operations, in line with the Partnership for
Climate Accounting Financials (“PCAF”) guidelines. This is not
currently included within our assessment of Scope 3 emissions.
Thetotal relevant carbon emissions across our insured vehicles
isestimated to be 50,391 tCO
2
e/yr as at 31 December 2022
(2021:54,621 tCO
2
e/yr).
GHG emissions have been reported by the three WBCSD/WRI
Scopes. Scope 1 includes direct GHG emissions from sources that are
owned or controlled by the Company such as natural gas combustion
and Company-owned vehicles. Scope 2 accounts for GHG emissions
from the generation of purchased electricity, heat and steam
generated off-site. Scope 3 includes all other indirect emissions such
as waste disposal, business travel and staff commuting. The most
significant element within Scope 3 emissions is the investment
portfolio, which contributed 11,223 tCO
2
e/yr to 2022 emissions (2021:
14,760 tCO
2
e/yr). For the first time we disclose separately the
weighted average carbon intensity across the portfolio, which was
39.6 tCO
2
e/$MM as at 31 December 2022 (2021: 45.4 tCO
2
e/$MM).
All emission sources have been reported on as required under the Large
and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended). The reporting period is in line with
theCompany’s financial year, which is the same as the calendar year.
Inorder to provide the most accurate estimate of our GHG emissions,
primary (actual) data has been used where it is available, up to date
andgeographically relevant. Secondary data in the form of estimates,
extrapolations and industry averages has been used when primary data
is not available. We expect that, as we and our counterparties improve
the quality of record-keeping and reporting on GHG emissions, the use
of primary data will increase. Given that secondary data is calculated
with a considerable degree of conservatism, we expect that increased
quality of reporting will reduce the reported levels of GHG emissions.
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We have set a more immediate goal of 31 December 2030 for the
Group to report operational carbon neutrality. This, effectively, is
the reduction of the Group's Scope 1 and 2 emissions to zero or,
where this is not possible, temporary use of targeted carbon
offsetting. We have set out our net-zero roadmap, which is
published on the Group’s website (www.sabreplc.co.uk/about-us/
corporate-governance/sustainability). Management targets set for
2022 and beyond include the achievement of specific activities in
relation to this plan. Our baseline position against which the
roadmap has been set is 2019, the last full year not impacted by
COVID-19 and related disruption to normal working practice. In our
last Annual Report and Accounts, we detailed a number of actions
which had been carried out since 2019. In 2022, we made further
progress through:
Maintenance and review of our solar panel estate, increasing
efficiency by c.25%
Commencement of a full building refurbishment which includes
areplacement of the air conditioning system and windows,
which will contribute to a significant reduction in emissions
Implementation of tighter restrictions on our investment portfolio
Our roadmap is a ‘live’ document, which will constantly evolve as
we continue to interrogate our activities and the available solutions.
Statement of consistency with TCFD
recommendations
In preparing the Responsibility and Sustainability section of the
Annual Report, we have made disclosures consistent, or partially
consistent where noted, with those recommended by the TCFD
and intend to achieve full consistency with the recommendations
as a consensus view of sufficient and complete disclosure
becomes clear. In particular, we note certain areas of potential
inconsistency below. All of the relevant disclosures are made within
this section of the Annual Report. The Company has considered
the consistency of these disclosures against the TCFD’s Guidance
for All Sectors and Supplemental Guidance for Insurance
Companies, and considers them to be consistent.
The Group remains at an early stage in its journey with respect to
gaining a full understanding of the impact of climate change on the
business. Steps have been taken to ensure that consideration of
both the effects of climate change and the Group’s impact on the
environment is embedded within the Group’s culture at all levels.
As such, we expect our understanding and the related disclosure to
evolve over the coming years. We note the following areas in which
we intend to enhance disclosure in future periods:
Metrics and Targets 4a: Organisations should disclose the
metrics used by the organisation to assess climate-related risks
and opportunities in line with its strategy and risk management
process
Metrics and Targets 4c: Organisations should describe the
targets used by the organisation to manage climate-related risks
and opportunities and performance against targets
Sabre has introduced additional climate-related metrics, such
asweighted average carbon intensity, across the investment
portfolio and insurance-related emissions. The Group currently
has not set specific short-term targets for each of these metrics,
beyond an overall objective to reach ‘Net Zero’ as set out in
theGroup’s Net Zero Roadmap, which can be located at
https://www.sabreplc.co.uk/about-us/corporate-governance/
sustainability/. Note that this roadmap does not form part of our
TCFD disclosure.
Strategy 2b: The organisation’s disclosures should reflect a
holistic picture of the interdependencies among the factors that
affect their ability to create value over time
We have now extended our analysis to cover insured risks and
operational risks with regard to climate change. While this goes
some way to ensuring consistency with this objective, we note
that a holistic statement about the interdependencies of these
factors along with their impact on value creation should be
enhanced and disclosed in more detail in future reports.
How we decide what to measure
Our disclosures are designed to provide information that we
consider will be useful and relevant to stakeholders. We aim
toidentify the issues that are most important to them and
consequently also matter to our own business. Our management
team with appropriate Board Committee oversight, choose what
we measure and publicly report in this section. ’Materiality’ is
considered to be the threshold at which issues become sufficiently
important to our investors, us and other stakeholders that they
should be publicly reported. We are also informed by stock
exchange listing and disclosure rules. We know that what is
important to our stakeholders evolves over time and we plan to
continue to assess our approach to ensure we remain relevant
inwhat we measure and publicly report.
Our route to net zero
We have continued to adjust our ways of working and our working
environment to minimise our negative impact on our environment.
The Group has assessed its carbon footprint and concluded that it
is appropriate to set a target for net-zero emissions. The target has
been set having considered the Group's current footprint along with
an assessment the level of influence held by the Group and
expected societal trends.
We have set our goal to achieve net-zero emissions by 31 December
2050. This reflects the need for significant change to occur within
the Group's supply chain, societal moves towards low-carbon
transport and a reduction in the carbon footprint of key investable
assets, such as government-backed securities. We have set our
targets, which are absolute as opposed to intensity-based, with
reference to 2019 as a base year. Performance indicators relate
primarily to the completion of activities driving our net-zero roadmap,
rather than the resultant quantitively-measured reduction at this
stage, although we will continue to monitor Scope 1, 2 and 3
emissions against our expected reductions over time.
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Our Shareholders
We aim to operate a responsible and sustainable
business, while continuing to deliver our core strategy.
Weengage frequently with our shareholders, who support
our efforts to operate a fair and inclusive workspace while
minimising any negative impact on our environment.
Over recent years, shareholder expectations have increased
significantly as to the level of disclosure required in this area, and
amove from passively reporting our status to actively evolving the
business in order to show continuous improvement across all areas.
Inorder to achieve this, we appointed the Chief Financial Officer to
establish our ESG framework, and to ensure that sufficient, accurate
and timely information is provided to stakeholders.
The table below lists the TCFD’s 11 recommendations and where they are addressed within this report.
Recommendation
Where addressed and whether consistent with
TCFD requirements
Governance
a. Describe the board’s oversight of climate-related risks
andopportunities.
Risk Committee report, page 65
Consistent
b. Describe management’s role in assessing and managing
climate-related risks and opportunities.
‘Managing Climate-Related Risks’, Page 24
Consistent
Strategy
a. Describe the climate-related risks and opportunities the
organization has identified over the short, medium, and long term
‘Strategy for Climate Change’, Page 45
Consistent
b. Describe the impact of climate-related risks and opportunities on
the organization’s businesses, strategy, and financial planning.
‘Strategy for Climate Change’, Page 45
Partially consistent
c. Describe the resilience of the organization’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
‘Strategy for Climate Change’, Page 45
Consistent
Risk management
a. Describe the organization’s processes for identifying and
assessing climate-related risks.
‘Managing Climate-Related Risks’, Page 24
Consistent
b. Describe the organization’s processes for managing climate-
related risks.
‘Managing Climate-Related Risks’, Page 24
Consistent
c. Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organization’s overall risk management.
‘Managing Climate-Related Risks’, Page 24
Metrics and targets
a. Disclose the metrics used by the organization to assess
climate-related risks and opportunities in line with its strategy
and risk management process
‘Our Metrics and Targets’, page 48
Partially consistent (see above)
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3
greenhouse gas (GHG) emissions and the related risks
‘Our Metrics and Targets’, page 48
c. Describe the targets used by the organization to manage
climate-related risks and opportunities and performance
againsttargets
‘Our Metrics and Targets’, page 48
Partially consistent (see above)
Strategic Report Governance Financials
About Sabre Chair’s letter Market
Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility
and Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
49
FCA Consumer Duty
Sabre recognises the importance of a
firms culture and purpose in its ability
tobe able to deliver good outcomes
forcustomers.
The FCA introduced their Consumer Duty policy statement which
setsthe standard of care that firms should give to customers in retail
financial markets. It is designed to ensure firms put consumers at the
heart of their business and focus on delivering good outcomes for
customers. The Consumer Duty consists of a new Principle, three
cross-cutting rules and four outcomes.
Governance
Sabre has put in place a robust governance process:
in September 2022 the Board approved the Companys
implementation plan and appointed Karen Geary, Independent
Non-executive Director, as Consumer Duty Champion.
the Head of Compliance meets individually each month with
theCompany Chair, Consumer Duty Champion and the Chair
of the RiskCommittee.
consumer Duty is reported on at the Company’s Leadership,
Executive and Risk Committees during the year.
Implementation
Regulatory requirements come into force on the 31 July 2023 in
respect of new and existing products. A thorough implementation
programme is in place:
a framework has been built that will provide the Board with
assurance that customers will be receiving good outcomes.
the Company’s Head of Compliance is responsible for ensuring
theregulatory requirements are fully implemented.
a detailed gap analysis to identify any policies and processes across
the business which require alignment has been conducted.
our products are designed to meet the demands and needs of our
target market and deliver fair value to the end consumer.
Monitoring
Monitoring and training will be key to assuring customers are receiving
good outcomes:
all employees will complete annual mandatory training on Consumer
Duty and this along with existing training in other key regulatory
areas will support the delivery of good customer outcomes.
management Information will be used to determine the value,
benefits and outcomes received by the customers of our products.
FCA Consumer Duty
Principle 12
A rm must act to deliver good outcomes for retail customers
3 Cross-Cutting Rules
A rm must act in good faith towards retail customers
A rm must enable and support retail customers to pursue their nancial
objectives
A rm must avoid causing foreseeable harm to retail customers
4 Outcomes
Product and Services
Price and Value
Consumer Understanding
Consumer Support
Products Governance Monitoring
Training Management Information
Processes
Consumers
Strategic Report Governance Financials
About Sabre Chair’s letter Market
Context
CEO Review Our Values Our Strategy Business Model KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO Review Responsibility
and Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2022
50
52 Chair’s Governance Letter
53 Board of Directors
56 Governance Report
62 Audit Committee Report
65 Risk Committee Report
67 Nomination and Governance Committee Report
69 Remuneration Committee Report
72 Directors’ Remuneration Policy
78 Annual Report on Directors’ Remuneration
88 Directors’ Report
91 Statement of directors’ responsibilities in respect of the financial statements
Corporate
Governance
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2022
51
Annual General Meeting
Sabre’s Annual General Meeting will provide shareholders with the
opportunity to vote on the resolutions put to them and, for those
shareholders who attend, to ask questions of the Directors, including
the Chairs of the Committees. The Notice of Meeting will be sent to
shareholders and the result of the Annual General Meeting votes on
allresolutions will be published on the Group’s website.
We look forward to engaging with you and to meeting shareholders at
our forthcoming Annual General Meeting, which will be held at 9:30 am
on Thursday 25May 2023 at the Group’s offices at OldHouse,
142South Street, Dorking, RH4 2EU.
ANDY POMFRET
Chair
13 March 2023
ANDY POMFRET
Company Chair
Dear Shareholders,
This report explains Sabre’s governance framework, how Sabre
applies the provisions of the UK Corporate Governance Code and
includes the committee reports from the Audit, Risk, Nomination
andGovernance, and Remuneration Committees.
The Board is committed to high standards of corporate governance
and has workedto ensure application of all of the main principles of
theUK Corporate Governance Code. The Group’s strategy, culture
andpurpose are aligned and discussed at every Board meeting.
The Board consists of eight Directors who have the appropriate
balance of skills, experience, independence and knowledge of the
Group to oversee the strategy, review management performance
andset the Group’s values and standards to ensure that its obligations
to its shareholders and other stakeholders are met. All of the Non-
executive Directors who serve on the Board are independent, and
further information about our Directors and theexperience they bring
to the Group is set outon pages 53 to 55 ofthis Annual Report.
During the year, we welcomed Alison Morris as a Non-executive
Director, who was subsequently appointed Chair of the Audit
Committee. Further information regarding the process for this
appointment can be found in the Nomination and Governance
Committee Report, on pages 67 to 68. Ian Clark, who was appointed
Chair of the Audit Committee on an interim basis, stepped down from
this role and remains Chair of the Risk Committee. We recognise that
Ian has served as an Independent Non-executive Director of Sabre
Insurance Group since its listing, but that he has also served as an
Independent Non-executive Director of Sabre Insurance Company
Limited, the Group’s operating subsidiary company since 2014, and
therefore will no longer be seen as independent, as defined in the
UKCorporate Governance Code from May 2023. However, Ian’s
contribution to the Group and knowledge of the insurance industry
issignificant, and therefore I have asked him to remain as a Non-
executive Director of Sabre Insurance Group for at least a further year,
whilst the Board searches for an additional Non-executive Director.
The Board has begun this search, and in the meantime Ian will remain
as Chair of the Risk Committee and will stand for re-election as a
Non-executive Director at the Group’s Annual General Meeting.
Chairs Governance Letter
Chair's Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2022
52
KEY
Audit Committee
member
Nomination and
Governance
Committee
member
Remuneration
Committee
member
Risk Committee
member
Chair of
Committee
A
N
R
RI
2022
Board Gender Diversity
Female 3/8 (37.5%)
Male
5/8 (62.5%)
2021
Female 2/7 (28.5%)
Male
5/7 (71.5%)
Chair and Non-executive Directors’ Tenure
<3 years 3 (50.0%)
3-6 years
2 (33.3%)
6 years plus
1 (16.6%)
Senior
Independent
Director
Non-executive
Director
responsible
forEmployee
Engagement
S
E
N I
* On appointment as Company Chair
*
Independent
I
Board of
Directors
As at 31 December 2022
Directors’ skills and experience matrix
Skills and experience
Number of
Directors
% of the
Board
Boardroom Experience
(outside of Sabre) – Chair, CEO,
NED, Audit, REM, NOM
6 75
ESG Experience 6 75
Financial Expertise 6 75
HR Expertise 3 37.5
International Experience 6 75
Innovation Expertise 3 37.5
Insurance Industry Experience 7 87.5
IT/Digital Expertise 3 37.5
Cyber Expertise 2 25
Legal Expertise 1 12.5
Marketing Expertise 3 37.5
Operation Expertise 3 37.5
Regulatory Experience 6 75
Risk Management Expertise 5 62.5
GEOFF CARTER
Chief Executive Officer
Appointment
Geoff Carter was appointed Director andChief Executive Officer of
Sabre Insurance Group plc in September 2017 (when the Company
was incorporated) and has been a Director of Sabre Insurance
Company Limited since 2015, when he joined as Chief Operating
Officer, and became Chief Executive Officer in May 2017.
Skills and experience
Prior to joining the Group, Geoff wasChief Executive Officer of Tesco
Underwriting Limited and has over 20years’ experience in managing
insurance operations. Prior to that, Geoffwas employed by Ageas
Insurance UK asManaging Director ofAgeas Insurance Solutions
Limited and spent seven years at Churchill Insurance. He is a
Chartered Insurer and holds aMaster of Business Administration from
Sheffield Business Schooland a Postgraduate Diploma inMarketing
from the Chartered Institute of Marketing. Geoff is also a Director of
the Motor Insurance Bureau and active in ABI committees.
ANDY POMFRET
Company Chair
Appointment
Andy Pomfret was appointed Non-executive Director and Senior
Independent Director of Sabre Insurance Group plc in February 2018
and Chair of the Company inSeptember 2020.
Skills and experience
Andy has extensive experience of working in the financial services
sector and with UK listed companies both as anExecutive and
Non-executive Director. After qualifying as an accountant with KPMG,
he spent 13 years with Kleinwort Benson as a corporate financier,
venture capitalist and finance director of the investment management
and private banking division. In 1999 he joined Rathbone Brothers plc
as Finance Director, and then served as Chief Executive Officer from
2004 until 2014. In2003,he started his non-executive career, joining
the board of Beazley plc where he chaired the Audit and Remuneration
Committees and was theSenior Independent Director. Duringthe last
eight years Andy has been a Non-executive Director of a number of
public and private companies, including Sanne plc, Aberdeen New
ThaiInvestment Trust plc, and Miton UK MicroCap Trust plc. He was
afounder member of the Prudential Regulation Authority Practitioner
Panel and he holds an MA from Queens’ College, Cambridge.
Strategic Report Governance Financials
Chair's Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
53
RI RII E IA RN N
*
ADAM WESTWOOD
Chief Financial Officer
Appointment
Adam Westwood was appointed Director and Chief Financial Officer
ofSabre Insurance Group plc in September 2017 (when the Company
was incorporated), has been a Director and Chief Financial Officer of
Sabre Insurance Company Limited since September 2016. Adam
joined Sabre as Financial Controller in 2014.
Skills and experience
Adam is a qualified chartered accountant, having joined Ernst &Young
LLPs insurance audit team in2006 and qualified as a chartered
accountant in 2009. Adam has over 15years’ experience of the
insurance sector and holds a BSc (Hons) degree in Physics and
Business Studies from the University of Warwick.
IAN CLARK
Non-executive Director
Appointment
Ian Clark was appointed a Non-executive Director in September 2017
(when the Company was incorporated) and has been a Non-executive
Director of Sabre Insurance Company Limited since May2014. Ian is
Chair of the Risk Committee.
Skills and experience
A chartered accountant, Ian has a strong finance background and
significant recent and relevant accounting experience as well as
extensive knowledge of the UK insurance market. Ian was a partner
inDeloitte and its predecessor firms between 1990 and 2014, where
he led the Strategy and Corporate Finance practice for the insurance
sector. Ian is a Non-executive Director at Aviva Insurance Limited,
acharity trustee of African Revival and the Worshipful Company of
Insurers and is Chair of Mighty Quin Consulting Limited, a company
through which he provides strategic advice within the
insuranceindustry.
KAREN GEARY
Non-executive Director
Appointment
Karen Geary was appointed as Non-executive Director of Sabre
Insurance Group plc in December 2020 and is the Non-executive
Director responsible for employee engagement and the Board’s
Consumer Duty Champion.
Skills and experience
Karen brings over 20 years of executive leadership experience across
start-up and listed blue-chip organisations, as well as international HR
and business transformation experience across a variety of industries,
particularly in Europe and the US. Karen is a former FTSE100 HR
director with an extensive track record in the technology industry.
Between 1998 and 2013, Karen was with The Sage Group plc, where
she built and led the HR function as Group HR Director and from 2004
was a member of the Executive Committee. Subsequent to this Karen
held senior positions with a US-based software business, followed by
a FTSE 100 software company which she originally joined as
Non-executive Director and Chair of the Remuneration Committee.
In addition to her role at Sabre, Karen also holds external appointments
as a Non-executive Director and Chair of the Remuneration Committee
of National Express Group plc and as a Non-executive Director and
Chair of the Remuneration Committee of PageGroup plc. Her previous
non-executive roles include MicroFocus plc and ASOS plc.
* Ian was deemed independent during the financial year ended 31 December
2022, and the Board recognises that he will lose his independence with effect
from May 2023, having served nine years on the Sabre Insurance Company
Limited Board.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
54
RA INA N NR I RI RISI
ALISON MORRIS
Non-executive Director
Appointment
Alison Morris was appointed as Non-executive Director of Sabre
Insurance Group plc in May 2022. Alison is the Chair of the Audit
Committee.
Skills and experience
Alison is a chartered accountant and brings extensive recent and
relevant experience of the financial services sector as well as detailed
and specialist knowledge of accounting and auditing practice and the
audit market. Alison was a partner in PwC’s financial services audit
practice from 1994 until the end of 2019. She has led external audits and
internal audit projects across the financial services sector in the FTSE
100 and FTSE 250 and held a number of leadership roles within PwC,
including sitting on the executive management team which led their
audit practice. She is a Non-executive Director and Audit Committee
Chair of Paragon Banking Group plc and of M&G Group Limited, part of
the M&G plc group. Until recently she was Non-executive Director and
Audit Committee Chair of Vanquis Bank Limited, part of the Provident
Financial Group plc. Alison holds an MA in Economics with International
Studies from the University of St Andrews.
REBECCA SHELLEY
Senior Independent Director and Non-executive Director
Appointment
Rebecca Shelley was appointed aNon-executive Director of Sabre
Insurance Group plc in October 2017 and became Senior Independent
Director in September 2020. Rebecca is Chair of the Company’s
Remuneration Committee.
Skills and experience
Rebecca brings extensive commercial and financial services
experience to the Board, as well as her background of market-facing
roles at listed companies. Having been Investor Relations and
Corporate Communications Director atNorwich Union plc from
1998-2000, Rebecca moved to Prudential plc in 2000, starting as
Investor Relations Director, and then became Group Communications
Director with a seat on their Group Executive Committee. From 2012
to 2016, Rebecca was the Group Communications Director of Tesco
plc and a member of their Executive Committee. During this time she
held positions on the board of the British Retail Consortium and was a
trustee ofthe Institute of Grocery Distribution. Most recently Rebecca
spent three years at TP ICAP plc as Group Corporate Affairs Director,
and was a member of the Global Executive Committee.
She holds a BA (Hons) in Philosophy and Literature from the University
ofWarwick, and has an MBA in International Business and Marketing
from Cass Business School. Rebecca isalso a Non-executive Director
at Hilton Food Group and Liontrust Asset Management.
MICHAEL KOLLER
Non-executive Director
Appointment
Michael Koller was appointed aNon-executive Director of Sabre
Insurance Group plc in September 2020.
Skills and experience
Michael brings extensive experience ofworking in the financial
services sector with both Swiss and UK listed companies, in particular
insurance and reinsurance businesses. Michael was with Prudential
plc, where he was Group Risk Director and a member of the subsidiary
board Audit and Risk Committees. From 2008 to 2011, Michael was
Chief Risk Officer atAviva Europe, where he was also amember of
the European Executive Board. Michael was Group Chief Actuary at
Partner Re in 2007–2008 and spent 20052007 as Chief Regulatory
Officer at Swiss Re. Prior tothis, Michael spent 11 years in a number
of different roles at Swiss Life including serving as a Chief Risk Officer
on the Executive Board. Michael is currently a Non-executive Director
at Sanitas AG inSwitzerland and is Chief Risk Officer for Amlin AG
Zurich. Alongside his executive roles, since 1995, Michael has lectured
at the Federal Institute of Technology, Zurich (ETHZ) asa titular
professor of mathematics. He holds a PhD in Mathematics fromETHZ.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
55
Board Committees
Each Committee has a set of Terms of Reference, which are agreed by the Board and approved annually. Theyare all available in the Governance
section of Sabre’s corporate website at www.sabreplc.co.uk
The key responsibilities of each Committee are set out below.
Audit Committee
To monitor the integrity of the
Group’s accounts, and the
adequacy and effectiveness of the
systems of internal control.
To monitor the effectiveness and
independence of the internal and
external auditors
Risk Committee
To monitor and review the
effectiveness of the risk
management and compliance
framework and internal controls.
Nomination & Governance
Committee
To keep under review the
composition, structure and size of,
and succession to, the Board and
its Committees.
To provide succession planning for
the Executive Team and the Board,
leading the process for all Board
appointments.
To evaluate the balance of skills,
knowledge, experience and
diversity on the Board.
Remuneration Committee
To set remuneration for all
Executive Directors and the Chair.
To oversee the Company’s
Remuneration Policy and practices
and take these into account when
setting the policy for Directors’
remuneration.
Oversight of wider employee
reward policies.
Chief Executive Officer
Responsible for the day-to-day running of the Group’s business and performance, and the development and implementation of strategy.
Executive Team
Supporting the Chief Executive Officer in developing the Group’s strategy and its implementation.
The Audit Committee report can
be found on page 62.
The Risk Committee Report can
be found on page 65.
The Remuneration Committee
Report can be found on page 69.
The Nomination and Governance
Committee Report can be found
on page 67.
The Board is collectively responsible for setting the Group’s strategic
aims and providing the leadership to put them into effect through the
management of the Group’s business within the Group’s governance
framework. It does this by setting the Group’s strategy andensuring
that appropriate standards, controls and resources are in place for the
Group to meet its obligations, and also by reviewing Management’s
performance. This includes ensuring that the Group has a Code of
Conduct, which sets out the Group’s policy of conducting all business
affairs in a fair and transparent manner and maintaining high ethical
standards in dealings with all relevant parties. The Code of Conduct
isavailable at www.sabreplc.co.uk/about-us/code-of-conduct
In order to ensure there is a clear division of responsibilities between the
Board and the running of the business, the Board has a formal Schedule
of Matters and Matters Reserved for the Board, which confirms what
decisions are reserved for the Board. These documents are reviewed on
an annual basis and include the Group’s strategic aims; objectives and
commercial strategy; governance and regulatory compliance; structure
and capital; financial reporting and controls; internal controls and risk
management; major capital commitments; major contracts and
agreements; shareholder engagement; remuneration of senior
executives; material corporate transactions; and any changes to
theSchedule of Matters and Matters Reserved for the Board.
Governance Report
Chair
The Chair is responsible for the leadership of the Sabre Insurance Group plc Board (the ‘Board’) and for ensuring that it operates effectively through
productive debate and constructive challenge.
Governance Framework
Shareholders
The Board
The Board is responsible for providing leadership to the Group. It does this by setting strategic priorities and overseeing their delivery in a way that is
aligned with Sabre’s culture and enables sustainable long-term growth, while maintaining a balanced approach to risk within a framework of effective
controls and taking into account the interests of a diverse range of stakeholders. Decisions and matters which are reserved for the Board, are
contained in the Boards Schedule of Matters and Matters Reserved for the Board.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
56
The Board and Leadership
The Group Directors and details of their experience and the date of
their appointment are set out on pages 53 to 55.
As at 31 December 2022, the Board consisted of eight Directors:
TheGroup Chair, two Executive Directors, and five Non-executive
Directors. The independence of the Non-executive Directors is
reviewed annually in accordance with the criteria set out within
Provision 10 of the Code, and it is confirmed that all of the Group’s
Non-executive Directors remained independent as at 31 December
2022. It is noted that Andy Pomfret, Group Chair was considered
independent on appointment. Board Directors recognise the need and
importance of acting with integrity, and do so in their roles as Directors
of the Group. All of the Directors bring strong judgement to the
Board’s deliberations. During the year the Board was of sufficient size
and diversity that the balance of skills and experience was considered
to be appropriate for the requirements of the business.
Board meetings
The Board meets at least six times a year with supplementary ad-hoc
meetings as required. There is a planned cycle of activities, managed
through the Schedule of Matters and Matters Reserved for the Board,
and a formal agenda is prepared for each Board and Committee
meeting. Minutes and a follow-up list of matters arising from each
Board and Committee meeting are maintained, and reviewed at every
meeting. In addition to this, verbal updates are provided by each
Committee Chair at the following Board meeting.
Company Secretary
The Company Secretary acts as Secretary tothe Board and to its
Committees, apart from the Risk Committee which is minuted by
theHead of Compliance. Theappointment or removal of the Company
Secretary is a matter for the Board as a whole. The Company Secretary
assists the Chair in ensuring that the Board and the Group have the
appropriate policies, processes, information, time and resources
theyneed to fulfil their duties and in order to function effectively
andefficiently. Anneka Kingan has been the Group’s Company
Secretary since 2018.
Division of responsibilities
The Chair is primarily responsible for leading the Board, setting its agenda, promoting a culture of openness and debate and monitoring its
effectiveness. The Chair is supported by the Senior Independent Director, who acts as a sounding board and serves as an intermediary for
theother Directors. Neither the Chair, nor the Senior Independent Director, are involved in the day-to-day management of the Group. Save for
the Schedule of Matters and Matters Reserved for the Board, the Chief Executive Officer (with the support of Management) is responsible
for proposing the strategy to be adopted by the Group, running the business in accordance with the strategy agreed by the Board and
implementing Board decisions. The Board has approved the clear division of responsibilities between the Chair, Chief Executive Officer
andSenior Independent Director, as shown in the table below. The division of responsibilities is reviewed annually.
Chair
Sets the Board agenda primarily focusing
on strategy, performance, value creation,
culture and stakeholders
Ensures the Board has an effective
decision-making process, demonstrating
objective judgements and constructive
challenge
Ensures the Board has an appropriate
balance of skills, knowledge, experience
and diversity
Leads the induction and development
plans for new and existing Board
members
Communicates with major shareholders
and ensures the Board understands their
views
Ensures the Board receives accurate,
timely and clear information
Leads the annual Board evaluation
Senior Independent Director
Supports the Chair in the delivery of his
objectives
Acts as a sounding board for the Chair and
serves as an intermediary for the other
Directors
Is available to shareholders if they have
concerns that cannot be resolved through
the normal channels
Works with the Chair and other Directors
and shareholders to resolve significant
issues where necessary
Leads the annual performance evaluation
of the Chair
Chief Executive Officer
Runs the Group’s business and delivers its
commercial objectives
Proposes and develops the Group’s strategy, in close
consultation with the Executive Team, the Chair and
the Board
Implements the decisions of the Board and its
Committees
Ensures operational policies and practices drive
appropriate behaviour, in line with the Group’s
culture
Leads the communication programme with key
stakeholders, including employees.
Ensures Management provides the Board with
appropriate information and necessary resources
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
57
Non-executive Directors
Along with the Chair and Executive Directors, the Non-executive
Directors are responsible for ensuring the Board and its Committees
fulfiltheir responsibilities. It is the Non-executive Directors’ role to
provide constructive challenge, strategic guidance, offer their
respective specialist advice and hold Management to account. The
Non-executive Directors combine broad business and commercial
experience, in particular in the financial services and insurance sectors,
with independent and objective judgement and they provide
independent challenge to the Executive Directors. The balance
between Non-executive and Executive Directors enables the Board
toprovide clear and effective leadership across the Group’s business.
Board Committees
In order to provide effective oversight and leadership, the Board has
delegated certain aspects of its responsibilities to the following
committees of the Board (“Committees”):
The Audit Committee
The Risk Committee
The Nomination and Governance Committee
The Remuneration Committee
The Terms of Reference of these Committees are approved by the
Board, reviewed annually and are available on the Group’s website
atwww.sabreplc.co.uk/about-us/corporate-governance
The Committee Reports are set out on pages 62 to 87.
Board and Committee meetings
The attendance of Directors at Board and Committee meetings held
inthe financial year ended 31 December 2022 is illustrated in the table
across the page. During the year, the Board reviewed and amended
the membership of its Committees. As a consequence of this review,
Alison Morris upon her appointment to the Board joined the Audit and
Risk Committees, and the Nomination and Governance Committee
later in the year. Following this, and subsequent to approval by the
PRA and FCA, Alison became Chair of the Audit Committee with
effect from 25 August 2022. During the year, Karen Geary was
appointed to the Risk Committee, and subsequently Andy Pomfret left
the Risk Committee. In addition, following the appointment of Alison
to the Audit Committee, Andy Pomfret left the Audit Committee.
Itisnoted that Andy had only been appointed to these committees
ona short term basis, following the resignation of Catherine Barton,
Non-executive Director, in November 2021, and while the Board
sourced and appointed a suitable additional Non-executive Director.
Details of the membership of each Committee can be found in each
relevant Committee Report.
Attendance by Directors at scheduled Board and Committee
meetings(number attended/number required to attend)
Director Board
Audit
Committee
Risk
Committee
Nomination
&
Governance
Committee
Remuneration
Committee
Geoff Carter 6/6
Ian Clark 6/6 5/5 5/5 3/3
Karen Geary 6/6 5/5 3/3 4/4
Michael Koller 6/6 4/5 3/3 3/4
Alison Morris
*
4/4 3/3 3/3
Andy Pomfret
**
6/6 3/3 1/1 3/3
Rebecca Shelley 6/6 5/5 3/3 4/4
Adam Westwood 6/6
* Alison Morris joined the Audit and Risk Committees with effect from the
24May 2022 and joined the Nomination and Governance Committee with
effect from 1 October 2022.
** Andy Pomfret left the Risk Committee with effect from 27 January 2022 and
the Audit Committee with effect from 24 May 2022.
Decisions at Board meetings are taken by a majority vote of the
Directors and in the case of an equality of votes the Group’s Articles of
Association (“Articles”) provide that the Chair has a second or casting
vote. The Board considers that no single Director can dominate or
unduly influence decision-making. During the year, the Chair and the
Non-executive Directors met without the Executive Directors, and the
Non-executive Directors met without the Chairpresent.
Diversity
The Board recognises that it is vital that it is diverse in its make-up to
ensure creative and innovative thinking, improved decision-making and
that it leads to better outcomes for the Group. Diversity is a key factor in
reviewing the Board’s composition and recommending appointments.
When recruiting, the Board requires that executive search agencies
provide diverse shortlists, and ensures that all Board appointments are
based on merit. As at 31 December 2022, the Board has three female
Directors out of eight, which is the equivalent to 37.5% of the Board
being female. Further information on Sabre’s approach to diversity and
inclusion can be found on page 42 of this report.
The activities of the Board during the year are set out below and the
reports from each of these Committees are set out on pages 62 to 87
of this Annual Report.
During the financial year ended 31 December 2022, the Board
scheduled and formally met six times, during which it reviewed,
discussed and approved:
the financial performance of the Group
the 2021 Annual Report and Accounts, including the Committee
reports, Viability and Going Concern Statements and the RNS of the
results for the financial year which ended on 31 December 2021
the Notice of Meeting and Proxy Form for the 2022 Annual General
Meeting
the 2022 Half-Year Results, Q1 and Q3 Trading Statements
the Group’s strategy, including the continued development of the
motorcycle and taxi insurance products
the payment of the dividends, including the final dividend for the
financial year which ended on 31 December 2021, and an interim
dividend for the financial year which ended on 31 December 2022
the results of the Group’s 2021 Board Effectiveness Review, and the
external review of the Board for 2022
the 2023 budget
In addition, the Board and the Committees regularly received updates,
reports and presentations from other senior employees including
theChief Actuary, the Claims Director, the Chief Risk Officer, the
Company Secretary, the Head of IT, the Head of Compliance and
theHead of HR.
During the financial year ended 31 December 2022, the Board met an
additional two times to discuss the Half Year Trading Update and Half
Year Results.
Effectiveness
The Board is structured to provide the Group with an appropriate
balance of skills, experience, knowledge and independence to enable
it to discharge its duties and responsibilities effectively. Given the
nature of the Group’s business, insurance, actuarial and accounting
experience as well as experience of the financial services sector is
clearly of benefit and this is reflected in the composition of the Board
and its Committees.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
58
Induction and ongoing professional development
The Board has a thorough induction programme for Directors to
participate in upon joining the Board. This programme is monitored
bythe Chair and is the responsibility of the Company Secretary.
Depending upon their qualifications and experience, the programme
includes presentations and briefings, meetings with Board Directors,
senior Management, external advisers, andvisits to the Group’s office
in Dorking,Surrey.
The ongoing professional development of the Directors has been
reviewed by the Board and its Committees. The Chair reviews and
agrees the training and development needs with each of the Directors
during each year. Directors have the opportunity to highlight specific
areas where they feel their skills or knowledge would benefit from
development as part of the Board evaluation process, and are
encouraged to continue their own professional development through
attendance at seminars and conferences. Directors confirm annually
that they have received sufficient training to fulfil their duties.
Information and advice
Directors are provided with appropriate documentation at least a week
in advance of eachBoard and Committee meeting. TheGroup uses an
online platform to distribute its Board and Committee papers securely
and efficiently, which maximises information security and has minimal
environmental impact. AllDirectors have access to the advice and
services of the Company Secretary for information and guidance, and
she is responsible for ensuring that all Board procedures have been
complied with. Directors may also obtain independent professional
advice at the Group’s expense if they believe it is required in the
furtherance of their duties. No such advice was sought by any
Directorduring the year.
Time commitment
As part of the appointment process and their annual review the
Non-executive Directors each confirm that they are able to allocate
sufficient time to the Group to discharge their responsibilities
effectively and Directors are expected to attend all scheduled Board
meetings, relevant Committee meetings, the Annual General Meeting
and any general meeting of the Group.
The other public company commitments of the Chair and the other
Directors are as indicated in their biographies on pages 53 to 55.
EachDirector is required to seek permission from the Chair and the
Board before accepting additional commitments. This is to ensure
thatadditional appointments are not a conflict of interest and that the
Director will have sufficient time to continue in their role at Sabre. The
Board is satisfied that the Chair and each Non-executive Director are
able to allocate sufficient time to enable them to discharge their duties
and responsibilities effectively.
Accountability
The Board, through the Audit Committee, reviews the Group’s
financial and business reporting and maintains the Company’s
relationship with its auditors, the details of which are set out in
theAudit Committee Report on pages 62 to 64. Through the Risk
Committee, the Board receives reports regarding the Company’s
riskmanagement, compliance and internal control systems,
theeffectiveness of the Group’s systems of risk management
andinternal controls. Further details of this are set out in the Risk
Committee Report on pages 65 to 66.
Anti-bribery and corruption
As part of Sabre’s commitment to preventing bribery and corruption,
the Group has an Anti-Bribery and Corruption Policy, which is reviewed
and approved annually by the Risk Committee. The Policy is designed
to prevent and prohibit bribery, in line with the Bribery Act 2010. The
Group will not tolerate any form of bribery by, or of, its Directors,
employees, agents or consultants or any person or body acting on
itsbehalf, and no such incidents occurred in the 2022 financial year.
Thepolicy covers:
the main areas of liability under the BriberyAct 2010
the responsibilities of the Directors, employees and associated
persons acting for, or on behalf of, the Company
the consequences of any breaches ofthe policy
Modern slavery
Sabre annually considers the2015 Modern Slavery Act. Sabre has a
zero-tolerance approach to any form of slavery and human trafficking
and confirms to the best of its knowledge that there is no slavery or
human trafficking within its supply chain. The Group’s Modern Slavery
Statement isreviewed and approved by the Board on an annual basis
and can be found on the Group’s website www.sabreplc.co.uk/
about-us/corporate-governance/modern-slavery-statement
Whistleblowing arrangements
The Group has a Whistleblowing Policy, which enables and
encourages employees to report in confidence any possible
improprieties in either financial reporting or other matters to an
externalhotline. The Group’s Whistleblowing Policy is reviewed
andapproved by the Audit Committee on an annual basis.
Performance evaluation
The Board recognises the importance of evaluating annually the
performance and effectiveness of the Board, its Committees, the
Chair and individual Directors. During theyear a formal annual review
of the performance of the Board, its Committees, the Chair and
individual Directors was completed. This year the process consisted
ofan externally facilitated exercise sponsored by the Chair and
assisted by the Company Secretary. The review concluded that the
Board was effective and to continue being so, it was agreed to
introduce an additional strategy day during the year. It was further
agreed that alongside the existing formal meetings between Non-
executive Directors and Executive Directors outside of the meeting
cycles, there would be an increase in the informal contact between
theNon-executive Directors and Executive Directors.
Appointment of Directors
The Articles provide that Directors may be appointed by the Board or
by the Group by ordinary resolution. A Director appointed by the Board
may only hold office until the next Annual General Meeting of the
Group following their appointment and is then eligible for election
bythe shareholders. The Board, through the Nomination and
Governance Committee, hasreviewed and adopted the Code
recommendation that all Directors should be subject to annual
re-election (in compliance with Code Provision 18). During 2022, all
ofthe Directors stood for election or re-election at the Annual General
Meeting, and were successful in their appointment or reappointment.
Further details regarding the terms of appointment and remuneration
for the Executive Directors and Non-executive Directors are set out
inthe Annual Report on Directors’ Remuneration (on pages 78 to 87)
andtheir service contracts and terms of appointment are available for
inspection inaccordance with the Code at the Group’soffice and at
the Group’s Annual General Meeting.
Conicts of interest
The Board has established a procedure to deal with Directors’ conflicts
of interest which complies with the Group’s Articles andthe provisions
in section 175 of the Companies Act 2006. Schedules of a Directors
actual or potential conflicts are compiled based on disclosures made
by the Director. These are updated and reviewed on an annual basis in
addition to conflicts or potential conflicts being considered at the
beginning of Board meetings.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
59
Remuneration
Details of the Directors’ remuneration and thework of the
Remuneration Committee asrequired by the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(asamended) can be found in the Annual Report on Directors’
Remuneration on pages 78 to 87. Although the Company does not
formally engage with its employees on executive remuneration, the
Board engages with employees via the designated Non-executive
Director for workforce engagement. During the year Karen Geary
replaced Ian Clark as the Non-executive Director for workforce
engagement. Karen regularly meets with employees, and provides
feedback on her meetings to the Board. This process does not
currently include an active two-way dialogue with the employees
onexecutive pay but this approach is being kept under review.
Relations with shareholders
Through this Annual Report and, as required, through other periodic
announcements, the Board is committed to providing shareholders
with a clear assessment of the Group’s position and prospects. The
Board recognises the importance of engaging constructively with
shareholders and, during the year, the Chief Executive Officer and the
Chief Financial Officer continued to engage with shareholders through
investor presentations, conferences and roadshows, ensuring they
areup to date with their views. These views are regularly shared with
the Board, and theChair and the Senior Independent Director remain
available to meetshareholders separately to discuss any issuesor
concerns they may have. During the year the Group Chair also met
with the Group’s shareholders. In addition to these meetings, the
Group keeps shareholders informed primarily by way of theAnnual
Report, Half Year Results, Trading Statements and the Annual General
Meeting. This information and other significant announcements of the
Group will be released to the London Stock Exchange and will be
available on the Group’s website www.sabreplc.co.uk/investors/
regulatory-news
Major shareholders
The holdings of our major shareholders can be found on page 89 of
this Annual Report.
Share register
The share register is managed on the Group’s behalf by Equiniti,
whocan be contacted at Aspect House, Spencer Road, Lancing,
WestSussex BN99 6DA or by telephone on 0371 384 2030 or,
ifdialling internationally, on+44121 415 7047.
Annual General Meeting (AGM)
Notice of the Group’s AGM for the 2022 financial year will be sent to
shareholders at least 21 clear days before the meeting. The AGM will
provide shareholders with the opportunity to vote on the resolutions
put to shareholders and, for those shareholders who attend, to ask
questions of the Board of Directors, including the Chairs of the
Committees. The result of the voting on all resolutions proposed at the
AGM will be published on the Group’s website, post the conclusion of
the meeting. Further information on the Group’s AGM can be found
onpage 90.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
60
Statement of Corporate Governance
Compliance with Code provisions
The Board is committed to the high standards ofcorporate governance
across the Group and supports the principles laid down in the UK
Corporate Governance Code (the ”Code”), asissued by the Financial
Reporting Council. The Board considers that the Company
wascompliant with most of the principles and provisions of the Code
during the financial year ended 31 December 2022. It notes that during
the year, prior to the appointment of Alison Morris as a Non-executive
Director, Andy Pomfret sat on both the Audit and Risk Committees,
which is non-compliant with Provision 25 of the Code. Andy’s
appointment to both committees allowed there to be sufficient skills
and experience on both the Audit and Risk Committees, following the
resignation of Catherine Barton, as a Non-executive Director in late
2021. Andy left the Risk Committee in January 2022 when Karen
Geary joined it, and left the Audit Committee when Alison joined the
Board and the Committee, ensuring that the Committees were
compliant with the Code for the remainder of the year. The Board
notesthat it did not engage with employees regarding executive
remuneration pay levels, and therefore is not compliant with Provision
41 of the Code, but notes that the Board does regularly engage with
employees through the appointment of a Non-executive Director
responsible for employee engagement, who meets regularly with
employees and provides feedback to the Board on employee views.
Itwould be this mechanism that the Company would use to seek
engagement with employees regarding executive remuneration
paylevels.
To ensure the Group remains compliant with the principles of the
Code, the Board reviews and addresses its training and development
needs by attending various seminars and teach-ins from advisers
atBoard meetings, and in 2022 completed an external Board
Effectiveness Review, which evaluated the performance of the
Board, its Committees, and the Company Chair.
Composition, Succession and Evaluation Section
J. Appointments to the Board should be subject to a
formal, rigorous and transparent procedure, and an
effective succession plan should be maintained for Board
and senior management. Both appointments and
succession plans should be based on merit and objective
criteria and, within this context, should promote diversity
of gender, social and ethnic backgrounds, cognitive and
personal strengths.
Governance Report
(Pages 56 to 61)
Nomination and
Governance
Committee Report
(Pages 67 to 68)
K. The Board and its committees should have a
combination of skills, experience and knowledge.
Consideration should be given to the length of service of
the Board as a whole and membership regularly refreshed.
Governance Report
(Pages 56 to 61)
L. Annual evaluation of the Board should consider its
composition, diversity and how effectively members
work together to achieve objectives. Individual evaluation
should demonstrate whether each Director continues to
contribute effectively.
Governance Report
(Pages 56 to 61)
Audit, Risk and Internal Control Section
M. The Board should establish formal and transparent
policies and procedures to ensure the independence and
effectiveness of internal and external audit functions and
satisfy itself on the integrity of financial and narrative
statements.
Audit Committee
Report (Pages 62
to 64)
N. The Board should present a fair, balanced and
understandable assessment of the Company’s position
and prospects.
Audit Committee
Report(Pages 62
to64)
O. The Board should establish procedures to manage risk,
oversee the internal control framework, and determine
the nature and extent of the principal risks the Company
is willing to take in order to achieve its long-term strategic
objectives.
Principal Risks and
Uncertainties
(Pages 19 to 28)
Risk Committee
Report (Pages 65
to 66)
Remuneration Section
P. Remuneration policies and practices should be designed
to support strategy and promote long-term sustainable
success. Executive remuneration should be aligned to
Company purpose and values, and be clearly linked to the
successful delivery of the Companys long-term strategy.
Remuneration
Committee Report
(Pages 69 to 71)
Q. A formal and transparent procedure for developing
policy on executive remuneration and determining
Director and senior management remuneration should be
established. No Director should be involved in deciding
their own remuneration outcome.
Remuneration
Committee Report
(Pages 69 to 71)
R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes,
taking account of Company and individual performance,
and wider circumstances.
Remuneration
Committee Report
(Pages 69 to 71)
Principles of the Code
Board Leadership and Company Purpose
Section of the
Annual Report
A. A successful Company is led by an effective and
entrepreneurial Board, whose role is to promote the
long-term sustainable success of the Company,
generating value for shareholders and contributing to
wider society.
Governance Report
(Pages 56 to 61)
B. The Board should establish the Company’s purpose,
values and strategy, and satisfy itself that these and its
culture are aligned. All Directors must act with integrity,
lead by example and promote the desired culture.
Strategic Report
(Pages 2 to 50)
C. The Board should ensure that the necessary resources
are in place for the Company to meet its objectives and
measure performance against them. The Board should
also establish a framework of prudent and effective
controls, which enable risk to be assessed and managed.
Directors
Remuneration
Policy (Pages 72
to77)
Principal Risks and
Uncertainties
(Pages 19 to 28)
D. In order for the Company to meet its responsibilities to
shareholders and stakeholders, the Board should ensure
effective engagement with, and encourage participation
from, these parties.
Governance Report
(Pages 56 to 61)
E. The Board should ensure that workforce policies and
practices are consistent with the Company’s values and
support its long-term sustainable success. The workforce
should be able to raise any matters of concern.
Responsibility and
Sustainability
(Pages 38 to 49)
Division of Responsibilities Section
F. The chair leads the Board and is responsible for its
overall effectiveness in directing the Company. They
should demonstrate objective judgement throughout their
tenure and promote a culture of openness and debate. In
addition, the chair facilitates constructive Board relations
and the effective contribution of all Non-executive
Directors, and ensures that Directors receive accurate,
timely and clear information.
Governance Report
(Pages 56 to 61)
G. The Board should include an appropriate combination
of executive and Non-executive (and, in particular,
independent Non-executive) Directors, such that no one
individual or small group of individuals dominates the
Board’s decision-making. There should be a clear division
of responsibilities between the leadership of the Board
and the executive leadership of the Company’s business.
Governance Report
(Pages 56 to 61)
H. Non-executive Directors should have sufficient time to
meet their Board responsibilities. They should provide
constructive challenge, strategic guidance, offer
specialist advice and hold management to account.
Governance Report
(Pages 56 to 61)
I. The Board, supported by the Company Secretary,
should ensure that it has the policies, processes,
information, time and resources it needs in order to
function effectively and efficiently.
Governance Report
(Pages 56 to 61)
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
61
The Audit Committee (the “Committee”)
The Committee comprises of at least three Non-executive Directors
ofthe Group, all of whom are considered to be free of any relationship
that would affect their impartiality incarrying out their responsibilities
and were independent as required under Provision 17 ofthe UK
Corporate Governance Code (the “Code). Members of the
Committee are appointed by the Board, on the recommendation
oftheNomination and Governance Committee andthe Chair of the
Committee. The Committee is chaired by Alison Morris, who has
significant, recent and relevant financial experience. During the year
Alison took over as Committee Chair from Ian Clark, who also has
significant, recent and relevant financial experience.
The Company Chair (when not a member of the Committee), Chief
Executive Officer, Chief Financial Officer and Chief Actuary are invited
toattend meetings, unless they have a conflict of interest. Inaddition,
the External Audit Partner, the Internal Audit Partner, the Company
Secretary and Head of Internal Audit are invited to attend part or all of
the Committee meetings, providing there is no conflict of interest. Other
relevant people from the Group may also be invited to attend all orpart
of a meeting to provide deeper insight intothe Group and its issues.
TheBoard considers that the membership of the Audit Committee
isappropriate and has skills and competencies relevant to the role
oftheCommittee and the insurance sector.
Either immediately prior to the meeting orimmediately after the
meeting, theCommittee meets with either the External Audit Partner
or the Internal Audit Partner. These private meetings alternate at each
meeting and give the External parties access tothe Committee
members. The Committee Chair also meets regularly with both
Internal and External Audit Partners outside of the Committee
meetings, and is available to shareholders at the Group’s Annual
GeneralMeeting.
The Chair of the Committee reports to subsequent meetings of
theBoard and the Company Secretary acts as Secretary to the
Committee. Annually, the Committee reviews its effectiveness.
ALISON MORRIS
Audit Committee Chair
Audit
Committee
Report
Committee meetings in 2022
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members
Date of Appointment to
the Committee Attendance
Alison Morris (Chair)
(joined the Committee with effect from May 2022)
(Chair with effect from August 2022)
May 2022 3/3*
Ian Clark
(Chair until August 2022)
April 2020 5/5**
Michael Koller September 2020 4/5
Andy Pomfret
(left the Committee with effect from May 2022)
3/3
* Two as Committee Member and one as Committee Chair
** Four as Committee Chair and one as Committee member
Committee Members
The membership as at the date of thisreport together with such members’ appointment dates
and attendance record for the year ended 31December 2022are set outbelow:
Meeting occurred
No meeting took place
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
62
Roles and responsibilities
The Committee, in line with its terms of reference, meets at least
three times a year, andas and whenrequired. The terms of reference
of the Committee can be found on the Group’s website www.
sabreplc.co.uk/about-us/corporate-governance and are reviewed
bytheCommittee on an annual basis.
In accordance with its terms of reference the Board has delegated to
the Committee responsibility for overseeing key areas of responsibility
which include the following:
External audit – this includes considering and making
recommendations to the Board on the appointment of the external
auditors (including approving the remuneration and terms of
appointment) as well as reviewing the external auditors annual audit
plan and the results therefrom, reviewing the quality and effectiveness
of the audit, approving the policy on non-audit services carried out by
the external auditors and reviewing auditor independence. The
Committee is responsible for managing the relationship with the
Group’s external auditor, PwC, on behalf of the Board. Overall
effectiveness of the external audit process is dependent upon
communication between the Group and the auditor, which allows each
party to raise potential accounting and financial reporting issues as and
when they arise, rather than limiting this exchange to only during
regularly scheduled meetings.
Financial and narrative reporting – thisareaof responsibility
includes monitoring the integrity and compliance of the Group’s
financial statements and for providing effective governance over the
Group’s financial reporting, as well asreviewing significant financial
reporting issues and judgements made in connection with them.
Internal audit – the Group has a formal process of internal audit, and
in2018 appointed BDO to run the Group’s internal audit programme.
BDO performs audits on arolling basis across the Group over a
three-year period. The reports are made available to the Committee,
the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer,
the Company Secretary, and relevant members of Management. BDO
re-confirm their independence on an annualbasis. The primary
objective of the function is to systematically and objectively assess: (i)
the effectiveness of the business controls over the Group’s operations,
financial reporting, risk and compliance areas and (ii) the adequacy of
these systems of control to manage business risk and safeguard the
During the financial year ended 31 December 2022, the Committee
reviewed:
the accounting issues and significant judgements related to the
financial statements;
the appropriateness of key accounting judgements including the
adequacy of insurance liabilities;
the appropriateness of the Group’s accounting policies;
the process and stress testing undertaken to support the Group’s
viability and going concern statements;
recommended to the Board the Group’s Annual Report and Accounts;
the appointment of the external auditor and their plan for the audit of
the Group’s financial statements, which included key areas of scope
of work, keyrisks on the financial statements, confirmation of
auditor independence and the proposed audit fee;
the transition plan presented by the incoming external auditor, with
particular focus on any divergence in risk assessment or approach
from that which was presented by the outgoing external auditor;
the effectiveness of the incoming external auditor informally during
the year, ahead of a formal assessment following completion of the
first year-end audit, which will be carried out in 2023;
the Group’s system of controls and its effectiveness using
information drawn from a number of different sources including
Management, and independent assurance provided by internal audit
(throughits annual audit plan) and the external auditors;
reports from the Group’s outsourced internal audit and reviewing
and approving their fees; and
the Committees annual effectiveness report responses and
concluded that the Committee was effective.
Furthermore, the Committee approved:
the external audit fees and the policy on non-audit services carried
out by the Group’s external auditors;
and recommended to the Board, whichagreed to recommend to
shareholders, theappointment of PwC as the Group’s externalauditor.
It is noted that the shareholders of the Group approved the
appointment at the Annual General Meeting, held in May 2022;
the Committee’s terms of reference and confirmed that the
Committee had sufficient resources to enable it to complete
itsresponsibilities;
and confirmed to the Board that the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and provide the
necessary information for the shareholders to assess the Group’s
position and performance and its business model and strategy.
Group’s assets and resources. The Committee reviewed and approved
the internal audit role and risk-based internal audit plan, and received
updates on the internal audit activity. During the year, the effectiveness
of Internal Audit was reviewed, and it was concluded that it remained
effective. This review incorporated a questionnaire along with ongoing
informal feedback and discussion at the Committee.
Internal controls – this includes reviewing the effectiveness of the
Group’s system of internal controls and ensuring timely action istaken
by Management to address matters arising from the internal audit
assessments.
Reserves review – the establishment of insurance liabilities in respect
of reported and unreported claims is the most significant area of
judgement within the financial statements. The Committee maintains
oversight of the reserving process and assumptions used in setting the
level of insurance liabilities, which are assessed by the Group’s
actuaries on a quarterly basis.
Whistleblowing – reviewing arrangements bywhich employees may
in confidence raise concerns about possible improprieties regarding
financial reporting and other matters. The Committee receives any
whistleblowing reports and reports matters raised to the Board.
2022 and the Committee
The Committee was in place throughout the financial year ended
31December 2022, and met five times through the period. The Audit
Committee was chaired by Ian Clark, until the appointment of Alison
Morris who joined the Committee with effect from 24 May 2022 and
became Chair on 25 August 2022. Andy Pomfret left the Committee
with effect from 24 May 2022. The Committee is required to be
chaired by an individual who has appropriate financial expertise, as
required by the Code, and the Board considers that Alison has the
appropriate financial expertise, as Alison is a qualified accountant with
significant financial services and director experience. All members of
the Committee attended all of the meetings, apart from Michael Koller
who missed one meeting.
The Chief Executive Officer and the Chief Financial Officer both
attended all of the Committee meetings, as did the External Audit and
Internal Audit Partners. All meetings were minuted by the Company
Secretary. The Committee Chair also held regular individual meetings
with members of Management, the Group’s External and Internal
Audit Partners, and the Company Secretary and Head of Internal Audit.
The Board is comfortable that the make-up of the Committee ensures
that it is fully able to fulfil its duties.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
63
3. Parent Company Investment in Subsidiary
The Committee reviewed Management’s valuation of the investment
in subsidiary held by the Group’s parent company, having noted the
significant reduction in the Group’s market capitalisation during the
year. The Committee considered the assumptions made in the
discounted cash flow model used to support the valuation within
theaccounts, as well as the disclosure made on pages 167 and 168
ofthe financial statements.
4. Internal controls
During the year, the Committee reviewed the adequacy and
effectiveness of the controls that underpin the Group’s financial
reporting control framework which is part of the wider internal controls
system and addresses financial reporting risks. The key procedures,
which the Directors have established include: an annual budgeting
process with periodic forecasting; reporting of financial and solvency
capital information to the Board on a monthly basis; reporting on specific
matters including updated key risks, investments and taxation; liquidity
monitoring; and an anti-bribery and corruption policy. The Committee
also considered Management’s processes and controls foridentifying
and responding to the risk of fraud, and considered the second line of
defence review of controls and reports from Internal Audit. Any control
weaknesses that these procedures identify are monitored and
addressed in the normal course of business. The Committee noted
thatthere were no fraud-related events or actions to suggest that fraud
might have a material impact on the financial statements.
5. Going concern and viability
The Committee considered the going concern assumptions and
viability statement in the 2022 Annual Report and Accounts, valuation
of assets and impairment reviews and clarity of disclosures. In
assessing the viability of the Group the Committee considered the
liquidity and capital position of the Group over the period to 31
December 2025 under a range of scenarios which had been selected
to reflect the key risks faced by the Group. Further information on this
can be found in the Viability Statement on page 29. In assessing the
going concern of the Group, the Committee considered the financial
forecasts and liquidity for a period of one year from the date of the
approval of this Annual Report.
6. Fair, balanced and understandable
The Committee reviewed and concluded that the Annual Report and
Accounts taken as a whole were fair, balanced and understandable
and provided sufficient information to enable the reader to assess
theGroup’s position, performance, business model and strategy.
Key Matters considered by the Committee during
the year:
The Committee pays particular attention to matters it considers to be
important by virtue of their impact on the Group’s results, the internal
control environment or the level of complexity, and matters of
judgement or estimation involved in their application to the
Consolidated Financial Statements. The main areas of focus for
theyear were:
1. Valuation of insurance liabilities
The Committee agreed with managements assessment that the most
significant area of estimation within the financial statements continues
to be the estimation of insurance liabilities. This comprises an estimate
of the ultimate cost of claims incurred at the date of the Statement of
Financial Position, both reported and not yet reported, along with an
estimate of the associated reinsurance recoveries. The Committee
reviewed the Group’s policy to hold sufficient reserves to meet
insurance liabilities as they fall due, plus a risk margin reflective of
theuncertainty within such calculation. The Committee specifically
considered the impact of recent high levels of inflation on the level
ofinsurance liabilities held.
The Committee reviewed the Chief Actuarys annual and quarterly
reserving reports and challenged the appropriateness of the process,
key judgements and assumptions supporting the projection of the best
estimate claims expense. The Committee reviewed Managements
rationale for the level of risk margin recorded within the claims
reserves, which was set at 8% of outstanding claims reserves as at
31December 2022 (2021: 10%). The Committee also discussed such
matters with the Group’s external auditor. The Chair of the Committee
met with the Group’s Chief Actuary without other members of
Management present. TheCommittee noted the inherent uncertainty
associated with the estimation of claims costs, in particular with
reference to the changes in the legal environment and the impact of
historically high levels of claims inflation. The Committee concluded
that the insurance liabilities presented in the financial statements were
fairly stated.
2. Implementation of accounting standards
The Committee reviewed the proposed implementation and key
judgements associated with the upcoming implementation of IFRS 17,
including consideration of the classification and measurement of
insurance assets, liabilities and transactions. The Committee also
considered the appropriate level of disclosure required in the 2022 Annual
Report and Accounts related to the implementation of the new standard.
7.Task force for Climate-Related Financial Disclosures
(“TCFD”)
The Committee reviewed the disclosures made in accordance with the
TCFD recommendations as part of its review of the Annual Report
andaccounts.
External auditor appointment
PwC were appointed as external auditor in accordance with the plan
set out in the prior Annual Report and Accounts, and have presented
their first audit opinion in respect of the year ended 31 December
2022. Resolutions regarding the appointment of PwC and their
remuneration were contained in the Notice of Meeting for the 2022
Annual General Meeting and both resolutions, were approved by
100% of shareholders.
Non-audit work carried out by external auditors
The Committee reviewed and approved apolicy regarding non-audit
work and fees which requires all non-audit work proposed to be
carried out by the external auditors to be pre-authorised by the
Committee or, ifrequired urgently between Committee meetings,
theChair of the Committee, inorder to ensure that the provision of
non-audit services does not impair the external auditor’s independence
or objectivity. The total fees for non-audit services must not exceed
70% of the average audit fees billed to the Group by the external
auditor in the past three years. During 2021, EY and its subsidiaries
charged the Group £379,000 for audit and audit-related services, and
received atotal fee during the financial year of £459,000. Their work
ended with effect 25 May 2022. From their appointment on 25 May
2022 PwC and its subsidiaries charged the Group £440,000 (2021:
n/a) for audit and audit-related services, and received atotal fee during
the financial year of £519,000 (2021: n/a). A summary of fees paid to
each external auditor is set out inNote 8.4 to the Consolidated
Financial Statements. In the financial year ended 31December 2022,
the external auditors didnotundertake any material non-audit work
forthe Group.
On behalf of the Audit Committee
ALISON MORRIS
Chair of the Audit Committee
13 March 2023
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
64
The Risk Committee (the “Committee”)
The Committee comprises of at least three Non-executive Directors
ofthe Group, all ofwhom are considered to be free of any relationship
that would affect their impartiality in carrying out their responsibilities
and are considered independent as required under Provision 17 of the
Corporate Governance Code (the “Code), or in the case of the
Group’s Chair considered independent on appointment. Members of
the Committee are appointed by the Board, on the recommendation
ofthe Nomination and Governance Committee and the Chair of
theCommittee.
The Committee is chaired by Ian Clark, who has significant, recent
andrelevant risk experience. The Chief Executive Officer, Chief Risk
Officer and Chief Financial Officer are invited to attend meetings,
unless they have a conflict of interest. In addition, the Company
Secretary, the Head of Compliance and the Data Protection Officer are
invited to attend part or all of the Committee meetings, providing there
is no conflict of interest. Other relevant people from the Group may
also be invited to attend all or part of a meeting to provide deeper
insight into the Group and its issues.
Either immediately prior to the meeting or immediately after the
meeting, the Committee meets with either the Chief Risk Officer,
theHead of Compliance or the Data Protection Officer. These private
meetings alternate at each meeting and give the Chief Risk Officer,
Head of Compliance and Data Protection Officer access to the
Committee members. The Committee Chair also meets regularly with
these individuals outside of the Committee meetings, and is available
to shareholders at the Group’s Annual General Meeting. The Chair of
the Committee provides an update of the Committee’s activities at
subsequent meetings of the Board. The Head of Compliance usually
acts as Secretary to the Committee, as the Company Secretary is also
the Chief Risk Officer. Annually, the Committee reviews its
effectiveness, which is then reported to the Board.
IAN CLARK
Risk Committee Chair
Risk Committee
Report
Committee meetings in 2022
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members
Date of Appointment
tothe Committee Attendance
Ian Clark (Chair) April 2020 5/5
Alison Morris
(joined the Committee with effect from May 2022)
May 2022 3/3
Karen Geary January 2022 5/5
Rebecca Shelley April 2020 5/5
Andy Pomfret
(left the Committee with effect from January 2022)
November 2021 1/1
Committee Members
The membership as at the date of thisreport together with such members’ appointment dates
and attendance record for the year ended 31December 2022 are set outbelow:
Meeting occurred
No meeting took place
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
65
Principal risks and uncertainties – details of the Group’s principal
risks and uncertainties are set out on pages 19 to 28 together with
information about the management and mitigation of such risks.
Compliancereviewing the Group’s compliance policies and
procedures to ensure that the Group complies with relevant regulatory
and legal requirements
Data protection – the appointment and removal of the Group’s Data
Protection Officer, review how the Group meets its obligations under
the Data Protection Act, review all reports from the Data Protection
Officer and Managements responses to the findings and
recommendations.
Remuneration – the Committee provides advice to the Remuneration
Committee regarding the weightings to be applied to performance
objectives relating to the Executive Team’s management of risk
throughout the year.
2022 and the Committee
The Committee was in place throughout the financial year ended
31December 2022, and met five times through the period. The Chief
Executive Officer and the Chief Risk Officer attended, partially or fully,
all of the Committee’s meetings. The Chief Financial Officer, the Head
of Compliance and Data Protection Officer attended certain meetings
during the year. All meetings were minuted by either the Head of
Compliance or the Company Secretary. The Committee Chair also held
regular individual meetings with the Chief Risk Officer and the Head of
Compliance. Upon her appointment to the Board, Alison Morris joined
the Committee with effect from 24 May 2022. Andy Pomfret left the
Committee with effect from 27 January 2022. The Board is
comfortable that the make-up of the Committee ensures that it is fully
ableto fulfil its duties.
During the year, the Committee addressed its responsibilities by:
confirming that Management had fulfilled their obligations regarding
the management of the Group’s risks;
reviewing reports from the Chief Risk Officer regarding risk
management, including the procedures and plan relating to the
management of risk across the Group;
reviewing and approving the risk management framework and risk
appetite, the corporate risk registers and the Group’s principal risks
and uncertainties;
reviewing reports from the Head of Compliance regarding
compliance across the Group, including progress against the
Compliance Monitoring Plan;
approving the Group’sCompliance Manual;
Role andresponsibilities
The Committee has a planned cycle of activities, managed through a
schedule of matters, to ensure that it addresses its responsibilities in
the current financial year. The terms of reference of the Committee
canbe found on the Group’s website at www.sabreplc.co.uk/
about-us/corporate-governance and are reviewed by the Committee
on an annual basis. The Committee meets at least three times a year,
inline with its terms of reference, and as and when required.
The Board has delegated to the Committee responsibility for ensuring
that the Group has robust processes and procedures in place for the
identification and management of risk. This includes the monitoring
and reviewing the Group’s risk management and compliance
frameworks, and their controls, and ensuring that there is adequate
processes for the identification, evaluation and mitigation of the risks
faced by the Group. The Committee reviews the effectiveness of the
Groups risk management, compliance management and internal
control systems, and reports to the Board on these areas. In
conducting its reviews, the Committee focuses on material risks,
including the determination of the nature and extent of the principal
risks, and controls in the context of reports it receives regarding risk
management. These include reports from the Chief Risk Officer, the
Head of Compliance and the Data Protection Officer.
The Committee leads the process for:
Risk management – this includes reviewing and monitoring the
effectiveness of the procedures for the identification, assessment
andreporting of risk as well as setting, and monitoring adherence to,
arisk appetite that defines the nature and extent of the risks that the
Group is facing and should be willing to take in achieving its strategic
objectives. It also includes oversight of the processes by which
risk-based capital requirements, and the Group’s solvency position,
aredetermined and monitored. The Committee further advises the
Board on the Group’s overall risk appetite, tolerance and strategy, and
oversees and advises the Board on its risk strategy and current risk
exposures. In addition to this, the Committee is responsible for the
appointment and removal of the Group’s Chief Risk Officer and
reviewing their reports and Management’s responses to the findings
and recommendations.
Risk controls – these are in place and are designed to mitigate the
risks that the Group faces, rather than to eliminate the risk of failure
toachieve business objectives. The Risk Committee ensures timely
action is taken by Management to address matters arising from the
risk and compliance assessments.
reviewing reports from the Group’s Data Protection Officer;
confirming that the Chief Risk Officer, Head of Compliance and Data
Protection Officer had fulfilled their obligations regardingtheir roles;
reviewing regulatory correspondence;
reviewing and recommending to the Board the Group’s ORSA;
reviewing the Committee’s terms of reference;
reviewing the annual Committee’s evaluation responses and
concluded that the Committee was effective; and
confirming that the Committee had sufficient resources to enable
itto complete its responsibilities.
Specific discussions were had by the Committee on:
Cyber security
Inflation
UK economic distress
FCAs Retail Pricing Review act and its impact on the Group
FCA Consumer Duty – for further information on this, please see
page 50
Sabre’s approach to Data Protection
Sabre has a GDPR oversight Committee which is chaired by the Data
Protection Officer, and meets regularly to review GDPR compliance.
The meeting is attended by representatives of all areas of the
business, including Compliance and Risk. The standing agenda for
themeeting ensures that all breaches are reviewed, emerging risks
considered and any follow through training required is identified.
Our employees are trained, at least annually, on data protection
legislationand the Group’s requirements when handling data. This
includes online training courses which include a marked assessment on
completion to ensure understanding. Additional ad-hoc training is provided
to update on any specific changes or points of interest. Reporting of data
protection risks are initially reported to our Data Protection Officer who
reports to Ian Clark,Chair of the Risk Committee.
On behalf of the Risk Committee
IAN CLARK
Chair of the Risk Committee
13 March 2023
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
66
The Nomination and Governance Committee
(the “Committee”)
The Committee comprises of at least three Non-executive Directors
ofthe Group, all of whom are considered to be free of any relationship
that would affect their impartiality incarrying out their responsibilities
and were independent as required under Provision 17 ofthe UK
Corporate Governance Code (the “Code). However, for the financial
year ended 31 December 2022, all of the Non-executive Directors of
the Group sat on the Committee. The Committee is chaired by the
Group Chair, Andy Pomfret, unless there is a conflict of interest.
The Chief Executive Officer and Company Secretary may also be
invited to attend meetings, unless this presents a conflict of interest.
The Committee Chair meets regularly with the Chief Executive Officer
outside of the Committee meetings, and is available to answer
shareholder questions at the Group’s Annual General Meeting.
The Chair of the Committee reports to subsequent meetings of the
Board and the Company Secretary acts as the Secretary to the
Committee. Annually the Committee reviews its effectiveness.
Roles and responsibilities
The Committee has a planned cycle of activities, managed through
aschedule of matters, to ensure that it addresses its responsibilities
inthe current financial year. The terms of reference of the Committee
canbe found on the Group’s website at www.sabreplc.co.uk/
about-us/corporate-governance and are reviewed by the Committee
on an annual basis. The Committee meets at least twice a year, inline
with its terms of reference, and as and when required.
The Committee leads the process for:
reviewing the size, structure and composition of the Board;
overseeing succession planning for the Directors and other senior
executives, taking into account the challenges and opportunities
facing the Group, and the skills and expertise needed on the Board
inthe future;
reviewing the leadership needs of the organisation, both executive
and non-executive, with a view to ensuring the continued ability of
the organisation to compete effectively in the marketplace;
reviewing the Group’s policy on diversity, setting measurable
objectives for board diversity and preparing a policy on how to
promote Board diversity;
ANDY POMFRET
Nomination and
Governance Committee
Chair
Nomination and
Governance
Committee Report
Committee meetings in 2022
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members
Date of Appointment to
the Committee Attendance
Andy Pomfret (Chair) February 2018 3/3
Ian Clark September 2017 3/3
Karen Geary December 2020 3/3
Alison Morris
*
October 2022
0/0
Michael Koller September 2020 3/3
Rebecca Shelley October 2017 3/3
* Alison was appointed to the Committee with effect from October 2022.
Committee Members
The membership as at the date of thisreport together with such members’ appointment dates
and attendance record for the year ended 31December 2022 are set outbelow:
Meeting occurred
No meeting took place
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
67
Process followed for the appointment of the Non-executive Directors during 2022
Candidate requirements
The Committee reviewed the experience and skills of the existing Board directors, and considered what additional skills would be beneficial
for the Board to enable it to drive the business forward. From this a skills criteria list for the candidates was drawn up.
Appointment of an external search agency
Several external search agencies were considered, and the Committee appointed Ridgeway Partners, an independent external search
agency, with no other connection to the Group, to find the suitable candidates. It was felt Ridgeway Partners was the most appropriate
agency, as they had worked with the Group on its past two Non-executive Director appointments, therefore understanding the Group and
Board dynamics well.
Search process
Ridgeway Partners produced a long list of candidates, which were reviewed by members of the Committee, and a short list of candidates
were interviewed by several Board Directors, including the Chair, the Senior Independent Director, and also the Chief Executive Officer and
Chief Financial Officer.
Appointment of new Non-executive Director
All interviewers provided feedback on the candidates to the Committee, which discussed the merits of each candidate against the skills
criteria list. From this discussion, the Committee proposed to the Board that Alison Morris be appointed to the Board. Following Alison’s
acceptance of her appointment, the Committee reviewed which committees it would be appropriate for her join and appointed Alison to
theAudit and Risk Committees with immediate effect, and the Nomination and Governance Committee later on in 2022.
During the financial year which ended on 31 December 2022
theCommittee:
approved the Nomination and Governance Committee Report in the
Annual Report for the year ended 31 December 2021;
reviewed and recommended the election and re-election of
Directors at the Group’s 2022 Annual General Meeting;
reviewed the ongoing professional development of Committee
members and the induction of new Directors;
discussed the balance of skills and experience on the Board and
considered if any changes were necessary;
reviewed the talent development and succession plans for the
Executive Team and senior managers;
reviewed and approved the Committee’s terms of reference and
schedule of matters;
reviewed the annual Committees evaluation responses and
concluded that the Committee was effective;
identifying, evaluating and recommending candidates to join the Board;
appointing the Group’s Senior Independent Director;
making recommendations to the Board regarding the make-up of the
Group’s Committees; and
making recommendations regarding the election and re-election of
the Directors by shareholders.
Diversity
The Committee recognises the importance of diversity, and has
ensured that the Group has and maintains a Diversity Policy (for
furtherinformation on diversity at Sabre, see page 42), however,
whenrecruiting, the Committee ensures that Board appointments are
basedon merit regardless ofgender, social and ethnic backgrounds.
2022 and the Committee
The Committee was in place throughout the financial year ended
31December 2022, and met three times. All Committee members
attended all of the meetings held during their period of appointment
tothe Committee. The Chief Executive Officer attended partially or
fully, all of the Committee’s meetings, and the Company Secretary
attended and minuted each meeting. The Board were comfortable
thatthe make-up of the Committee ensures that it is fully ableto
fulfilits duties. During the year, the Committee agreed to appoint an
additional Non-executive Director to the Board after the resignation
ofCatherine Barton. To do this, the Committee employed Ridgeway
Partners, an external search consultancy, to source suitable
candidates. The process was led by Andy Pomfret, with the
Committee reviewing the potential candidates and several Board
Directors interviewing the final shortlist of potential candidates.
TheCommittee recommended to the Board that Alison Morris
beappointed as Non-executive Director with effect 1 May 2022.
Following her appointment and subject to her receiving regulatory
approval, the Committee agreed that Alison Morris would be
appointed as Audit Committee Chair. Regulatory approval was
received in August 2022, and upon which, Alison was appointed
asAudit Committee Chair.
confirmed that the Committee had sufficient resources to enable
itto complete its responsibilities;
discussed environmental, social, governance and diversity issues
faced by the Group; and
appointed Karen Geary as the Non-executive Director responsible
foremployee engagement with effect 1 April 2022. During the year
Karen was also appointed as the Group’s Consumer Duty Champion.
On behalf of the Nomination and Governance Committee
ANDY POMFRET
Chair of the Nomination and Governance Committee
13 March 2023
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
68
On behalf of the Board, I am pleased to present to you the
Remuneration Committee’s Report for the year ended 31 December
2022. Sabre’s Executive Team responded swiftly to unprecedented
economic conditions through immediate, appropriate action, in order
topreserve the future profitability of the business, while laying a solid
foundation for growth. The Company has continued to return capital
toshareholders in-line with the Group’s dividend policy.
This report has been prepared in accordance with the Directors’
Remuneration Reporting Regulations for UK incorporated companies
set out in Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 (asamended) and
the principles of the UK Corporate Governance Code.
The report is presented in the following sections:
Remuneration Committee Report and the Remuneration Committee
Chair’s Annual Statement
The Company’s Directors’ Remuneration Policy (the “Policy”)
The Annual Report on Remuneration
The Policy was approved by shareholders at the Companys Annual
General Meeting in 2021, and the Remuneration Committee Report,
the Remuneration Committee Chair’s Annual Statement and the
Annual Report on Remuneration, which sets out the remuneration
outcomes for 2022 is subject to an advisory shareholder vote at the
2023 Annual General Meeting.
The Remuneration Committee (the “Committee”)
The Committee comprises of at least three Non-executive Directors of
the Company, all ofwhom are considered to be free of any relationship
that would affect their impartiality in carrying out their responsibilities
and are independent as required under Provision 17 of the UK Corporate
Governance Code (the ‘Code’). Members of the Committee are
appointed by the Board, on the recommendation of the Nomination and
Governance Committee and the Chair of the Committee. Members of
the Committee do not have any personal interests in the topics
discussed at the Committee, except as shareholders in the Company.
No Director is involved in the decisions setting their ownremuneration.
The Company Chair and the Chief Executive Officer are invited to attend
meetings, unless they have a conflict of interest, for example the
discussion of their own remuneration. All meetings are minuted by the
Company Secretary, unless there is a conflict of interest. Other relevant
people from the Company may also be invited to attend all or part of a
meeting to provide deeper insight into the Company and its issues.
REBECCA SHELLEY
Remuneration
Committee Chair
Remuneration
Committee Report
Committee meetings in 2022
Jan FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members
Date of Appointment to
the Committee Attendance
Rebecca Shelley (Chair) October 2017 4/4
Michael Koller September 2020 3/4
Karen Geary December 2020 4/4
Committee Members
The membership as at the date of thisreport together with such members’ appointment dates
and attendance record for the year ended 31 December 2022are set out below:
Meeting occurred
No meeting took place
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
69
The total fees paid to Deloitte in relation to the remuneration advice
provided to the Committee during the year were £17,000 excluding
VAT (2021: £48,750). Fees were charged on a time and materials
basis. During the year the wider Deloitte firm also provided corporate
tax advisory services to the Group. The fees paid for this work are not
included in these totals.
2022 and the Committee
The Committee was in place throughout the financial year ended
31December 2022, and met four times through the period. The
Remuneration Committee was chaired by Rebecca Shelley and all
Committee members attended all of the meetings held, apart from
Michael Koller, who was unable to attend one meeting. Each meeting
was minuted by the Company Secretary. The Chief Executive Officer
and the Company Secretary either partially or fully attended all of the
Committee meetings. The Committee Chair also held regular individual
meetings with the Chief Executive Officer and theCompany Secretary.
The Board is comfortable that the make-up of the Committee ensures
that it is fully able to fulfil its duties.
During 2022, the Committee considered its effectiveness during
theyear and confirmed that the Committee continued to perform
effectively, and had access to sufficient resources to enable it to
complete its responsibilities.
During the year, the Committee addressed its responsibilities by:
approving the prior-year Directors’ Remuneration Report
reviewing and approving the application of the 2021 Remuneration
Policy to the financial year ended 31 December 2022
reviewing and approving the payment of bonuses under the 2021
Short Term Incentive Plan (“STIP”), including approving 50% of
thevested award being deferred to the Company’s Deferred
BonusPlan (“DBP”)
setting the award levels and the financial, non-financial and individual
performance conditions for the awards made under the 2022 STIP
and ensuring that they contained objectives relating to ESG
setting the grant levels and underpins for the awards under the
2022LTIP
reviewing and approving any changes to the salaries of the
ExecutiveTeam
reviewing remuneration across the Company to ensure that
arrangements continue to align with our strategy, our key principles
around remuneration and culture
TheCommittee Chair meets regularly with the Chief Executive Officer
and the Company Secretary outside of the Committee meetings and is
available to shareholders to answer their questions at the Company’s
Annual General Meeting. The Chair of the Committee reports to
subsequent meetings of the Board, and the Company Secretary acts
asSecretary to the Committee. Annually, the Committee reviews
itseffectiveness.
Roles and responsibilities
The Committee, in line with its terms of reference, meets at least
twice a year, and as and when required. The terms of reference of the
Committeecan be found on the Company’s website www.sabreplc.
co.uk/about-us/corporate-governance and are reviewed by the
Committee on an annual basis. The Committee has a planned cycle of
activities, managed through a schedule of matters, to ensure that it
addresses its responsibilities in each financial year.
The Board has delegated to the Committee responsibility for ensuring
that the Executive Team is appropriately incentivised to deliver
sustainable growth to shareholders over the long term. The
Committee supports this objective by structuring and deploying
remuneration in a cost-effective manner, embedding a clear link
between pay and performance in the Group’s remuneration
framework. The Committee is responsible for setting the
Remuneration Policy for the Executive Directors, the Executive Team
and the Company’s Chair, including pension rights and any
compensation payments. It is also responsible for reviewing all share
incentive plans and setting and approving the achievement of their
performance conditions, as well as reviewing all employee pay
arrangements periodically. The fees of the Non-executive Directors are
approved by the Company Chair and the Executive Directors.
Committee advisers
For the financial year that ended on 31 December 2022, the Committee
appointed Deloitte LLP (“Deloitte”) to provide advice regarding
remuneration. Advisers from Deloitte may attend the Committee
meetings as appropriate, and provide advice on executive remuneration,
best practice and market updates. Annually the Committee evaluates
the support provided by its advisers. During the year the Committee
reviewed the performance of Deloitte, who were subsequently
reappointed to advise the Committee for a further year. Deloitte is a
founding member of the Remuneration Consultants Group and
voluntarily operates under their Code of Conduct in relation to executive
remuneration consulting in the UK. As such, the Committee is satisfied
that the advice provided by Deloitte is independent and objective.
reviewing and approving the feesof the Chair
reviewing the Company’s SAYE and SIP employee contribution
levels
approving the Company’s SAYE 2022grant
reviewing and approving the Committee’s terms of reference
reviewing and publishing the Company’s Gender Pay Gap Report
Executive remuneration in 2022
The Group has a well-defined strategy, whereby the profitability of
business written is prioritised under all market conditions. During
2022, following an extended period where market-wide premium
increases continued to lag claims inflation, the entire market
experienced sudden, unexpected inflation across the entire cost base,
including current and expected claims expenditure. By nature this
impacted in-year profitability, however management took immediate,
appropriate pricing action to ensure that the impact was limited
primarily to the 2022 result. This robust pricing action, taken against a
backdrop of pervasive under-pricing in the market, meant that volumes
in the motor vehicle book remained supressed during 2022 although
overall volumes grew following the launch of the new Motorcycle and
Taxi portfolios.
The Remuneration Committee discussed and approved the
remuneration outcomes in respect of 2022 shortly after the year end,
and made no amendments to the performance conditions for the
annual bonus award or the outstanding LTIP awards. Following the
implementation of the Company’s new Remuneration Policy at the
2021 Annual General Meeting, the annual bonus for 2022 was based
on a profit pool of 2% of Profit Before Tax (“PBT”), subject to the
achievement of a minimum level of £35m PBT. The Chief Executive
Officer and Chief Financial Officer both delivered good performances
against their individual and the Company’s strategic objectives, and the
Committee was able to review extensive evidence of delivery across
these combined objectives. However, as the minimum level of £35m
PBT was not achieved there was no payment of the STIP in respect of
the 2022 financial year. Further details on bonus outcomes can be
found pages 79 to 80.
Performance under the 2020 Long Term Incentive Plan (‘LTIP’) was
measured against Relative TSR (50% weighting) and EPS targets
(50% weighting) over a three-year period. Performance against the
TSR and EPS targets was below threshold and no payment will be
made against either element of the LTIP, therefore the LTIP awards
willvest at 0%. Further information on the 2020 LTIP can be found
onpage 81.
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responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
70
Overall, the Committee considered that the outcomes under the 2022
STIP and the 2020 LTIP are a fair reflection of the overall performance
of the Company and the Executive Directors, and are considered
appropriate in the context of the broader stakeholder experience. As
such the Committee has determined that no discretionary adjustments
were required. The Committee is satisfied that the Policy operated as
intended during the financial year, and did not exercise discretion in
respect of the Policy or its operation during the year. Further details
and the performance conditions for the awards made under the
Companys LTIP and STIP can be found on pages 79 to 81.
Wider considerations regarding reward
When considering the remuneration arrangements for the Executive
Directors, the Committee continues to take into account remuneration
throughout the Group and regularly examines the average employee
salary, pension and share plan contributions. The Committee is aware
of the importance of having an engaged, motivated and fairly paid
workforce. To support this the Committee receives regular updates on
remuneration of the Company’s employees. The Committee and
Company were cognisant of the increased cost of living. To help
support our employees with the increase in the cost of living, the
Group paid a Cost of Living Allowance of £800 to all employees
(outside of the Executive Team) over the five months from October
2022 to February 2023 and arranged financial wellbeing seminars to
inform employees around all aspects of their financial wellbeing from
debt management, savings accounts and mortgage rates explained,
aswell as a separate session which looked at the options around
retirement and pensions.
During the year the Company reviewed and increased the starting
salaries for trainees, and the Company confirms that the Real Living
Wage is paid to all full-time employees. As in prior years, during the
year the Company gave employees pay rises during the year, within
arange of 3.5% and 4.4% (excluding specials) and at an average of
4.1% (excluding specials), paid an employee performance bonus to all
employees, and a Christmas bonus of £1,000. In addition, the Group
introduced free private health insurance to its employees, which also
provides discounted gym memberships, dietary advice, and free
workshops promoting a healthier lifestyle and good mental health,
andpaid employees outside of the Executive Team the Cost of Living
Allowance, as discussed previously in this report. Also introduced was
a salary extras platform, which provides employees with discounts
fora number of supermarkets, retailers or days out, and a technology
loan scheme.
Statement of shareholder voting
The following table shows the results of shareholder voting relating
to the approval of the Remuneration Policy and the approval of the
Remuneration Report at the 2022 Annual General Meeting.
2021 Annual General Meeting resolution to approve the
Directors’ Remuneration Policy
Total number
of votes
% of votes
cast
For (including discretionary) 200,920,076 94.75
Against 11,14 0,79 0 5.25
Total votes cast (excluding withheld votes) 212,060,866 100
Votes withheld 7,930,125 n/a
Total votes cast (including withheld votes) 219,990,991 n/a
2022 Annual General Meeting resolution to approve the
Directors’ Remuneration Report
Total number
of votes
% of votes
cast
For (including discretionary) 217,6 81,16 9 99.85
Against 318,601 0.15
Total votes cast (excluding withheld votes) 217,999,770 8 7. 2 0
Votes withheld 5,611 n/a
Total votes cast (including withheld votes) 218,005,381 n/a
Shareholder engagement
Sabre and the Remuneration Committee are committed to maintaining
an ongoing dialogue with shareholders on issues of remuneration to
ensure an open and transparent dialogue. We continue to welcome
any feedback you may have, via the Company Secretary, who can be
contacted at anneka.kingan@sabre.co.uk. During 2023, I will meet
with shareholders to discuss the development of a new Remuneration
Policy, which will be put to shareholder vote in 2024.
I look forward to your support on the resolutions relating to
remuneration at the Company’s Annual General Meeting in May 2023.
On behalf of the Remuneration Committee
REBECCA SHELLEY
Chair of the Remuneration Committee
13 March 2023
The Company continues to operate a SAYE Plan where employees can
make a monthly contribution of up to £500 and a SIP where for every
three shares an employee purchases the Company matches with one
free share. It is the Committee’s intention that both the SAYE Plan and
SIP will remain in place for the financial year ending 31 December
2023. During 2022, the free shares granted at the Company’s IPO
under the Companys SIP award, became available for employees
toexercise tax-free.
While the Group currently has fewer than 250 employees and so is
notrequired to submit a formal statement on its gender pay gap, our
intention is to be transparent. As such, in 2019 the Committee made
acommitment to release the Company’s Gender Pay Gap Report.
TheCommittee ensures that the report is updated annually, and it
isavailable on the Company’s website
https://www.sabreplc.co.uk/about-us/corporate-governance.
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responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
71
Principle How the Committee has addressed this
Clarity
Remuneration arrangements should
betransparent and promote effective
engagement with shareholders and
theworkforce.
The Committee is committed to providing clear and transparent disclosure of Sabre’s executive
remuneration arrangements. As part of the Remuneration Policy review undertaken in 2020 and 2021,
we consulted extensively with shareholders in order to ensure their feedback was fully considered.
Further information* – Karen Geary was appointed as the designated Non-executive Director for
workforce engagement during 2022, replacing Ian Clark who had served in the role since 2020.
Karen actively engages with employees and feeds back to the Committee and the Board on her
meetings in order to provide insight on employees’ views.
Simplicity
Remuneration structures should avoid
complexity and their rationale and
operation should be easy to understand.
In designing the remuneration framework the Committee sought to avoid complexity by ensuring
compensation arrangements are straightforward and easily understood.
Sabre’s remuneration framework comprises fixed pay, an annual bonus and a LTIP and is well
understood by both participants and our key stakeholders.
Risk
Remuneration arrangements should
ensure reputational and other risks
from excessive rewards, and
behavioural risks that can arisefrom
target-based incentive plans, are
identified and mitigated.
The Committee is satisfied that the remuneration structure does not encourage excessive risk taking
and incorporates a number of features that align remuneration outcomes with risk. These include
deferral under the bonus plan, the two-year post-vesting holding periods under the LTIP and personal
shareholding guidelines that apply both in-employment and post-employment. Furthermore, the
Committee has the discretion to reduce variable pay outcomes where appropriate, and malus and
clawback provisions apply to both the annual bonus and LTIP awards.
Further information* – The Risk Committee reviews the Executive Team’s management of risk
during the year and advises the Remuneration Committee as appropriate, prior to the Committee
approving any awards of payment of bonuses.
Predictability
The range of possible values of rewards
to individual Directors and any other
limits or discretions should be identified
and explained at the time of approving
the policy.
The Remuneration Policy outlines the threshold, target and maximum levels of pay that Executive
Directors can earn in any given year over the three-year life of the approved Remuneration Policy.
Actual incentive outcomes will vary depending upon the level of achievement against specific
performance measures and underpins.
Proportionality
The link between individual awards, the
delivery of strategy and the long-term
performance of the Company should
be clear. Outcomes should not reward
poor performance.
The Committee is comfortable that the Remuneration Policy does not reward poor performance
and that the range of potential payouts are appropriate and reasonable.
The Committee has discretion to adjust incentive outcomes where they are not considered to
appropriately reflect underlying performance. Furthermore, payments made under the incentive
plans are subject to the achievement of performance measures and underpins which are directly
linked to the Group’s strategy and KPIs.
Alignment of culture
Incentive schemes should drive
behaviours that are consistent with
Company purpose, values and strategy.
The performance measures for the annual bonus and the award of RSAs are directly linked to the
Group’s strategy, objectives and values.
* This further information was not included in the original policy, but is included to provide further information and transparency regarding how the Committee has
addressed the requirements under the UK Corporate Governance Code.
The Directors’ Remuneration Policy (the‘Policy’)
The Director’s Remuneration Policy was approved by shareholders at
the 2021 Annual General Meeting (‘AGM’), and will be in place for the
financial years which ended on 31 December 2021, 31 December
2022 and the year that will end on 31 December 2023. In line with the
requirement to seek approval of the Directors’ Remuneration Policy
every three years, it is expected that the Company will return to
shareholders to seek approval of a Directors’ Remuneration Policy
atthe 2024 AGM. The current Directors’ Remuneration Policy is
provided in this section for shareholder information and is available on
the Company’s website at www.sabreplc.co.uk/about-us/corporate-
governance/remuneration-committee/
The Executive Directors’ remuneration consists of five main
components: a base salary, benefits, employer pension contributions,
a performance-related annual bonus STIP and Restricted Share
Awards made under the Company’s LTIP.
Directors are also entitled to participate in both the all-employee share
plans on the same basis as other Group employees. Detail in relation to
each of these elements is set out in the Policy Table on pages 72 to 77.
In designing the Companys Remuneration Policy, the Committee has
been guided by the three following principles:
1 Cost-effectiveness
Sabre intends to pay no more than is necessary to attract, retain and
incentivise high-calibre management, while also aligning the interests
of employees with those of shareholders and, where appropriate,
other key stakeholders.
2 Pay for performance
Performance-related pay will, potentially, make up a significant
proportion of the Executive Directors’ remuneration packages and will
be assessed based on stretching targets.
3 Long-term alignment
There will be an appropriate balance of remuneration to the delivery
oflonger-term performance targets. In determining the Company’s
Remuneration Policy, the Committee has taken into account the
relevant regulatory and governance principles.
The following table summarises how, in designing the Companys
Remuneration Policy and its implementation, the Committee has
addressed the principles set out in Provision 40 of the UK Corporate
Governance Code.
Directors’ Remuneration Policy
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Sabre Insurance Group plc Annual Report and Accounts 2022
72
Sabre Insurance Group’s Directors’ Remuneration Policy as set out in
this report (the “Remuneration Policy”) was approved by shareholders
at the Company’s Annual General Meeting on 14 May 2021, with a
vote of 94.75% in favour. The Committee intended the policy to be
simple and clear, linking the Companys strategy and performance
with the Directors’ remuneration, reflecting the insurance industry’s
cyclical nature and compliance with corporate governance best practice.
The Remuneration Policy was developed taking into account the
Committee’s requirements that it:
be simpler and more transparent
reward performance against a balanced mix of financial and
non-financial performance metrics, which reflect the interests of
allstakeholders
reflect that, although the business is cyclical in nature, the focus
ofthe Executive Team is to protect the dividend and to deliver
attractive returns to shareholders. We consider that a Remuneration
Policy that offers a narrower, but more predictable, range of
performance and reward outcomes is more aligned to Sabre’s
positioning as an ‘income stock
more closely align the remuneration of the Executive Team with the
business’s profit generation at different parts of the insurance cycle,
rather than achievement against the annual budget
encourages long-term share ownership and aligns with the creation
of shareholder value
mitigates risk by ensuring the Committee has the ability to apply
discretion to ensure that the award levels are appropriate, and
thatthe Committee has the ability to apply clawback and/or malus
ifrequired
complies with corporate governance best practice
Remuneration Policy Table
Salary
To attract, incentivise and retain Executive Directors of a high calibre, and to reflect their responsibilities and experience.
Operation Maximum opportunity Performance measures
Base salaries will be reviewed at least annually, taking into
account the scope and requirements of the role, the
performance and experience of the Executive Director and the
individual’s total remuneration package.
Account will also be taken of remuneration arrangements at
Sabre’s peer companies (and other companies of an equivalent
size and complexity), for other Group employees, and the
impact of any base salary increases on the total remuneration
package.
Any salary increases are normally effective from 1 April, each
year, in line with the broader workforce.
The Committee has decided not to set an overall maximum
monetary opportunity or increase. However, the Committee
intends that Executive Directors’ salary increases will normally be in
line with salary increases offered to the wider employee population.
There are specific circumstances in which the Committee could
award increases outside this range which may include:
a change in the Executive Director’s role and/or responsibilities
performance and/or development in role of the Executive Director
a significant change in the Group’s size, composition and/or
complexity
a significant change in market practice
Where an Executive Director has been appointed to the Board at a
below-market starting salary, larger increases may be awarded as
their experience develops, if the Committee considers such increases
to be appropriate.
n/a
Benets
To provide a benefits package to recruit and retain Executive Directors of a high calibre and to promote the wellbeing and health of the Directors, enabling them
to focus on the Company.
Operation Maximum opportunity Performance measures
The Committee’s policy is to provide Executive Directors with
competitive levels of benefits, taking into consideration the
benefits provided to Sabre’s employees and the external market.
Benefits currently include (but are not limited to) life insurance
and private medical insurance.
If an Executive Director is required to relocate as a result of his/
her duties the Company may provide the Executive Director
with additional benefits such as assistance with relocation,
travel, accommodation or education allowances or professional
tax advice, along with any associated tax liabilities.
As the costs of benefits are dependent on the Executive Directors
individual circumstances, the Committee has not set a maximum
monetary value.
However, in approving the benefits paid, the Committee will
ensure that they do not exceed a level which is, in the
Committee’s opinion, appropriate given the Executive Directors
particular circumstances.
n/a
Pension
To provide a pension package for the Executive Directors.
Operation Maximum opportunity Performance measures
The Group may make employer pension contributions to a
registered pension plan (or such other arrangement the
Committee considers has the same economic effect) set up for
the benefit of each of the Executive Directors.
Alternatively, an Executive Director may be awarded some/all of
the contribution as an equivalent cash allowance in lieu of
pension contributions.
Prior to 2022, for incumbent Executive Directors, pension
contribution levels would not exceed 17% of an individual’s salary,
less employer national insurance contribution.
From 1 January 2022, the maximum pension contribution for
incumbent Executive Directors was aligned with the average
employee company pension contribution (currently 7.5% of salary).
For any new Executive Director appointments, the maximum
pension contribution will be aligned with the average employee
company pension contribution (currently 7.5% ofsalary).
n/a
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Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
73
Short Term Incentive Plan (STIP) – Annual Bonus and Deferred Bonus Plan (“DBP”)
To incentivise and reward the delivery of annual corporate and/or individual financial and non-financial targets, and to align the interests of Executive Directors
with shareholders through the deferral of a portion of the bonus into shares.
Operation Maximum opportunity Performance measures
The Committee will use a bonus pool for each financial year of
the Company.
Annual bonus outcomes will be determined by the Committee
after the end of each financial year.
In exceptional circumstances the Committee may use its
discretion to adjust the formulaic outcome of the performance
targets to reflect corporate and individual performance during
the year.
The Committee may defer a proportion of any bonus award (no
more than 50%) into a share award under the DBP. DBP awards
will normally vest on the second anniversary of grant (or such
other date as the Committee determines on grant).
Malus and clawback provisions will apply (see page 76).
The maximum bonus opportunity
for Executive Directors is 150%
of base salary.
Use of a bonus pool funding approach. The bonus pool
is calculated as a percentage of PBT, subject to a
minimum level of PBT being achieved. The size of the
pool will be capped at 2% of PBT in any financial year.
70% of the bonus to be based on financial objectives,
with 30% based on non-financial objectives.
Long Term Incentive Plan (“LTIP) – Restricted Share Awards (“RSA”)
To incentivise and reward delivery of the Group’s longer-term strategic objectives for the business and ensure alignment with shareholders.
Operation Maximum opportunity Performance measures
Awards are structured as conditional rights or nil-cost awards or
nil-cost options, to receive free shares on vesting.
Shares will normally vest after three years, subject to continued
employment and the Remuneration Committee’s assessment,
with an additional two-year holding period, meaning that shares
are not released until five years from award grant.
If the Company does not meet one or more of the underpins at
the date of vesting, then the Committee would review whether
or not it was appropriate to reduce the number of shares that
vest under the award.
The Committees general discretion to adjust vesting levels,
depending on performance and unforeseen circumstances, and
any other appropriate reason will also apply.
Dividend equivalents in respect of the value of dividends which
would have been received during the vesting period and any
holding period may be paid in shares or in cash in respect of the
number of shares which vest.
Malus and clawback provisions will apply (see page 76).
The maximum awards are 75% of
base salary for the Chief
Executive Officer and 60% of
base salary for the Chief Financial
Officer.
RSAs are subject to one or more underpins over a
period of three financial years commencing with the
year in which the awards are granted. These underpins
are designed to ensure that an acceptable threshold
level of performance is achieved and that vesting is
therefore warranted. The underpins applying to each
award will be determined by the Committee each year
and the Committee may use different performance
underpins for each award, if deemed appropriate.
Underpins will be set taking into account the business
strategy and to ensure that failure is not rewarded.
Underpins may include financial measures such as the
maintaining of a minimal solvency ratio or a capital return
measure. Non-financial measures may also be used,
including those related to risk or regulatory matters.
Vesting of awards will also be subject to overarching
Committee discretion.
All-Employee Share Plans
To align the Executive Directors with the wider workforce.
Operation Maximum opportunity Performance measures
Executive Directors are eligible to participate in any all-
employee share plans in place, which are operated in line with
HMRC requirements.
These are currently a share acquisition and free share plan,
known as the UK Share Incentive Plan “SIP”), and a savings-
related share option plan, known as the Save As You Earn
(“SAYE) Plan.
Participation in the Group’s
all-employee share plans will be
subject to any applicable
maximum limits as set by HMRC.
n/a
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Sabre Insurance Group plc Annual Report and Accounts 2022
74
Shareholding guidelines
To align the interests of the Executive Directors and shareholders to the success of the Company.
Operation Maximum opportunity Performance measures
The Executive Directors are expected to build and maintain a
shareholding equivalent to at least 200% of their base salary.
This should be achieved within a reasonable timeframe from
the adoption of this Policy or their appointment.
Shares which may be used to satisfy this requirement include
all beneficially-owned shares and vested share awards subject
to a holding period.
To support the implementation of this measure, Executive
Directors are required to retain 50% of any share awards
vesting (after settling any tax liability) until the 200%
requirement is met.
Post-cessation of employment, the Executive Directors are
expected to maintain a minimum shareholding of 200% (or their
actual shareholding if lower) for a period of two years. This
arrangement will be administered through a nominee account.
The post-employment guideline applies to shares from
incentive awards that have been granted from the date of the
adoption of this Policy.
n/a n/a
Non-executive Directors’ fees
To attract Non-executive Directors of an appropriate calibre and with sufficient experience to ensure the effective management of the Company.
Operation Maximum opportunity Performance measures
Fee levels will be reviewed (though not necessarily increased)
annually. Fees will be set with reference to the time
commitment and responsibilities of the position, and any
increases reflective of any increases given to the wider
employee population.
Additional fees may be paid for additional responsibilities (such
as chairing a Board Committee, membership of a Committee,
or acting as the Senior Independent Director), or for an
increased time commitment during the year.
Each Non-executive Director will be entitled to be reimbursed
for all reasonable costs incurred in the course of his/her duties,
including travel and accommodation expenditure, along with
any related tax liabilities.
The fee for the Chair will be determined by the Committee.
Fees for Non-executive Directors will be determined by the
Chair and the Executive Directors.
Total fees will not exceed the limit set out in the Companys
Articles of Association.
There is no prescribed maximum
fee or annual increase.
n/a
Prior arrangements
The Board reserves the right to make any remuneration payments
and/or payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that
they are not in line with the Policy set out on the prior pages where the
terms of the payment were agreed (i) before the Policy came into
effect; or (ii) at a time when the relevant individual was not a Director of
the Group and, in the opinion of the Committee, the payment was not
in consideration for the individual becoming a Director of the Group. For
these purposes ‘payments’ includes the Committee satisfying awards
of variable remuneration and, in relation to an award over shares, the
terms of the payment are ‘agreed’ at the time the award is granted.
Selection of performance conditions
For the STIP, the Committee believes that a mix of financial and
non-financial targets is most appropriate. Strategic and personal
objectives may be included where appropriate to ensure delivery of
key business milestones. Targets are set by the Committee taking into
account internal and external forecasts.
For the LTIP, under which it is proposed to grant awards of restricted
shares, awards will be subject to performance underpins. The underpins
selected by the Committee will be based on measures considered to be
most reflective of the overall financial stability and performance of the
Company, and therefore aligned with shareholder value creation.
Terms common to the DBP and LTIP
Awards under the DBP and LTIP may:
be granted as conditional share awards or nil-cost options or in
suchother form that the Committee determines has the same
economic effect
have any performance conditions applicable to them amended or
substituted by the Committee if an event occurs which causes the
Committee to determine an amended or substituted performance
condition would be more appropriate and not materially less difficult
to satisfy
incorporate the right to receive an amount (in cash or additional
shares) equal to the value of dividends which would have been paid
on the shares under an award that vests up to the time of vesting (or,
where the award is subject to a holding period, the end of that
holding period). This amount may be calculated assuming that the
dividends have been reinvested in the Company’s shares on a
cumulative basis be settled in cash at the Committee’s discretion be
adjusted in the event of any variation of the Companys share capital
or any demerger, delisting, special dividend or other event that may
materially affect the current or future value of the Company’s shares.
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75
Malus and clawback
Malus and clawback provisions apply to all awards granted under the
STIP and LTIP. These provisions may be invoked at the Committee’s
discretion at any time prior to the third anniversary of the grant of a
cash bonus or DBP award, or to the fifth anniversary of the grant of
anLTIP award. In these circumstances, the Committee may reduce or
impose additional conditions on an award or require that the participant
returns some or all of the value acquired under the award.
The Committee has the discretion to invoke these provisions where
there has been:
a material misstatement of any Group member’s audited accounts
a corporate failure
intervention from a regulator
an error in assessing the relevant performance conditions or the
information or assumptions on which the award was granted
orvested
misconduct on the part of the Executive Director
serious reputational damage to, or a material failure of risk
management by, a member or business unit of the Group
Within the period beginning on:
in the case of LTIP awards, from the grant of the award and ending
on the fifth anniversary of the date of grant
in the case of STIP (cash bonus and DBP awards), the start of the
financial year in respect of which the award is granted and ending
onthe third anniversary of the date of grant
The Board will retain the discretion to calculate the amount to be
recovered, including whether or not to claw back such amount gross or
net of any tax or social security contributions applicable to the award.
Remuneration policy for new Executive Directors
The Committee intends to set any new Executive Directors
remuneration package in line with the Policy outlined earlier in this
section. In recognition of the changes in the corporate governance
environment, the Committee will align the Company’s pension
contributions for any newly appointed Executive Director with those of
the average employee. For the financial year ended 31 December 2021,
the average Company employee pension contribution was 7.5%, and
while this Policy is in place, 7.5% is the maximum pension contribution
to be given to an Executive Director, with effect 1 January 2022.
When determining the design of the total package in a recruitment
scenario, the Committee will consider the size and scope of the role,
the candidate’s skills and experience and the market rate for such a
candidate, in addition to the importance of securing the preferred
candidate. In some circumstances, the Board may be required to take
into account common remuneration practices in another country and,
ifapplicable, may consider awarding payments in respect of relocation
costs. In line with the Policy, in relation to annual bonus and LTIP
awards, maximum variable remuneration will not exceed 225% for the
Chief Executive Officer and 210% for the Chief Financial Officer as of
a percentage of salary.
In the event that Sabre wishes to hire a candidate with unvested
long-term incentives accrued at a previous employer, which would be
forfeited on the candidate leaving that company, the Committee retains
the discretion to grant awards with vesting on a comparable basis to
the likely vesting of the previous employers award. The LTIP Rules
have been drafted to permit the grant of recruitment awards on this
basis to an individual (which will not be counted towards the annual
LTIP limit and which will be subject to such vesting schedules and
performance conditions (if any) as the Committee may determine). If it
is not possible or practical to grant recruitment awards under the LTIP,
the Committee may rely on the provisions of Listing Rule 9.4.2 to grant
the awards. For internal candidates, LTIP awards granted in respect of
the prior role would be allowed to vest according to their original terms,
or adjusted if appropriate to take into account the appointment.
For the appointment of a new Chair or Non-executive Director, the fee
would be set in accordance with the Policy. The length of service and
notice periods would be set at the discretion of the Committee, taking
into account market practice, corporate governance considerations and
the skills and experience of the particular candidate at that time.
Service agreements and exit payment policy
In line with the UK Corporate Governance Code Provision 18, all
Directors are subject to re-election annually at the Companys Annual
General Meeting.
Director Date of appointment Notice period
Geoff Carter 21/11/2017 12 months
Adam Westwood 21/11/2017 12 months
Andy Pomfret 28/02/2018 3 months
Ian Clark 04/10/2017* 3 months
Karen Geary 07/12/2020 3 months
Michael Koller 01/09/2020 3 months
Alison Morris 01/05/2022 3 months
Rebecca Shelley 04/10/2017 3 months
* Ian Clark was appointed to the Sabre Insurance Group plc Board as a
Non-executive Director upon its IPO, but had been a Non-executive Director of
Sabre Insurance Company Limited since May 2014.
Shareholders may inspect the Executive Directors’ contracts or the
Non-executive Directors’ letters of appointment at the Companys
registered office, and these contracts and letters of appointment are
also available for shareholders to review at the Companys Annual
General Meeting.
Both Geoff Carter and Adam Westwood have written service
contracts with the Company with no fixed end date, but which are
terminable by either the Company or the Executive Director on not
less than 12 months’ notice.
In the event notice is given to terminate an Executive Director’s
contract, the Company may make a payment in lieu of notice equal to
the value of the Executive Directors salary for the notice period. Any
such payments may be made, at the Committee’s discretion, as a lump
sum or in instalments, subject to mitigation by the Executive Director.
Itis the Committee’s intention that the service contracts for any new
Executive Directors will contain equivalent provisions. In the event that
an Executive Director leaves the Group, entitlement they have to any
variable pay will be determined in accordance with the relevant
incentive plan rules.
The Chair and each of the independent Non-executive Directors have
anotice period of three months and may receive fees in respect of any
notice period.
Short Term Incentive Plan (“STIP”) – Annual Bonus
and Deferred Bonus Plan (DBP)
Executive Directors will not have any automatic entitlement to a
bonusfor the financial year in which they leave the Group. Where
anExecutive Director leaves the Group, as a result of their ill-health,
injury, disability or redundancy, or their employing company or
business is sold out of the Group, or in such other circumstances as
the Committee determines (but excluding gross misconduct), (known
as “Good Leaver Reasons”), the Executive Director will typically
remain eligible for their annual bonus award, which will normally be
time prorated to reflect the proportion of the financial year served.
Anysuch bonus may be paid out in such proportions of cash and share
awards as the Committee considers appropriate. For other leavers,
rights to awards under the annual bonus will be forfeited.
Unvested DBP awards will normally lapse when an Executive Director
leaves the Group. However, if an Executive Director’s departure is a
Good Leaver Reason, as set out above, their award will normally vest
on the original vesting date, although the Committee has the discretion
to allow awards to vest earlier if the Committee considers it appropriate.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
76
Long Term Incentive Plan (“LTIP) – Restricted Share
Awards (“RSAs”)
Unvested LTIP awards, including RSAs following the amendment of
the plan rules at the Annual General Meeting, will also normally lapse
when an Executive Director leaves the Group. However, if the
Executive Directors departure is as a result of a Good Leaver Reason,
their LTIP awards will normally vest (and be released from any
applicable holding period) on the original timetable set, although the
Committee has the discretion to accelerate the vesting and release
ofawards.
The extent to which unvested LTIP awards vest in these
circumstances will be determined by the Committee, taking into
account the extent to which the relevant performance conditions
orunderpins have, in its opinion, been satisfied (over the original
performance period, where the vesting of the award is not being
accelerated) and, unless the Committee determines otherwise, the
proportion of the performance period that has elapsed at the time the
Executive Director leaves.
If an Executive Director leaves the Group holding vested LTIP awards
which are subject to a holding period, these awards will normally be
released at the end of the original holding period, unless the
Committee allows the holding period to be shortened. However, if the
Executive Director is dismissed for gross misconduct, all his or her
LTIP awards will lapse.
If an Executive Director dies, their DBP and LTIP awards will normally
vest (and be released from any holding periods) as soon as reasonably
practicable after their death. The extent to which unvested LTIP awards
vest in these circumstances will be determined by the Committee in
the same way as for other Good Leaver Reasons described above.
The Committee reserves the right to make any other payments in
connection with a Directors cessation of office or employment where
the payments are made in good faith in discharge of an existing legal
obligation (or by way of damages for breach of such an obligation) or
by way of settlement of any claim arising in connection with the
cessation of a Directors office or employment. Any such payments
may include but are not limited to paying any fees for outplacement
assistance and/or the Directors legal and/or professional advice fees
inconnection with his cessation of office or employment.
Change of control
In the event of a change of control of the Company, LTIP and DBP awards
will normally vest and be released early. The proportion of any unvested
LTIP awards which vest will be determined by the Committee, taking into
account the extent to which it determines that any performance
conditions and underpins have been satisfied at the time, and, unless the
Committee determines otherwise, the proportion of the performance
period that has elapsed. DBP awards will normally vest in full.
Alternatively, the Board may permit an Executive Director to exchange
their awards for equivalent awards of shares in a different company
(including the acquiring company). If the change of control is an internal
reorganisation of the Group or in other circumstances where the
Committee considers it appropriate, Executive Directors may be
required to exchange their awards.
If other corporate events occur such as a winding-up of the Company,
demerger, delisting, special dividend or other event which, in the opinion
of the Committee, may materially affect the current or future value of
the Company’s shares, the Committee may determine that awards will
vest and be released on the same basis as for a change of control.
Consideration of shareholder views and
employment conditions
The Committee will consult with major shareholders prior to any
significant changes to the Policy and will continue to value their
viewswhen deciding on future executive remuneration strategy. In
developing and reviewing the Remuneration Policy, the Committee
was mindful of the views of the Company’s shareholders and
remuneration arrangements for employees.
The Committee proactively sought feedback from shareholders when
developing the Policy, and seeks feedback from shareholders when
considering any significant changes to remuneration for the Executive
Directors. The Committee took on board the feedback received from
shareholders during the consultation regarding the Remuneration
Policy implemented in 2021, and modified the proposals in response
to the feedback received.
In setting the Policy, the Committee was led by the same principles
which determined all employee remuneration: cost-effectiveness, pay
for performance and long-term alignment. These principles evidence
themselves in all employee remuneration as follows:
Cost-Effectiveness – As with the Directors, in setting
compensation across the Group, Sabre intends to pay no more than
is necessary to attract, retain and incentivise high-calibre individuals,
setting remuneration competitively but not excessively
Pay for Performance – Many full-time Group employees are eligible
to participate in some form of share-based incentive. Key individuals
below Board level have been invited to participate in the LTIP, in
order for there to be alignment between senior management and
the Executive Directors’ objectives
Long-term Alignment – In line with our philosophy of encouraging
our workforce to be investors in the Group, all eligible employees
were offered an award of free shares under the SIP. The Company
operates both a SAYE Plan and a SIP to further facilitate employee
investment in the Group and their long-term alignment
Although the Committee did not formally engage with the workforce
on the alignment of executive remuneration with the wider company
pay policy, the Board engages with the Companys employees via the
designated Non-executive Director responsible for employee
engagement. Karen Geary was appointed to this position by the Board
during 2022, taking over from Ian Clark. Karen leads on ensuring
effective engagement with the workforce and regularly feeds back to
the Committee and the Board following her meetings with employees.
This process does not currently include an active two-way dialogue
with the workforce on executive pay but this approach is being kept
under review.
The Committee appreciates the importance of an appropriate
relationship between the remuneration levels of the Executive Directors,
the Executive Team, managers and other employees withinthe Group.
As such, when reviewing and determining pay for Executive Directors,
the Committee takes into account the level and structure of
remuneration, as well as salary budgets, for other employees in the
Group. Moreover, as a result of the implementation of the all-employee
share plans referred to above, many of the Group’s employees are Sabre
shareholders and therefore have the opportunity to express their views
through the same means as any other shareholder.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
77
Single figure of remuneration (audited)
The table below sets out the total remuneration received by Executive Directors and Non-executive Directors in respect of the financial year
ended 31 December 2022.
£’000s
Salary/fees
Taxable
benets
1
Pension
2
Total xed
pay
Short term
incentive
Plan
3
Long term
incentive
Plan
4
Other
5
Totalvariable
Pay
6
Total
Remuneration
7
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Executive Directors
Geoff Carter 454 439 3 3 30 66 487 508 0 224 0 9 1 9 225 496 733
Adam Westwood 275 258 2 2 20 22 297 282 0 113 0 1 1 113 298 395
Executive Director total 729 697 5 5 50 88 784 790 0 337 0 10 1 10 338 794 1,128
Non-executive Directors
Andrew Pomfret 155 150 155 150 155 150
Ian Clark
8
81 73 81 73 81 73
Karen Geary
9
64 60 64 60 64 60
Michael Koller 62 60 62 60 62 60
Alison Morris
10
45 n/a 45 n/a 45 n/a
Rebecca Shelley 82 80 82 80 82 80
Non-executive Director total
489 423 489 423 489 423
Total 1,218 1,120 5 5 50 88 1,273 1,213 0 337 0 0 10 1 10 338 1,283 1,551
1 Taxable benefits include private medical insurance and payment in lieu of holiday not taken.
2 As an element of pension is received as cash in lieu, the amount awarded is reduced below the allowed percentage to reflect the additional national insurance cost
borne by the Group.
3 Awards made under the STIP are paid for performance over the relevant financial year. Details of the performance targets and performance against the targets for the
2022 STIP awards are detailed on pages 79 to 80. Details of the performance targets and performance against the targets for the 2021 STIP awards are detailed in the
Annual Report and Accounts for the year ended 31 December 2021. Consistent with the terms of the 2021 Remuneration Policy, 50% of the bonus earned in relation to
the financial year ended 31 December 2022 is deferred into the Company’s shares for two years, with the balance payable in cash. These shares will be held in the
Sabre Group Employees’ Share Trust and are not subject to any further performance conditions.
4 Awards made under the LTIP are conditional awards, and paid for performance over the period 1 January 2020 to 31 December 2022. The awards for the LTIP 2020 did not meet
the performance conditions, and therefore did not vest. Details of the performance targets and performance against the targets for the 2020 LTIP awards are detailed on page 81.
5 The Company operates a SIP which is open to all employees. ‘Other’ is the value of matching SIP shares attributable to the year. The Company offers a 1:3 match for
Partnership Shares purchased by employees. In 2021, Geoff Carter participated in the SIP up to the maximum extent permitted by HMRC. Adam Westwood did not
participate in the SIP in 2021. The calculation for value is based on the shares bought by the Company on behalf of the individual and the share price as at 31 December
2021 of £1.838. In 2022, Geoff Carter and Adam Westwood participated in the SIP up to the maximum extent permitted by HMRC. The calculation for value is based
on the shares bought by the Company on behalf of the individual and the share price as at 31 December 2022 of £1.064.
6 Comprising STIP, LTIP and any other relevant variable remuneration.
7 Comprising of total fixed pay and total variable pay and other remuneration as set out in footnote 6.
8 Ian Clark was appointed Audit Committee Chair on an interim basis between 25 November 2021 and 25 August 2022, and his fee is prorated in line with the time served
in the position during the 2022 financial year. In addition, with effect from 1 April 2022, Ian Clark stopped being the Non-executive Director responsible for employee
engagement and again his fee was prorated in line with the time served in the position during the 2022 financial year.
9 With effect from 1 April 2022, Karen Geary became the Non-executive Director responsible for employee engagement and her fee was prorated in line with the time
served in the position during the 2022 financial year.
10 Alison Morris joined the Board with effect from 1 May 2022 and became Audit Committee Chair with effect from 25 August 2022. Her fee was prorated in line with the
time served in the positions during the 2022 financial year.
This section of the Directors’ Remuneration Report sets out the
remuneration paid to Sabre’s Directors in respect of the year which
ended on 31December 2022 (the “2022 financial year”).
In line with the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended in 2013)
thefollowing parts of the Annual Report on Directors’ Remuneration
are audited:
the single total figure of remuneration for each Director, including
pension entitlements, STIP and LTIP outcomes for the financial year
ended 31December 2022
share plan awards granted during the financial year ended
31December 2022
payments to past Directors and payments for loss of office
Directors’ shareholdings and share interests
All other parts of the Annual Report on Directors’ Remuneration
areunaudited.
Annual Report on Directors’ Remuneration
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
78
Base salary
The annual salary paid to the Executive Directors with effect from 1
April 2022, is shown in the tablebelow.
Base salary Annual salary (£) with effect 1 April 2022
Geoff Carter £458,496
Adam Westwood £280,000
In late 2021, the Committee reviewed Executive Director salaries for
the 2022 financial year, taking into account the individual’s role and
experience and pay for the broader employee population. The
Committee decided to increase Geoff Carter’s salary by 4%, which
was below the average increase given to employees across the Group.
The Committee decided to increase Adam Westwoods salary by 8%
to reflect the significant increase in his experience, his development
and his performance, since his salary was set at IPO four years ago.
Details of the salaries that will apply in 2023 are provided on page 86
and 87.
Pension
In late 2021, the Committee reduced the Executive Directors’ pension
allowance to align with the average employee rate with effect 1 January
2022. During the 2022 financial year, Geoff Carter and Adam
Westwood received pension contributions of 7.5% of their base salaries
respectively, in line with the average employee rate. Details of the
pension contributions that will apply in 2023 are provided on page 86.
Short Term Incentive Plan (‘STIP’)
Framework and outcomes for the nancial year ended
31December 2022
For the financial year ended 31 December 2022 the Executive Directors
were eligible to participate in the Company’s STIP, which was based on a
bonus pool funding approach, calculated as 2% of PBT, subject to a
minimum hurdle of £35m PBT being achieved. For 2022 the maximum
annual bonus opportunity was 150% of salary for Geoff Carter and 150%
of salary for Adam Westwood. The STIP was based 70% on achievement
against financial targets (PBT) and 30% achievement against non-financial
targets, split equally between non-financial Company-wide objectives,
including strategy, customer, ESG, people, the development of the
business, risk and compliance, and individual non-financial objectives.
Performance measure Weighting
Profit before tax 70%
Non-financial Company-wide objectives, including strategy, customer and
partners, ESG, people, development of business, risk and compliance
15%
Non-financial objectives relating to the individual 15%
PBT performance for the 2022 financial year was £12.7m, therefore the minimum hurdle was not met and the profit pool was not available for
distribution to the Executive Directors. The Committee reviewed the Company and individual performance in the year, and determined not to
exercise its discretion to override the target threshold of £35m or to adjust bonus outcomes.
The non-financial targets set for the Company, the non-financial individual personal targets for Geoff Carter and Adam Westwood and the
Committee’s assessment of their performance against them are detailed on the following page, with as much clarity as possible while protecting
Company competitive advantages and respecting contractual confidentiality. The non-financial targets for the Company were determined by the
Committee to have been achieved at 90%, and the non-financial individual performance objectives detailed below for both Geoff Carter and
Adam Westwood were determined by the Committee to have been achieved at 93.75% and 91.87% respectively. However, as the PBT
performance threshold for the 2022 financial year was not reached, awards under the STIP did not vest.
Non-financial Company-wide objectives
The Committee believes that responsibility for the wider business objectives is shared equally amongst the Executive Team, and a consistent score
will be given unless specific examples of over/under performance by any one individual are identified. Taken holistically, the Committee considered a
score of 75% against these objectives to be appropriate.
Non-nancial measure
Weighting
as a % of
total bonus
opportunity Performance Commentary on performance
Actual bonus
payable as a %
of total bonus
opportunity
Strategic Focus
Maintaining focus on retaining a Combined Operating
Ratio (‘COR’) position within target range and
optimising volumes as market dynamics play out
following the implementation of the FCA pricing
reforms and anticipated hardening market.
15% 75% Maintained firm focus on the Company strategy, as evidenced
by early call regarding inflation and corrective action on pricing
and reserving which is intended to protect the COR delivery
into the future.
However, the Committee noted that this was not able to
mitigate the impacts of such a rapid increase in inflation in the
year that the inflation hit.
n/a
Customer and Partners
Maintain a high-quality service in direct and
outsourced processes, ensuring customers are dealt
with fairly.
Clear evidence of high-quality service through KPIs on internal
and external outsourced functions.
Progress made with further enhancements in identifying
vulnerable customers and modifying processes appropriately.
Environmental, Social and Governance
Continue to enhance our approach to ESG
requirements, with an increased focus on
environmental impacts and stakeholder expectations.
Strong progress made in ESG, notably the implementation of
the Task Force on Climate Related Financial Disclosures
(‘TCFD’). Further information on the Company’s ESG Strategy
can be found on pages 44 to 49.
People
Maintain Sabre’s position as a great place to work,
ensuring colleagues have an appropriate work/life
balance, are able to develop in their careers and strive
to ensure Sabre’s success and ensure a successful
return to primarily office-based working.
During the year there have been continued enhancements for
employees, as discussed in the ‘Our People’ Report on pages
40 to 42. Management have continued strong engagement
and communication with employees through the year, and the
positive impact of this has been seen in employee polls.
Development of the Business
Ensure that the new material product areas
(Motorcycle and Taxi) are embedded effectively into
the business operations and perform in line with
expectations.
The Motorcycle and Taxi products are now fully embedded
into the Companys Claims and Financial processes. It is noted
that the Motorcycle product required further focus to get it to
a sustainable profit level, and both products are now writing
within profitability targets.
Risk and Compliance
Comply with existing and emerging regulatory
requirements, and successfully manage risk and
compliance across the Group.
The Company has a good relationship with its regulators and
has made strong progress on meeting the requirements of the
Operational Resilience and Consumer Duty regulations. The
Company received a positive audit on its work relating to the
implementation of the FCA’s Pricing Principals Requirements.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
79
Non-financial objectives relating to the individual
Geoff Carter
Weighting as a % of
personal/strategic
bonus opportunity Commentary on performance
Actual
performance
Objectives
Ensure progress of the agreed strategic developments
initiatives, with a specific focus on ensuring the business
maintains strong underwriting foundations alongside
medium term growth opportunities.
25% Maintained firm focus on the Company strategy, as evidenced by
early call regarding inflation and corrective action on pricing and
reserving. However, the Committee noted that this was not able
to mitigate the impacts of inflation in the year that the inflation hit.
It was agreed by Management to sacrifice volumes, to protect the
long term interest and success of the business.
90%
Ensure Executive Team continued effectiveness and
positive engagement with the board.
25% The Board considered that the engagement between Management
and the Board had remained strong throughout the year, notably their
fast responses regarding the corrective action to deal with inflation.
100%
Ensure the business effectively embeds new product areas
(Motorcycle and Taxi) and specifically build relationships
with new key partners to ensure mutually beneficial
developments.
25% The Motorcycle and Taxi products are now fully embedded into
the Company’s Claims and Financial processes. It is noted that
the Motorcycle product required further focus to get it to a
sustainable profit level, and both products are now writing within
profitability targets.
100%
Ensure positive relationships are maintained with key
stakeholders, specifically including the PRA, covering
analysts and key investors.
25% The Company has a good relationship with its regulators and has
made strong progress on meeting the requirements of the
Operational Resilience and Consumer Duty regulations. The
Company received a positive audit on its work relating to the
implementation of the FCA’s Pricing Principals Requirements.
Geoff has also maintained good relations with the Company’s
analysts, and presented at a number of investor conferences.
85%
Total % of personal/strategic objectives 100% 93.75%
Adam Westwood
Weighting as a % of
personal/strategic
bonus opportunity
Actual
performance
Objectives
Continue to progress IFRS 17 implementation project to
include sign-off on key judgements, draft accounts and
disclosures, and external assurance where necessary.
25% Strong progress with implementation on track and limited
external support required
95%
Further enhance automation within Finance, in both
transactional processing and reporting.
25% The Finance Team continue to increase their efficiency with further
enhancements being made to the Team and increasing levels of
automation, including IFRS 9 analysis and journal postings,
segmental reporting by product line and the implementation of
Employment Hero, enhancing the automation of payroll reporting.
85%
Maintain strong relationships with analysts and investors,
ensuring that guidance is clear and well understood.
25% The Company has a good relationship with its regulators and has
made strong progress on meeting the requirements of the
Operational Resilience and Consumer Duty regulations. The
Company received a positive audit on its work relating to the
implementation of the FCA’s Pricing Principals Requirements.
Adam has maintained good relations with the Company’s
investors and analysts, with regular dialogue throughout the year.
90%
Continue the development of a carbon-neutral roadmap for
the Company, which includes a staged transition and
ambitious yet achievable targets.
12.5% Strong progress made in ESG, notably the implementation of the
Task Force on Climate Related Financial Disclosures (‘TCFD’).
Further information on the Company’s ESG Strategy can be
found on pages 44 to 49.
100%
Ensure financial accounting and reporting for new product
areas (Motorcycle and Taxi) is effectively implemented.
12.5% Both products are now fully embedded in the financial processes
and are working as required.
95%
Total % of personal/strategic objectives 100% 91.87%
Committee Chairs commentary on Executive
Directors’ personal performance
Sabre is predominantly a technical underwriting and claims
management business. The Company strategy is therefore centred on
maintaining a COR between 70% and 80% throughout all market
conditions, treating volume as an output not a target. The strategy
does not currently envisage material product development, merger
and acquisition activity or territorial expansion, although during the year
the Company expanded its product lines to include motorcycle cover.
As such, the Committee considers the effective implementation of the
strategy to be characterised by the quality of ongoing pricing, claims
management and underwriting activity, and primarily assesses
Executive performance against these measures.
As outlined in this Report, 2022 was a challenging year for motor
insurers, with the unexpected rapid increase in inflation having
increased the costs associated with policies already written and
therefore impacted the Group’s COR. This, along with the first-year
performance of the motorcycle and taxi lines generated a reduction
inprofit year-on-year, albeit with the business having returned to
growth for the first time since 2017. Within this context, the
Committee considers the 2022 results to be acceptable and in the
market context, creditable. Management identified the increasing
levels of inflation quickly, and took rapid, appropriate action in
response, allowing the Group to expect a return to higher levels
ofprofitability in the coming year.
The Committee believes that the annual bonus outcomes are a
fairreflection of Company performance in the year and the overall
shareholder experience, and therefore has not exercised its discretion
to adjust the awards.
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors Remuneration
Directors’ Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
80
Long Term Incentive Plan (“LTIP)
Vesting of awards under the LTIP in the nancial year ended 31 December 2022
Shortly prior to Admission, shareholders approved the introduction of the Sabre 2017 LTIP. The third award under the 2017 LTIP was granted in 2020
based on performance over three years up to 31 December 2022. Under the plan an award of 125% of salary was made to Geoff Carter and 100%
of salary to Adam Westwood. The LTIP was based 50% on Relative TSR targets and 50% on EPS growth targets.
The range of targets set and performance against the targets is detailed below:
Financial measure
Weighting as a
% of total LTIP
opportunity Threshold Target Maximum
Actual
Performance
Actual LTIP
payable as a
%of total LTIP
opportunity
Relative TSR vs. FTSE 250, excluding investment trusts and
companies in the extractive industries
50% Median Straight-line
vesting
Upper quartile Below
Threshold
0%
Earnings Per Share (“EPS”) 50% 48.6p 54p 59.4p 32.13p 0%
The Committee reviewed the formulaic outcomes of the LTIP and chose not to use any discretion to amend the vesting outturn. Based on the
performance of the awards against their performance conditions, the awards granted under the 2020 LTIP should not vest.
Granting of awards under the LTIP in the nancial year ended 31 December 2022 (audited)
In line with the Company’s 2021 Directors’ Remuneration Policy, both Geoff Carter and Adam Westwood were granted awards (75% and 60%
of salary respectively) under the Company’s LTIP during the financial year ended 31 December 2022. The awards were granted in the form of
restricted shares awards (as conditional awards), and in line with the Remuneration Policy, the awards will vest after three years from the date
ofgrant, followed by an additional holding period of two years from the date of vesting.
Awards were made subject to the following underpins:
Maintaining a solvency ratio in excess of 140%
Achieving a Return of Tangible Equity in excess of 10%
No material regulatory censure
Overall Committee discretion
If the Company does not meet one or more of the underpins at the date of vesting, the Committee will review whether or not it would be
appropriate to reduce the number of shares, including to zero, that vest under the award. Vesting of awards will also be subject to the
Committee’s overarching discretion in order to ensure that outcomes reflect the underlying performance of the Company and the broader
stakeholder experience.
Details of the LTIP awards granted on 7 April 2022:
Executive Director Basis of award Face value
Shares over which
conditional awards
were granted
1
Performance
underpin
Period over which
underpin assessed
Geoff Carter 75% of salary £343,947 145,802 Subject to the underpins
detailed above
1 January 2022 to
31 December 2024
Adam Westwood 60% of salary £167,9 9 8 71,216 Subject to the underpins
detailed above
1 January 2022 to
31 December 2024
1 The number of shares granted was calculated on the average share price of the five working days immediately preceding the date of grant of £2.359 as conditional
awards.
External appointments
Neither of the Executive Directors currently holds a paid external
appointment. All appointments must first be agreed by the Board and
must not represent a conflict with their current role.
Payments to past directors and payments for loss of
office (audited)
As disclosed in the 2021 Annual Report and Accounts, Catherine Barton
resigned from the Board in November 2021 and a payment of £5,833
was made to her in the 2022 financial year in line with the three months’
notice period in her letter of appointment. No other payments were
made to past directors or in respect of loss of office during the year.
Sourcing of shares and dilution limits
The terms of the Group’s share plans set limits on the number of newly
issued shares that may be issued to satisfy awards. In accordance with
guidance from the Investment Association these limits restrict overall
dilution under all plans (the LTIP, the DBP, the SAYE Plan, the SIP and
any other employee share scheme adopted by the Group) to under 10%
of the Company’s issued share capital over a ten-year period.
Furthermore, the LTIP and DBP set a further limitation that not more
than 5% of the Company’s issued share capital may be issued in any
ten-year period on discretionary plans. As at 31 December 2022 Sabre
was operating within these limits.
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Sabre Insurance Group plc Annual Report and Accounts 2022
81
Vested share awards and outstanding share awards granted during the 2022 financial year (audited)
Details of awards granted during the year are detailed below.
Long Term Incentive Plan (“LTIP)
Director
Holding on 1
January
2022
Granted
during the
Year
Option price
(£)
Exercised
during the
year Lapsed
Market
price at
exercise
date (£)
Holding on
31 December
2022 Date of grant
Share price
on date of
grant (£) Vesting date
Gain on
vesting (£)
Geoff Carter 2019 183,575 0 n/a n/a 183,575 n/a 0 11 April
2019
2.894 n/a n/a
2020 193,819 0 n/a n/a 0 n/a 193,819 23 April
2020
2.804 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2022 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
2021 126,539 0 n/a n/a 0 n/a 126,539 21 May
2021
2.613 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2023 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
2022 0 145,802 n/a n/a 0 n/a 145,802 07 April
2022
2.359 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2024 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
Total 503,933 145,802 n/a n/a 183,575 n/a 466,160 n/a
Adam
Westwood
2019 86,388 0 n/a n/a 86,388 n/a 0 11 April
2019
2.894 n/a
2020 91,208 0 n/a n/a 0 n/a 91,208 23 April
2020
2.804 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2022 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
2021 59,548 0 n/a n/a 0 n/a 59,548 21 May
2021
2.613 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2023 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
2022 0 71,216 n/a n/a 0 n/a 71,216 7 April 2022 2.359 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2024 and the third anniversary of grant. An
additional two-year holding period applies to these awards, once vested.
These are conditional share awards.
n/a
Total 237,14 4 71,216 n/a n/a 86,388 n/a 221,972 n/a
Deferred Bonus Plan (“DBP”) – Granted related to the 2022 nancial year
Director
Number of shares
granted during the
year
Share price used at
date of grant
1
(£)
Face value of
award at grant
2
(£) Date of grant Release date
Geoff Carter 47,5 5 7 2.359 112,187 7 April 2022 7 April 2024
Adam Westwood 24,008 2.359 56,635 7 April 2022 7 April 2024
1 The share price of £2.359 represents the average share price of the five working days immediately prior to the date of the grant and the award is a conditional award.
2 Represents 50% of the 2021 STIP award that was deferred into shares.
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82
Save As You Earn (SAYE”) Plan
Director
Holding on 1
January
2022
Granted during
the
year
Option price
(£)
Exercised
during the
year Lapsed
Market
price at
exercise date
(£)
Holding as at
31 December
2022 Date of grant
Share price
on date of
grant (£)
Exercisable
period
Gain on
exercise (£)
Geoff Carter 2019 3,174 0 2.268 0 3,174 n/a 0 30 April 2019 2.660 1 July 2022 to 31 December 2022 0
2020 808 0 2.226 0 808 n/a 0 12 May 2020 2.840 1 July 2023 to 31 December 2023 n/a
2021 4,680 0 1.923 0 4,680 n/a 0 21 April 2021 2.690 1 July 2024 to 31 December 2024 n/a
2022 0 3,970 1.813 0 0 n/a 3,970 26 April 2022 2.11 1 July 2025 to 31 December 2025 n/a
Total 8,662 3,970 n/a 0 8,662 n/a 3,970 n/a
Adam Westwood
2019 0 0 n/a 0 0 n/a 0 n/a
2020 0 0 n/a 0 0 n/a 0 n/a
2021 9,360 0 1.923 0 9,360 n/a 0 21 April 2021 2.690 1 July 2024 to 31 December 2025 n/a
2022 0 0 n/a 0 0 n/a 0 n/a
Total 9,360 0 n/a 0 9,360 n/a 0 n/a
Share Incentive Plan (“SIP”)
Director
Purchased
during
the year
Granted during the year
in the form of matching
and dividend shares
Total gained
during the year
Exercised
during the
year Lapsed
Granted in
prior years
Holding as at
31 December
2022 Vesting date
Gain on
exercise
(£’000)
Geoff Carter 1,236 642 1,878 n/a n/a n/a 4,526 Shares can be exercised with effect from the third anniversary of their grant n/a
Adam Westwood 780 406 1,18 6 n/a n/a n/a 2,16 4 Shares can be exercised with effect from the third anniversary of their grant n/a
During the period between 31 December 2022 and 12 March 2023, being the latest practicable date prior to publication of this Annual Report, the following changes to the above table occurred:
Geoff Carter purchased an additional 294 shares under the Share Incentive Plan (‘SIP) and was awarded an additional 98 shares in the form of matching shares, taking the number of unvested shares not subject to
performance as at 12 March 2023 to 4,918.
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responsibilities statement
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83
Directors’ shareholdings and share interests (audited)
To further align Executive Directors with shareholders, Executive Directors are required to build up substantial interests in the Company.
Executive Directors are expected to build and hold a shareholding with a value of at least 200% of their base salary. To support the
implementation of this measure Executive Directors are required to retain 50% of any share awards vesting (after settling any tax liability) until
the 200% requirement is met. The Executive Directors have both met their respective shareholding requirements.
Post-cessation of employment, Executive Directors are expected to maintain a minimum shareholding of 200% of their base salary (or their
actual shareholding, if lower) for a period of two years. To enforce this requirement vested shares are held in a nominee account.
Shareholding requirements and the number of shares held by Directors during the year and as at 31 December 2022 are set out in the table below:
Director
Number of
unvested shares
subject to
performance/
underpins as at
31December 2022
Number of
unvested shares
not subject to
performance as at
31 December 2022
1
Number of shares
held under the
Deferred Bonus
Plan as at
31 December 2022
Number of shares
held as at
31 December 2022
Number of shares
held as at
31 December 2021
Shareholding
requirement as a %
of salary
Shareholding as a
% of salary
achieved at
31 December 2022
2
Current Directors
Geoff Carter 466,160 8,496 117,167 1,609,317 1,591,165 200% 373%
Adam Westwood 221,972 2,164 64,955 686,267 658,320 200% 261%
Andy Pomfret n/a n/a n/a 174,278 81,278 n/a n/a
Ian Clark n/a n/a n/a 303,006 303,006 n/a n/a
Karen Geary n/a n/a n/a 0 0 n/a n/a
Alison Morris n/a n/a n/a 9,282 n/a n/a n/a
Michael Koller n/a n/a n/a 0 0 n/a n/a
Rebecca Shelley n/a n/a n/a 17, 271 15,521 n/a n/a
1 These awards relate to share options and share awards under the Company’s SIP and SAYE Plans.
2 Calculated using a share price of £1.06 (as at 31 December 2022).
During the period between 31 December 2022 and 12 March 2023, being the latest practicable date prior to publication of this Annual Report,
the following changes to the above table occurred:
Geoff Carter purchased an additional 294 shares under the Share Incentive Plan (‘SIP) and was awarded an additional 98 shares in the form
ofmatching shares, taking the number of unvested shares not subject to performance as at 12 March 2023 to 4,918.
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responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
84
Company performance – relative total shareholder return (“TSR”)
The graph below shows Sabre’s relative TSR performance from Admission to 31 December 2022 against the TSR performance of the FTSE 250
Index (excluding investment trusts and companies in the extractive industries). This is a broad equity market index which the Committee
considers to be the most appropriate comparator.
TSR performance vs. FTSE 250 excluding investment trusts since IPO
11 Dec
2017
30
50
70
90
120
130
150
31 Mar
2018
31 Dec
2018
30 Sep
2018
30 Jun
2018
31 Mar
2019
31 Dec
2019
30 Sep
2019
30 Jun
2019
31 Mar
2020
31 Dec
2020
31 Mar
2021
31 Dec
2021
30 Sep
2021
30 Jun
2021
31 Mar
2022
31 Dec
2022
30 Sep
2022
30 Jun
2022
30 Sep
2020
30 Jun
2020
Sabre Insurance FTSE 250 (Excluding investment trusts)
Percentage change in remuneration of Directors and employees
The table below shows the percentage change in salary, taxable benefits and annual bonus for the Directors who served on the Board compared
to an average employee of the Company against the prior year for the financial years 2022 and 2021.
2021 to 2022 2020 to 2021 2019 to 2020
Salary/fees
Taxable
benets
Annual
bonus Salary/fees
Taxable
benets
Annual
bonus Salary/fees
Taxable
benets
Annual
bonus
Geoff Carter 3.3% 11.8% -100.0% 1.6% 34.2% -63.2% 3.2% 0% 0%
Adam Westwood 6.4% 25.1% -100.0% 1.6% 59.9% -71.0% 4.2% 0% 10 3 .1%
Andy Pomfret
1
3.3% n/a n/a 55.2% n/a n/a 38.1% n/a n/a
Ian Clark
2
11.0% n/a n/a 3.2% n/a n/a -11.6% n/a n/a
Karen Geary
3
6.7% n/a n/a 1371.7% n/a n/a n/a n/a n/a
Alison Morris
4
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Michael Koller
5
3.3% n/a n/a 200% n/a n/a n/a n/a n/a
Rebecca Shelley
6
2.5% n/a n/a 9.1% n/a n/a 4.8% n/a n/a
Average of all employees 0.3% 102.4% 0.3% 2.1% 8.1% -27.6% 2.2% -1.4% 15.4%
1 The increase in Andy Pomfrets salary from 2020 to 2021 is due to him completing a whole financial year in this position as Company Chair.
2 Changes in Ian Clark’s salary reflect him being appointed as Audit Committee Chair in January 2022 for an interim period, and stepping down with effect from April
2022 as the Non-executive Director responsible for employee engagement
3 Change in Karen Geary’s salary reflect her being appointed as the Non-executive Director responsible for employee engagement in April 2022. Karen Geary was
appointed to the Board during the year which ended on 31 December 2020, and the annualised basis of her salary change from 2020 to 2021, was 0%.
4 Alison Morris was appointed during the 2022 financial year, and therefore no figures for 2020 to 2021 are included. On an annualised basis, Alison Morris’ salary
changed by 0% between 2021 and 2022.
5 Michael Koller was appointed to the Board during the year which ended on 31 December 2020, and the annualised basis of his salary change from 2020 to 2021, was 0%.
6 The change in salary for Rebecca Shelley from 2020 to 2021 is due to her completing a whole financial year in the position as Senior Independent Director, which she
was appointed to in 2020.
Arrangements for the wider workforce
The Committee seeks to align the remuneration of the Executive
Directors and Senior Management with consistency in reward
practices throughout the Group.
During 2022, all employees received a salary at or above the National
Living Wage and were eligible to receive a performance-related bonus.
In addition to this, the Company paid a Christmas bonus to all
employees (apart from the Executive Directors), of net value of £1,000.
Further, to support employees in the current difficult external
environment, all employees, apart from the Executive Team, received
a cost of living payment of £800, which was paid over a period of five
months from October 2022. The Company maintained payment of the
Companys dividend in line with the Company’s Dividend Policy.
Chief Executive Officers single figure
ofremuneration
The following table shows the Chief Executive Officers remuneration
for current and prior years:
2022 (£) 2021 (£) 2020 (£) 2019 (£)
2018
(£)
2017
(£)
Single figure of
remuneration
496k 733k 1,110 k 821k 760k 251k
Annual bonus pay out (as
a % of maximum
opportunity)
0% 33.9% 62.2% 63.1% 73.0% n/a
LTIP vesting (as a % of
maximum opportunity)
0% 0% 50% n/a n/a n/a
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Sabre Insurance Group plc Annual Report and Accounts 2022
85
Chief Executive Officer’s ratio
The ratio compares the total remuneration of Geoff Carter, the Chief
Executive Officer, as set out in the Directors’ Remuneration Report,
against the remuneration of the median Full Time Equivalent (‘FTE’)
employee, as well as FTE employees in the lower and upper quartiles.
We will build up our reporting of these figures over time to cover a
ten-year rolling basis. The ratios were calculated using the Option A
methodology, which uses the pay and benefits of all UK FTE employees.
The Company has chosen Option A as it uses the full-time equivalent pay
and benefits for all UK employees during the year and is therefore a more
accurate representation of employee pay. The employee pay data used
was based on the total remuneration of all of Sabre’s full-time employees
as at 31 December 2022. The Chief Executive Officer’s pay is as per the
single total figure of remuneration for 2022, as disclosed earlier in this
report. Employee full-time equivalent salaries have been calculating by
grossing-up the salary and bonus payments received by employees by
the number of hours worked with reference to a 35-hour week.
Total Pay
Chief Executive
Ofcers total
pay
(£’000)
25th
percentile
50th
percentile
75th
percentile
2019
Pay ratio
821
33.3:1 19.2:1 12.3:1
Remuneration values 24,643 42,651 66,846
2020
Pay ratio
1,10 9
42.3:1 25.6:1 16.2:1
Remuneration values 26,19 6 43,273 68,283
2021
Pay ratio
733
23.9:1 16:1 10.6:1
Remuneration values 30,635 45,927 68,868
2022
Pay ratio
496
16.3:1 11.3:1 7.9:1
Remuneration values
27,9 05 40,306 57,552
Salary
Chief Executive
Ofcers salary
(£’000)
25th
percentile
50th
percentile
75th
percentile
2022
Pay ratio
454
18.4:1 12.6:1 8.9:1
Remuneration values 24,653 3 6 ,188 50,846
The Committee has considered the pay data and believes that the
median pay ratio is consistent with the pay, reward and progression
policies for the Company’s UK employees.
Relative importance of spend on pay
The following table illustrates total remuneration for all employees
compared to distributions to shareholders in respect of the last two
financial years.
Measure 2022 2021 Change
Total employee remuneration
1
£12.5m £12.3m £0.2m
Shareholder distributions £30.1m £38.3m
2
8.2m)
1 Total employee cost.
2 Includes dividends paid during the financial year which ended on 31 December
2021.
Implementation of the Policy in 2023
The below sets out how the Committee intends to operate the
Remuneration Policy for the year ending 31 December 2023.
Salaries
The Executive Directors’ salaries were reviewed during the year. The
Committee decided to increase Geoff Carter and Adam Westwood’s
salaries by 5.5%, which was less than the average employee increase.
The average salary increase for employees was 6.04%, with a range
between 5.2% and 8.2%, ensuring the lowest paid employees
received the greatest increase.
The revised salaries, with effect from 1 April 2023, are £483,713.28 for
Geoff Carter, and £295,400 for Adam Westwood. The Committee was
comfortable setting base salaries at these levels given the size of the
roles and the experience and calibre of the individuals, took into account
the experience of employees across the Group, and were conscious of
the cost of living crisis and increase in inflation. As per the Policy, the
Committee will continue to review salaries on an annual basis and may
make further increases in future years, in line with the Policy.
Salary as at
1 April 2023
Salary as at
31 December 2022 Increase
Geoff Carter £483,713 £458,496 5.5%
Adam Westwood £295,400 £280,000 5.5%
Benets
The Executive Directors will continue to receive life insurance and
private medical care.
Pension
Pension contributions made to the Executive Directors are aligned with
the average employee rate of 7.5% of salary as at effect from 1 January
2022, and this rate will be used for pension contributions to the
Executive Directors in 2023.
Short Term Incentive Plan (STIP)
In line with the Directors’ Remuneration Policy, the Committee will use
a bonus pool funding and allocation approach for awards in 2023 for
the STIP. The Committee reviewed the bonus pool structure for 2023
and felt that, in recognition of the structural industry changes as a
result of COVID-19 and subsequent high inflation period, some
amendments were required to the way the bonus pool is structured
toensure the STIP remained a core tool to support the motivation and
retention of our Executive Directors going forward.
In line with the Policy, the pool will continue to be calculated as a
percentage of PBT, subject to a minimum level of PBT being achieved.
For 2023, if 10% Return On Tangible Equity (‘ROTE’) is achieved, a
pool of 1.5% of PBT will be available for the Executive Directors. The
maximum bonus opportunity for Executive Directors will remain 150%
of salary. There will be a second pool for Senior Managers separate to
the pool available to Executive Directors.
The Executive Directors will be eligible to receive STIP awards of up
to150% of salary in 2023. Awards will be subject to the following
performance measures:
Performance measure Weighting
Profit Before Tax 70%
Non-financial Company-wide objectives, including strategy,
customer and partners, ESG, People, development of business,
risk and compliance
15%
Non-financial objectives relating specifically to the individual 15%
Specific performance targets will not be disclosed at this time due to
the commercially sensitive nature of the objectives. Full retrospective
disclosure of the targets and performance against them, will be
included in next years Annual Report on Directors’ Remuneration.
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Sabre Insurance Group plc Annual Report and Accounts 2022
86
Long Term Incentive Plan (”LTIP”)
LTIP awards in 2023 will be made under the Companys LTIP in the
form of restricted shares. When considering grant levels each year the
Committee will take into account share price performance over the
preceding year. The Committee currently intends to award the Chief
Executive Officer an award equivalent to 75% of salary and the Chief
Financial Officer will receive an award equivalent to 60% of salary. In
line with the Policy awards these will vest after three years, with an
additional holding period of two years.
Awards granted in 2023 will be subject to the following underpins:
maintaining a solvency ratio in excess of 140%
achieving a return on tangible equity in excess of 10%
no material regulatory censure – relating to the Executive Director’s
time in office
overall Committee discretion
If the Company does not meet one or more of the underpins at the
date of vesting the Committee will review whether or not it was
appropriate to reduce the number of shares, including to zero, that vest
under the award. Vesting of awards will also be subject to the
Committee’s overarching discretion in order to ensure that outcomes
reflect the underlying performance of the Company and the broader
stakeholder experience.
Chair and Non-executive Director Fees
The range of salary increases for employees was between 5.2% and
8.2%, and the average salary increase was 6.04%. The Committee
reviewed the Chairs fee in light of the time commitment required of
the role and agreed to increase the fees by 5.5%, which was less than
the average employee increase, with effect 1 April 2023. The Chair,
Chief Executive Officer and Chief Financial Officer reviewed the
Non-executive Directors, Committee Chair and Senior Independent
Director’s fees in light of the time commitment required of the role and
agreed to increase the Non-executive Directors’ fees by 5.5%, which
was less than the average employee increase, with effect 1 April 2023.
The fees which will apply in 2023 are as follows:
Role
Fee (£)
2023
Fee (£)
2022
Chair fee (all-inclusive fee) 164,580 156,000
Non-executive Director base fee 65,832 62,400
Senior Independent Director fee 10,972 10,400
Committee Chair fee 10,972 10,400
Designated Employee
Representative Non-executive
Director
3,291 3,120
Committee member fee n/a n/a
The Chair and Non-executive Directors’ fees for the financial year
ended 31 December 2023 are therefore:
Director Reason for fee
Total annual
fee (£)
Andy Pomfret Company Chair 164,580
Ian Clark Non-executive Director
Risk Committee Chair
76,804
Karen Geary Non-executive Director
Designated Non-executive Director for
Employee Engagement
69,123
Alison Morris Non-executive Director
Audit Committee Chair
76,804
Michael Koller Non-executive Director 65,832
Rebecca Shelley Non-executive Director
Senior Independent Director
Remuneration Committee Chair
87,7 76
REBECCA SHELLEY
Chair of the Remuneration Committee on behalf of the Board
13 March 2023
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87
Company Financial Statements contained in this Annual Report.
Directors
The Directors who served throughout the year are as follows:
Executive Directors
Geoff Carter – Chief Executive Officer
Adam Westwood – Chief Financial Officer
Non-executive Directors
Andy Pomfret – Chair
Ian Clark
Karen Geary
Michael Koller
Alison Morris
Rebecca Shelley
The members of the Board of Directors, their biographical details
andthe dates of their appointment are set out on pages 53 to 55 of
this AnnualReport.
Appointment and replacement of Directors
The appointment and replacement of Directors is governed by the
Group’s Articles, the Companies Act 2006 (the “Companies Act”) and
related legislation. The Articles provide that Directors may be appointed
by ordinary resolution of the shareholders or by the Board. The Board
has decided to comply with best corporate governance practice, and all
Directors will seek re-election at each Annual General Meeting. In
addition to any powers of removal conferred by the Companies Act,
theGroup may by special resolution remove any Director before the
expiration of their period of office.
The Nomination and Governance Committee is responsible for
overseeing the recruitment of Directors and recommending
appointments for approval by the Board of Directors. Further details
regarding the appointment and replacement of Directors are set out
inthe Governance Report on pages 56 to 61 and the Nomination and
Governance Committee Report on pages 67 to 68.
Executive Directors’ service contracts
Executive Directors are employed under the terms of their service
contracts. Details of the effective dates of the service contracts for the
current Executive Directors as well as their compensation are set out
in the Annual Report on Directors’ Remuneration on pages 78 to 87
and the contracts are available for inspection by shareholders at the
The Directors’ Report for the period ended 31 December 2022 (the
“2022 financial year”) comprises the report set out on pages 88 to 90
and the Directors’ andOfficers’ Responsibility Statement on page 91
together with thefollowing sections of this Annual Report:
The Strategic Report
Pages 2 to 50 which comprise:
the Chair’s Letter on page 6
the Chief Executive Officer’s Review on pages 10 to 12
the Principal Risks and Uncertainties on pages 19 to 28
the Viability Statement on pages 29 to 30
the Chief Financial Officer’s Review on pages 35 to 37
the Responsibility and Sustainability Report on pages 38 to 49
The Governance Report
Pages 51 to 91 which comprise:
the Chair’s Governance Letter on page 52
the Biographies pages 53 to 55
the Governance Report on pages 56 to 61
the Committee Report on pages 62 to 87
the Directors’ Report on pages 88 to 90
the Statement of directors’ responsibilities on page 91
Corporate structure and principal activity
The Group’s principal and only trading subsidiary is a motor insurance
underwriter. Sabre Insurance Group plc is a public company limited by
shares and was incorporated in England and Wales on 21September
2017 with registered number 10974661. Its registered office and
principal place of business is at Sabre House, 150 South Street,
Dorking, Surrey RH4 2YY. The Group has no branches.
The Group is the holding company of the Sabre group of companies.
Details of the Group’s subsidiaries are set out in Note 2 of the Parent
Directors’ Report
Group’s registered office and at the Group’s Annual General Meeting.
Non-executive Director appointments
Non-executive Directors are appointed pursuant to a letter of
appointment. Such appointments are for an initial period of three
years,which is renewable. A Non-executive Director’s appointment is
terminable by the Non-executive Director or the Group by giving written
notice. Details of the effective dates of the letters of appointment for
the current Non-executive Directors as well as their fees are set out in
the Annual Report on Directors’ Remuneration on pages 78 to 87 of the
Annual Report and the terms of appointment are available for inspection
by shareholders at the Group’s registered office and at the Group’s
Annual General Meeting.
Powers
Subject to the provisions of the Articles, the Companies Act and
related legislation, and any directions given by special resolution of
theshareholders, the business of the Group shall be managed by
theBoard, which may exercise all the powers of the Group including
the Group’s powers to borrow money and to issue new shares.
Directors’ indemnities
Each of the Group’s Directors has been granted a qualifying third-party
indemnity pursuant to which the Group agrees to indemnify the
Directors against any liabilities that they may incur as a result of their
office as Director, to the extent permitted by the Companies Act.
Directors’ and Ofcers’ liability insurance
Directors’ and Officers’ liability insurance is provided for all Directors
ofthe Group.
Compensation for loss of ofce
The Group does not have arrangements with any Director that would
provide compensation for loss of office or employment resulting from
atakeover, except that provisions of the Group’s share plans may cause
options and awards granted under such plans to vest on a takeover.
Further information is provided in the Annual Report on Directors’
Remuneration on pages 78 to 87 of this Annual Report.
No such payments were made during the financial year ended
31December 2022.
Articles of Association
The Group may alter its Articles by special resolution of the
shareholders at a general meeting of the Group. The Articles are
available on the Group’s website at www.sabreplc.co.uk
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
88
As at the date of this report, no shares have been issued under these
authorities. These authorities will expire at the conclusion of the 2023
Annual General Meeting and, accordingly, the Board is proposing to
renew these authorities at thatAnnual General Meeting.
The Group was granted authority by its shareholders at the Meeting to
purchase up to the lower of (i) 25,000,000 Ordinary Shares and (ii) 10%
of the Company’s maximum Ordinary Share capital immediately
following the listing. This authority will expire at the conclusion of the
2023 Annual General Meeting. During 2022, no shares were bought
under this authority. The Board is proposing to renew this authority at
the 2023 Annual General Meeting, however the Company does not
have any current intention to purchase any of its own Ordinary Shares.
Directors’ interests in shares
The Directors who held office during the 2022 financial year had the
following interests (including family interests) in the Ordinary Shares
ofthe Company:
Name of Director
31 December
2022
31 December
2021
Geoff Carter 1,609,317 1,591,165
Ian Clark 303,006 303,006
Karen Geary 0 0
Michael Koller 0 0
Alison Morris 9,282 n/a
Andy Pomfret 174,278 81,278
Rebecca Shelley 17,271 15,521
Adam Westwood 686,267 658,320
The Directors, as employees and potential beneficiaries, have an
interest in 880,914 shares held by the Sabre Insurance Group
Employee Benefit Trust (offshore) and the Group’s SIP Trust (onshore)
as at 31December 2022. As at 31 December 2022, the Sabre
Insurance Group Employee Benefit Trust held 1,431,576 Ordinary
Shares and the Group’s SIP Trust held 301,608 Ordinary Shares. It is
anticipated that these shares, which have not already been allocated,
will be used to satisfy awards made under the Group’s employee
incentive plans. Further details regarding the Group’s employee
incentive plans can be found in the Annual Report on Directors’
Remuneration on pages 78 to 87.
There were no changes in the interests of Directors between
31December 2022 and 13 March 2023 (the latest practical date,
priorto the release of this Annual Report).
Shares
Share capital
The Group has one class of ordinary voting shares in issue.
As at 31 December 2022, the issued share capital of the Group
comprised 250,000,000 Ordinary Shares of £0.001 each, all of which
are fully paid (“Ordinary Shares”).
Rights and obligations attaching to shares
The rights and obligations attached to the Group’s shares are
governedby the Articles and prevailing legislation. Each Ordinary Share
ranks equally and carries the same rights to receive all shareholder
documentation (including notices of general meetings), attend, speak
and vote at general meetings, and participate in any distribution of
income or capital. All shareholders entitled to attend and vote at a
general meeting may appoint a proxy or proxies to attend, speak and
vote in their place. None of the Ordinary Shares carry any special rights
with regard to control of the Group and there are no specific restrictions
on voting rights, save where the Group is legally entitled to impose
such restrictions (for example, where the shareholder is in default of
anobligation to the Group). Major shareholders have the same voting
rights per share as all other shareholders.
Restrictions on transfer
There are no restrictions on the transfer or holding of shares in the
Company other than (i) as set out in the Articles and (ii) certain
restrictions which may from time to time be imposed by laws and
regulations and pursuant to the Listing Rules of the Financial Conduct
Authority (the “Listing Rules”) whereby Directors and certain officers
and employees of the Group require approval to deal in the Ordinary
Shares in accordance with the Group’s share dealing policies and the
Market Abuse Regulation.
Power to allot and purchase shares
By a resolution passed at the Annual General Meeting (the “Meeting”)
of the Group on 25 May 2022, the Group was granted a general
authority to allot Ordinary Shares up to the lower of (i) an aggregate
nominal amount of £83,333 and (ii) 33.33% of the Group’s Ordinary
Share capital. At the Meeting, the Group was also granted authority to
allot shares up to the lower of (i) an aggregate nominal amount of
£166,666 and (ii) 66.67% of the Group’s Ordinary Share capital by way
of a rights issue to ordinary shareholders in proportion to their existing
shareholdings (with such amount to be reduced to the extent that the
general authority is utilised (if any)).
The Company also received authority to allot shares for cash on a
non-pre-emptive basis up to the lower of (i) an aggregate nominal
amount of £12,500 and (ii) 5% of the Group’s Ordinary Share capital.
Major interests in shares
Information on major interests in shares notified to the Company under
the Disclosure Guidance and Transparency Rules (“DTRs”) of the UK
Listing Authority is published via a Regulatory Information Service and
on the Group’s website www.sabreplc.co.uk/investors/regulatory-news.
At 31 December 2022, the Company had been notified, in accordance
with Chapter 5 of the DTRs, of the following voting rights in respect of
3% or more of the issued share capital of the Company.
Company name
Current
shareholdings %
Aberforth Partners LLP 12,915,737 5.17
Aviva plc and its subsidiaries 24,947,347 9.98
Axa Investment Managers 12,291,762 4.92
Companies owned by Old Mutual plc 12,870,464 5.14
FMR LLC 12,546,431 5.01
Mawer Investment Management Limited 12,793,280 5.11
M&G plc 11,867,810 4.74
Ninety One UK Limited 12,493,014 5.00
Wellington Management Group LLP 11,9 83,3 5 0 4.79
Unicorn Asset Management Limited 12,050,000 4.82
During the period between 31 December 2022 and 13 March 2023,
being the latest practicable date prior to publication of this Annual
Report, the following changes to the above table occurred:
Date of
transaction Shareholder
Number of
Ordinary
Shares
% of voting
rights Change
11/01/2023 Gresham House Asset
Management Ltd
12,704,600 5.08% Increase
Results and dividends
The audited accounts for the year ended 31 December 2022 are set
out on pages 92 to 172. The Group profit after tax for the year was
£10.1m (2021: £30.1m).
The Directors recommend a final dividend of 0p (2021: 4.7p) and a
special dividend of 1.7p (2021: 4.6p).
The total dividend for the 2022 financial year, including the proposed
special dividend and interim dividend paid in 2022 is 4.5p (2021: 13.0p).
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
89
Annual General Meeting
The Annual General Meeting is the Group’s principal forum for
communication with shareholders and the Directors will be available
toanswer shareholders’ questions at the meeting.
The 2023 Annual General Meeting will be held at 9:30am on Thursday
25 May 2023. Full details about the 2023 Annual General Meeting,
including the venue and explanatory notes, will be contained in the
Notice of Annual General Meeting which will be sent to shareholders in
a separate document. The Notice of Annual General Meeting will set
out the resolutions to be proposed at the Annual General Meeting and
an explanation of each resolution. All documents relating to the Annual
General Meeting will be available on the Group’s website at
www.sabreplc.co.uk/investors/annual-general-meeting
Independent auditor
The auditor of the Group, PwC, has indicated their willingness to
continue in office, and resolutions to re-appoint PwC and to fix their
remuneration will be proposed at the 2023 Annual General Meeting.
Statement of disclosure of information to the auditor
Each of the Directors who held office at the date of the approval of
thisAnnual Report confirms that, so far as they are each aware, there
is no relevant audit information of which the Company’s auditors are
unaware, and each Director has taken all the steps that he or she
ought to have taken as a Director in order to make himself or herself
aware of any relevant audit information and to establish that the
Companys auditors are aware of that information. This confirmation
isgiven and should be interpreted in accordance with the provisions
ofsection 418 of the Companies Act.
Requirements of Listing Rule 9.8.4R
Information to be included in the Annual Report and Accounts under
Listing Rule 9.8.4R can be found as follows:
Listing Rule Description Page
9.8.4 (4) R Details of long term incentive schemes required by Listing
Rule 9.4.3
82
9.8.4 (12) R
9.8.4 (13) R
Details of dividends waived 151
Significant agreements and change of control
The Group is not a party to any material agreements that would take
effect, alter or terminate upon a change of control of the Group.
Employees and communities
Fewer than 250 individuals were employed by the Group in each week
during the financial year to which this Annual Report relates (further
details regarding the Group’s employees are set out in the Responsibility
and Sustainability section of this report on pages 38 to 49 of this
AnnualReport).
Environment and emissions
Information on the Group’s greenhouse gas emissions is set out in
theResponsibility and Sustainability section on pages 38 to 49 of this
Annual Report. Adam Westwood is the Executive Director responsible
for Environmental, Social and Governance issues.
Research and development
The Group does not undertake any material activities in the field of
research and development.
Financial instruments and risk management
The Group’s financial risk management objective and policies,
including information about its use of financial instruments, are
contained in Notes 2 – 4 of the Consolidated Financial Statements
onpages 109 to 137 of this Annual Report.
Events after the balance sheet date
Refer to Note 22 of the Consolidated Financial Statements on page
162 for information on events after the balance sheet date.
Charitable and political donations
The donations made by the Group to the charities referred to on page
43 of this Annual Report amounted, in aggregate, to £23,713 (2021:
£22,180). The Group made no political donations during the year
(2021:£0).
Supplier payment policy
The Group’s policy is to agree payment terms with suppliers when
entering into each transaction to ensure that suppliers are made aware
of the terms of payment and abide by the terms of payment. Trade
creditors of the Group (consolidated) at 31 December 2022 were
6days (2021: 7 days) based on the average daily amount invoiced
bysuppliers during the year.
Going concern
The Board has considered the business activities of the Group and the
factors likely to affect its future performance as well as the Group’s
principal risks and uncertainties, including the Directors’ statement on
the viability of the Group over a three-year period which is set out in
the Strategic Report on page 29 of this Annual Report. On the basis
ofthese considerations, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operation for
atleast the next 12 months to 31 March 2024 and that therefore it
isappropriate to adopt a going concern basis for the preparation of
thefinancial statements.
By order of the Board
ANNEKA KINGAN
Company Secretary
13 March 2023
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors Report Directors’ and Ofcers’
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
90
Directors’ confirmations
Each of the directors, whose names and functions are listed on
pages53 and 55 of this Annual Report confirm that, to the best
oftheirknowledge:
the Group and Company financial statements, which have been
prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities and
financial position of the Group and Company, and of the profit of
theGroup; and
the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that it faces.
This Responsibility Statement was approved by the Board of Directors
on 13 March 2023 and is signed on its behalf by:
GEOFF CARTER
Chief Executive Officer
13 March 2023
ADAM WESTWOOD
Chief Financial Officer
13 March 2023
The directors are responsible for preparing the Annual Report and
Accounts 2022 and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have prepared the
Group and the Company financial statements in accordance with
UK-adopted international accounting standards.
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Company and of the profit or
loss of the Group for that period. In preparing the financial statements,
the directors are required to:
select suitable accounting policies and then apply them consistently;
state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
make judgements and accounting estimates that are reasonable and
prudent; and
prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the group and company will
continue in business.
The directors are responsible for safeguarding the assets of the Group
and Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are also responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable them
to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the
Group’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Statement of directors’ responsibilities
in respect of the financial statements
Strategic Report Governance Financials
Chair’s Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Directors and Ofcers
responsibilities statement
Sabre Insurance Group plc Annual Report and Accounts 2022
91
93 Independent Auditor’s Report
100 Consolidated Profit or Loss Account
101 Consolidated Statement of Comprehensive Income
102 Consolidated Statement of Financial Position
103 Consolidated Statement of Changes in Equity
104 Consolidated Statement of Cash Flows
105 Notes to the Consolidated Financial Statements
163 Parent Company Statement of Financial Position
164 Parent Company Statement of Changes in Equity
165 Parent Company Statement of Cash Flows
166 Notes to the Parent Company Financial Statements
170 Financial Reconciliations
173 Shareholder Information
Financial
Statements
Primary statements
The primary statements are included at the
beginning of the annual financial statements
and include note references to underlying
detailed notes.
Notes to the financial statements
The notes to the financial statements
consist of insurance-specific, financial
instrument-specific and risk management
notes first, followed by less significant
notes thereafter.
How to navigate the annual
financial statements
ACCOUNTING POLICIES
The principal accounting policies applied
in the preparation of the consolidated and
Company financial statements are
included in the specific notes to which
they relate and are indicated by a blue
border and headings on a shaded blue
background.
CRITICAL ACCOUNTING ESTIMATES
AND JUDGEMENTS
The areas involving a higher degree of
judgement or complexity, or areas where
assumptions and estimates are significant
to the consolidated and Company financial
statements, are included in the specific
notes to which they relate and are indicated
by a red border and headings on a shaded
red background.
RISK MANAGEMENT
Risk management disclosures are
indicated by a purple border and headings,
with a shaded purple background.
Sabre Insurance Group plc Annual Report and Accounts 2022
92
Strategic Report Governance Financials
Independent auditors’ report to the
members of Sabre Insurance Group plc
Report on the audit of the financial statements
Opinion
In our opinion, Sabre Insurance Group plc’s group financial statements and company financial statements (the “financial statements”):
give a true and fair view of the state of the group’s and of the company’s affairs as at 31December2022 and of the group’s profit and the group’s and company’s
cash flows for the year then ended;
have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies
Act 2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Consolidated and Parent
Company Statements of Financial Position as at 31December2022; the Consolidated Profit or Loss Account and Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Company Statements of Changes in Equity, and the Consolidated and Parent Company Statements of Cash Flows for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are
further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRCs Ethical Standard were not provided.
Other than those disclosed in Note 8.4, we have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Our audit approach
Context
In addition to forming this opinion, in this report we have also provided information on how we approached our first year of audit, and details of the significant
discussions that we had with the Audit Committee.
Overview
Audit scope
Our audit scope has been determined to provide coverage of all material financial statement line items; and
In designing our audit, we have considered the impacts that climate change could have on the Group, including the physical and transitional risks which could
arise. In particular, we have assessed the impacts on reporting of the commitments related to climate change which the Group has made.
Key audit matters
Valuation of the provision for gross claims incurred but not reported (‘IBNR’) and gross claims incurred but not enough reported (‘IBNER’) (together ‘IBNR’) reserves (group)
Valuation of Investment in Subsidiaries (parent)
Sabre Insurance Group plc Annual Report and Accounts 2022
93
Strategic Report Governance Financial s
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Materiality
Overall group materiality: £1.65m based on 5% of the three year average group profit before tax.
Overall company materiality: £5.8m based on 1% of net assets.
Performance materiality: £1.24m (group) and £4.4m (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Key audit matter How our audit addressed the key audit matter
Valuation of the provision for gross claims incurred but not reported (‘IBNR’) and gross
claims incurred but not enough reported (‘IBNER) (together ‘IBNR’) reserves (group)
Refer to Note 3 Insurance Liabilities and Reinsurance Assets, specifically the accounting policy
and Note 3.1, of the Consolidated financial statements.
The valuation of IBNR reserves involves a significant degree of judgement. The liabilities are
based on the estimated ultimate cost of all claims incurred but not settled at 31 December 2022,
whether reported or not, together with the related claims handling costs. If the case estimates
are initially held in excess of a best estimate, this will result in a negative IBNER.
A range of methods may be used to determine these provisions. Underlying these methods are
a number of explicit or implicit assumptions relating to the expected settlement amount and
settlement patterns of claims. This includes assumptions relating to the settlement of personal
injury lump sum compensation amounts.
Additionally, IBNR reserves will be affected by the level of inflation, both future and current, as
claims are settled. General inflation is currently higher than it has been for several years and has
impacted claims settlements through higher costs of vehicle parts and replacement vehicles.
Claims settlements are also likely to be impacted by future inflation particularly through higher
costs of care for injury associated claims.
In performing our audit work over the valuation of claims IBNR reserves we have
used actuarial specialists as part of our team to conduct elements of the testing.
Our procedures included:
Understanding management's process and controls related to claims IBNR
reserves;
Testing the underlying data to source documentation on a sample basis;
Developing independent point estimates for certain larger or higher risk classes
as at 30 September 2022 and performing roll-forward testing to 31 December
2022;
Performing a methodology and assumptions review of the Periodic Payment
Order ('PPO') reserves;
For inflation, testing management's assessment of future inflation within the
claims IBNR reserves by comparing to our own independent estimate; and
Assessing the disclosures in the financial statements.
Based on the work performed and evidence obtained, we consider the
methodology and assumptions used to calculate the claims IBNR reserves to be
appropriate.
Valuation of Investment in Subsidiary undertakings (parent)
Refer to Note 2.1 Investment in subsidiary undertakings of the Parent Company financial
statements.
In the Company's statement of financial position, investment in subsidiary undertakings are
reported at cost less any impairment. The investment in subsidiary undertakings is the largest
asset on the parent company's statement of financial position. The impairment analysis involves
a significant degree of judgement.
In respect to the carrying value of investment in subsidiary undertakings our
procedures included:
Assessing investment in subsidiary undertakings for indication of impairment
considering our understanding of the business;
Challenging and testing management's valuation of the subsidiary undertakings
including reviewing the appropriateness of the assumptions, sensitivity analysis,
and testing the underlying source data used in management's valuation; and
Assessing the disclosures in the financial statements.
Based on the work performed and the evidence obtained, we consider the
carrying value of investment in subsidiary undertakings to be appropriate.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Sabre Insurance Group plc Annual Report and Accounts 2022
94
Strategic Report Governance Financial s
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole. Based on the
output of our risk assessment, along with our understanding of the Sabre Insurance Group structure, we performed a full scope audit over Sabre Insurance
Company Limited.
The impact of climate risk on our audit
We have made enquiries of management in order to understand the extent of the impact of climate change risks and the commitments made by the Group in the
Group’s financial statements. As part of this, we have reviewed management's assessment of climate risk. We have also made enquiries to understand, and
performed a risk assessment in respect of, the commitments made by the Group and how these may affect the financial statements and the audit procedures that
we perform. We have assessed the risks of material misstatement to the financial statements as a result of climate change and concluded that for the year ended
31 December 2022, the main audit risks are related to consistency of disclosures included within the Annual Report and ‘other information’ including the Task Force
on Climate-related Financial Disclosure ('TCFD') disclosures. As a result of this assessment, we concluded that there was no impact on our key audit matters.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative
considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line
items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group Financial statements - company
Overall
materiality
£1.65m. £5.8m.
How we
determined it
5% of the three year average group profit before tax 1% of net assets
Rationale for
benchmark
applied
In determining our materiality, we considered financial metrics which we believed to be relevant, and
concluded, consistent with prior year, that Group profit before tax was the most relevant benchmark.
For the year ended 31 December 2022, we have determined that a 3-year average of this metric is
most appropriate as it normalises the impact of one off events such as the current year inflation shock
and provides more consistency.
In determining our materiality, we considered financial
metrics which we believed to be relevant and
concluded that net assets was the most appropriate
benchmark.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The group consists primarily of one
component, Sabre Insurance Company Limited to which we allocated materiality of £1,649,549.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £1.24m
for the group financial statements and £4.4m for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the
effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £82,560 (group audit) and £291,000 (company
audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Sabre Insurance Group plc Annual Report and Accounts 2022
95
Strategic Report Governance Financial s
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern basis of accounting included:
Obtaining the Directors’ Going Concern assessment and challenged the rationale for the downside scenarios adopted and material assumptions made using our
knowledge of Sabre’s business performance, review of regulatory correspondence and obtaining further corroborating evidence;
Considered management's assessment of the regulatory Solvency coverage and liquidity position; and
Considered information obtained during the course of the audit and publicly available market information to identify any evidence that would contradict
management’s assessment of going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast
significant doubt on the group's and the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's ability to continue as
a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are
responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our
opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an
apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' Report for the year ended
31December2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material
misstatements in the Strategic report and Directors' Report.
Directors' Remuneration
In our opinion, the part of the Annual Report on Directors' Remuneration to be audited has been properly prepared in accordance with the Companies Act 2006.
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Financial reconciliations Shareholder information Directors, Advisers and
other information
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance
statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities
with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially
consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these
are being managed or mitigated;
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing
them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least twelve months from
the date of approval of the financial statements;
The directors’ explanation as to their assessment of the group's and companys prospects, the period this assessment covers and why the period is appropriate;
and
The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in scope than an audit and only consisted
of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the
UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the
group and company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is
materially consistent with the financial statements and our knowledge obtained during the audit:
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for
the members to assess the group’s and company's position, performance, business model and strategy;
The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the companys compliance with the Code does not
properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
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Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the nancial statements
As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for
such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the
company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the nancial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to regulatory
principles, such as those governed by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial
statements such as the Companys Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal risks were related to management bias in accounting estimates and judgemental areas
of the financial statements as shown in the 'Key Audit Matters'. Audit procedures performed by the engagement team included:
Discussions with the Board, management, and Internal Audit function including consideration of known or suspected instances of non-compliance with laws and
regulation and fraud;
Evaluation and testing of the operating effectiveness of managements controls designed to prevent and detect irregularities;
Reviewing relevant meeting minutes including those of the Board of Directors, Audit, Risk, Nomination and Remuneration Committees;
Identifying and testing journal entries based on risk criteria;
Challenging assumptions and judgements made by management in their significant accounting estimates, for example, in relation to the valuation of the provision
for gross claims incurred but not reported and gross claims incurred but not enough reported (‘IBNR’) reserves, and the investment in subsidiary;
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and
Attendance at Audit Committee meetings.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and
regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
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statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically
involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on
their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not obtained all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the company financial statements and the part of the Annual Report on Directors' Remuneration to be audited are not in agreement with the accounting records
and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 25May2022 to audit the financial statements for the year ended
31December2022 and subsequent financial periods. This is therefore our first year of uninterrupted engagement.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form part of the
ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory
Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using the single electronic
format specified in the ESEF RTS.
PHILIP WATSON SENIOR STATUTORY AUDITOR
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
13March2023
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Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
2022 2021
Notes £’k £’k
Gross written premium 19 171,257 169,322
Less: Reinsurance premium ceded (26,456) (21,233)
Net written premium 144,801 148,089
Less: Change in unearned premium reserve
Gross amount 3.1.1 6,918 (3,426)
Reinsurers’ share 3.1.1 1,499 779
Net earned premium 153,218 145,442
Interest income on financial assets using effective interest rate method 4.8 1,374 1,210
Net fair value gains/(losses) on derecognition of financial assets measured at fair value through OCI 22 (16)
Instalment income 3,300 3,924
Other operating income 7 1,784 2,098
Total income 159,698 152,658
Insurance claims 3.4 (125,893) (104,984)
Insurance claims recoverable from reinsurers 3.4 13,094 23,969
Net insurance claims (112,799) (81,015)
Finance costs 5.2 (5) (16)
Commission expenses (12,942) (12,942)
Operating expenses 8 (21,202) (21,486)
Total expenses (34,149) (34,444)
Profit before tax 12,750 37,199
Tax charge 10 (2,643) (7,059)
Profit for the year attributable to ordinary shareholders 10,107 30,140
Basic earnings per share (pence per share) 20 4.06 12.09
Diluted earnings per share (pence per share) 20 4.03 11.98
The attached notes on pages 105 to 162 form an integral part of these financial statements.
Consolidated Profit or Loss Account
for the year ended 31 December 2022
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other information
Governance Financials
2022 2021
Notes £’k £’k
Profit for the year attributable to ordinary shareholders 10,107 30,140
Items that are or may be reclassified subsequently to profit or loss
Fair value losses on debt securities 4.9 (14,207) (5,658)
Realised (gains)/losses transferred to profit or loss account (22) 16
Tax credit 3,563 1,069
Total other comprehensive loss for the year (10,666) (4,573)
Total comprehensive (loss)/income for the year attributable to ordinary shareholders (559) 25,567
The attached notes on pages 105 to 162 form an integral part of these financial statements.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
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Financial reconciliations Shareholder information Directors, Advisers and
other information
Governance Financials
2022 2021
Notes £’k £’k
Assets
Goodwill 14 156,279 156,279
Property, plant and equipment 9.1 3,996 4,066
Right-of-use asset 9.2 187
Reinsurance assets 3.1 116,526 112,312
Deferred tax assets 11 4,384 820
Deferred acquisition costs 3.1.2 13,354 13,791
Insurance receivables 3.2 31,427 38,003
Loans and other receivables 4.4 7 74
Current tax assets 1,255
Prepayments, accrued income and other assets 13 1,278 821
Financial investments 4.1 229,158 234,667
Cash and cash equivalents 4.5 18,502 30,611
Total assets 576,166 591,631
Equity
Issued share capital 15 250 250
Own shares (2,810) (2,257)
Merger reserve 48,525 48,525
FVOCI reserve (13,029) (2,363)
Revaluation reserve 831 831
Share-based payments reserve 2,407 1,841
Retained earnings 186,322 205,900
Total equity 222,496 252,727
Liabilities
Outstanding claims 3.1 257,443 232,516
Unearned premium reserve 3.1 83,858 90,776
Lease liability 5.1 193
Insurance payables 3.3 5,981 7,115
Trade and other payables 5.3 5,005 5,831
Current tax liabilities 580
Accruals 1,383 1,893
Total liabilities 353,670 338,904
Total equity and liabilities 576,166 591,631
The attached notes on pages 105 to 162 form an integral part of these financial statements.
Consolidated Statement of Financial Position
as at 31 December 2022
The financial statements were approved by the
Board of Directors and authorised for issue on
13March 2023.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
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other information
Governance Financials
2022 2021
Notes £’k £’k
ORDINARY SHAREHOLDERS’ EQUITY – at 1 January 15 250 250
At 31 December 250 250
OWN SHARES – at 1 January 16 (2,257) (1,494)
Net movement in own shares (553) (763)
At 31 December (2,810) (2,257)
MERGER RESERVE – at 1 January 17 48,525 48,525
At 31 December 48,525 48,525
FVOCI RESERVE – at 1 January 17 (2,363) 2,210
Fair value losses on debt securities (14,207) (5,658)
Realised (gains)/losses transferred to profit or loss account (22) 16
Tax credit 3,563 1,069
At 31 December (13,029) (2,363)
REVALUATION RESERVE – at 1 January 17 831 831
At 31 December 831 831
SHARE-BASED PAYMENT RESERVE – at 1 January 17 1,841 1,817
Settlement of share-based payments (1,037) (1,051)
Charge in respect of share-based payments 1,603 1,075
At 31 December 2,407 1,841
RETAINED EARNINGS – at 1 January 205,900 214,261
Share-based payments 447 (115 )
Profit for the year attributable to ordinary shareholders 10,107 30,140
Ordinary dividends paid (30,132) (38,386)
At 31 December 186,322 205,900
Total equity at 31 December 222,496 252,727
The attached notes on pages 105 to 162 form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
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Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Governance Financials
2022 2021
Notes £’k £’k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 12,750 37,199
Adjustments for:
Depreciation of property, plant and equipment 9.1 108 136
Depreciation of right-of-use assets 9.2 187 249
Share-based payment – equity-settled schemes 16 1,603 1,075
Investment return, including realised net fair value gains and losses on financial assets (1,590) (1,507)
Interest on lease liability 9.2 5 16
Expected credit loss 4.6 (34) 16
Operating cash flows before movements in working capital 13,029 37,184
Movements in working capital:
Change in reinsurance assets (4,214) (12,391)
Change in deferred acquisition costs 437 1,000
Change in insurance receivables 6,576 (4,027)
Change in loans and other receivables 67 10
Change in prepayments, accrued income and other assets (457) 47
Change in insurance liabilities 24,927 5,970
Change in unearned premium reserve (6,918) 3,426
Change in insurance creditors (1,134) 869
Change in trade and other payables (826) 301
Change in accruals (510) (552)
Cash generated from operating activities before investment of insurance assets 30,977 31,837
Taxes paid (4,479) (5,988)
Net cash generated from operating activities before investment of insurance assets 26,498 25,849
Interest and investment income received 3,383 4,273
Proceeds from the sale and maturity of invested assets 37,734 68,178
Purchases of invested assets (48,214) (64,987)
Net cash generated from operating activities 19,401 33,313
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 9.1 (38) (28)
Net cash used by investing activities (38) (28)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of principal portion of lease liabilities 9.2 (198) (264)
Net cash used in acquiring and disposing of own shares (1,142) (1,928)
Dividends paid 12 (30,132) (38,386)
Net cash used by financing activities (31,472) (40,578)
Net decrease in cash and cash equivalents (12,109) (7,293)
Cash and cash equivalents at the beginning of the year 30,611 37,904
Cash and cash equivalents at the end of the year 4.5 18,502 30,611
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
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other information
Governance Financials
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 and
motorcycles. The Companys principal activity is that of a holding company.
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated and company financial statements are included in the specific notes to which they
relate. These policies have been consistently applied to all the years presented, unless otherwise indicated.
1.1. Basis of preparation
The financial statements of the Group have been prepared in accordance with UK-adopted international accounting standards, comprising International Accounting
Standards (“IAS”) and International Financial Reporting Standards (“IFRS”), and the requirements of the Companies Act 2006. Endorsement of accounting
standards is granted by the UK Endorsement Board (“UKEB”).
The financial statements are prepared in accordance with the going concern principle using the historical cost basis, except for those financial assets that have been
measured at fair value. The preparation of the financial statements necessitates the use of estimates, assumptions and judgements that affect the reported
amounts in the statement of financial position and the statement of profit or loss and other comprehensive income. Where appropriate, details of estimates are
presented in the accompanying notes to the consolidated financial statements.
As the full impact of climate change is currently unknown, it is not possible to consider all possible future outcomes when determining the value of assets, liabilities
and the timing of future cash flows. The Group’s view is that any reasonable impact of climate change would not have a material impact on the valuation of assets
and liabilities at the year-end date.
The financial statements values are presented in pounds sterling (£) rounded to the nearest thousand (£’k), unless otherwise indicated.
The Group presents its statement of financial position broadly in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting
date (current) and more than 12 months after the reporting date (non-current) is presented in the respective notes.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously.
As permitted by IFRS 4 “Insurance Contracts”, the Group continues to apply the existing accounting policies that were applied prior to the adoption of IFRS, with
certain modifications allowed by the standard effective subsequent to adoption for its insurance contracts.
1.2. Going concern
The consolidated annual financial statements have been prepared on a going concern basis. The Directors have a reasonable expectation that the Group has
adequate resources to continue in operation for at least the next 12 months to 31 March 2024 and that therefore it is appropriate to adopt a going concern basis for
the preparation of the financial statements.
In making their assessment, the Directors took into account the potential impact of the principal risks that could prevent the Group from achieving its strategic
objectives. The assessment was based on the Group’s ORSA, which brings together managements view of current and emerging risks, with scenario-based
analysis and reverse stress testing to form a conclusion as to the financial stability of the Group. Consideration was also given to what the Group considers its
principal risks which are set out in the Principal Risks and Uncertainties section on pages 19 to 28 of the Strategic Report. The assessment also included
consideration of any scenarios which might cause the Group to breach its solvency requirements which are not otherwise covered in the risk-based scenario testing.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
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other information
We have assessed the short, medium and long-term risks associated with climate change. Given the geographical diversity of the Group’s policyholders within the
UK and the Group’s reinsurance programme, it is highly unlikely that a climate event will materially impact Sabre’s ability to continue trading. More likely is that the
costs associated with the transition to a low-carbon economy will impact the Group’s indemnity spend, as electronic vehicles are currently relatively expensive to
fix. We expect that this is somewhat, or perhaps completely, offset by advances in technology reducing the frequency of claims, in particular bodily injury claims
which are generally far more expensive than damage to vehicles. These changes in the costs of claims are gradual and as such reflected in our claims experience
and fed into the pricing of our policies. However, if the propensity to travel by car decreases overall this could impact the Group’s income in the long term, but this is
not expected to be material within the viability period of three years. We do not consider it plausible that such a decrease would be as severe as the scenarios that
we have modelled as part of our viability testing exercise.
1.3. New and amended standards and interpretations adopted by the Group
Amendments to IFRS
The following amended IFRS standards became effective for the year ended 31 December 2022:
Annual Improvements to IFRS 2018–2020
Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a First-time Adopter
Amendment to IFRS 9 Financial Instruments - Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities
Amendment to IFRS 16 Leases – Lease Incentives
Amendment to IAS 41 Agriculture - Taxation in Fair Value Measurements
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
Reference to the Conceptual Framework (Amendments to IFRS 3)
None of the amendments have had a material impact to the Group.
1.4. New and amended standards and interpretations not yet effective in 2022
A number of new standards and interpretations adopted by the UK which are not mandatorily effective, as well as standards interpretations issued by the IASB but
not yet adopted by the UK, have not been applied in preparing these financial statements. The Group does not plan to adopt these standards early; instead it
expects to apply them from their effective dates as determined by their dates of UK endorsement. The Group is still reviewing the upcoming standards to
determine their impact:
IFRS 17: “Insurance Contracts” (IASB effective date: 1 January 2023)
IFRS 10 and IAS 28: Amendment: “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” (IASB effective date: optional)
IFRS 17 – “Insurance Contracts”
The effective date for IFRS 17 is 1 January 2023. IFRS 17 will change the way insurance contracts are accounted for and reported. Revenue will no longer be equal
to premiums written but instead reflect a change in the contract liability on which consideration is expected. On initial assessment the major change will be on the
presentation of the statement of profit or loss, with premium and claims figures being replaced with insurance contract revenue, insurance service expense and
insurance finance income and expense. IFRS 17 also has additional disclosure requirements.
IFRS 17 prescribes a comprehensive model, the general model, which requires entities to measure an insurance contract at initial recognition as the total of the
fulfilment cash flows (comprising the estimated future cash flows, an adjustment to reflect the time value of money and an explicit risk adjustment for non-financial
risk) and the contractual service margin. The fulfilment cash flows are remeasured on a current basis each reporting period. The unearned profit (contractual service
margin) is recognised over the coverage period.
Notes to the Consolidated Financial Statements continued
1. ACCOUNTING POLICIES continued
1.2. Going concern continued
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other information
Governance Financials
IFRS 17 also provides a simplification to the general model, the premium allocation approach (“PAA”). This simplified approach is applicable for certain types of
contracts, including those with a coverage period of one year or less. The liability for remaining coverage is similar to the current premium reserve profile recognised
over time. The principles of the general model remain applicable to the liability for incurred claims.
All contracts issued by the Group are for one year or less and the Group expects to apply the PAA model to all insurance contracts written.
The Group is continuously assessing the impact of the design decision and relevant accounting policy choices. The Group’s assessment of the requirements of the
standard against current data, processes and valuation models does not indicate a material impact on the Group’s financial results.
The next steps for the Group are to incorporate changes required in the internal management and financial statement reporting process to report its results under
IFRS 17 and finalise the accounting policies and methodologies for the transitional approach that will be applied. Management does not expect the transition to
have a significant impact on the Group’s future profit or the net asset value.
Transitional Accounting
We intend to apply IFRS 17 fully retrospectively. As we intend to operate all contracts under the premium allocation approach, we expect the impact at transition to be limited.
DAC
Under IFRS 4, the Company deferred some of the cash flows from operational expenses which were identified as acquisition costs. Under IFRS 17 the Company
will assess those cash flows arising from the cost of selling, underwriting and starting a group of insurance contacts (issued or expected to be issued) that are
directly attributable to the portfolio of insurance contacts to which the group belongs. We expect the total annual expenditure deferred under IFRS 17 to be lower
than that under IFRS 4. As a result, we expect the deferred acquisition cost asset to be lower under IFRS 17, which will reduce net assets on transition date. We
expect this to be partially off-set by discounting of insurance liabilities. We do not expect a significant impact on the earnings profile of the Company, given the
decrease in total deferred costs will be offset by a decrease in the run-off of opening deferrals.
Reserving for outstanding claims liabilities
While there are some technical differences in the approach to reserving between IFRS 4 and IFRS 17, we do not expect that there will be a material difference in
practice between the reserves held under the two bases, with the exception of discounting and the application of a risk adjustment, which are discussed below.
Discounting
Under IFRS 4 the measurement of the liability for outstanding claims for non-life business is not discounted. Under IFRS 17, the Company will recognise income
and expenses at recognition and as a result of changes in the carrying amount of the liability for incurred claims due to:
Insurance service expenses – for the increase in the liability because of claims and expenses incurred in the period, excluding any investment components
Insurance service expenses – for any subsequent changes in fulfilment cash flows relating to incurred claims and incurred expenses
Insurance finance income or expenses – for the effect of the time value of money and the effect of financial risk
Fulfilment cash flows are adjusted to reflect the time value of money and financial risks related to those cash flows. The adjustment is made by discounting
estimated future cash flows. The discount rate applied to fulfilment cash flows will be calculated at the reporting date. The Company will use the IFRS 17 ‘top-
down’ approach to determine the appropriate discount rates for insurance contracts based on a yield curve that reflects the current market rates of return implicit in
a fair value measurement of a reference portfolio of assets.
Risk adjustment
Under IFRS 4 the Company applied a risk margin to its liabilities for outstanding claims. Under IFRS 17 the Company will replace the risk margin with a risk
adjustment for non-financial risk. This risk adjustment represents the compensation that the Company requires for bearing the uncertainty about the amount and
timing of cash flows that arise from non-financial risk. Non-financial risk is risk arising from insurance contracts other than financial risk, which is included in the
estimates of future cash flows or the discount rate used to adjust the cash flows. The risks covered by the risk adjustment for non-financial risk are insurance risk
and other non-financial risks such as lapse risk and expense risk.
Notes to the Consolidated Financial Statements continued
1. ACCOUNTING POLICIES continued
1.4. New and amended standards and interpretations not yet effective in 2022 continued
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The risk adjustment for non-financial risk for insurance contracts measures the compensation that the Company would require to make it indifferent between:
Fulfilling a liability that has a range of possible outcomes arising from non-financial risk; and
Fulfilling a liability that will generate fixed cash flows with the same expected present value as the insurance contracts
The impact of replacing the IFRS 4 risk margin with the IFRS 17 risk adjustment is expected to have an insignificant impact on the net assets of the Company.
Reinsurance
The Company does not run a complex reinsurance programme and one holds a single group of ‘loss occurring’ reinsurance contracts, having a coverage period of
less than one year. Under IFRS 17 the company will use the premium allocation approach, adapted to reflect the features of reinsurance contracts held that differ
from insurance contracts issued.
Under IFRS 17 a group of reinsurance contracts held is recognised from the earliest of the following:
The beginning of the coverage period of the group of reinsurance contracts held; and
The date on which the Company recognises an onerous group of underlying insurance contracts if the Company entered into the related reinsurance contract held
in the group of reinsurance contracts held at or before that date.
The Company does not expect any of the underlying contracts to be onerous and will recognise the group of excess-of-loss reinsurance contracts at the beginning
of the coverage period, in-line with current treatment under IFRS 4 and no impact on the net asset value of the Company on transition to IFRS 17.
Defined IFRS 17 terms:
Contractual service margin – A component of the carrying amount of the asset or liability for a group of insurance contracts representing the unearned profit the
entity will recognise as it provides insurance contract service under the insurance contracts in the group.
Coverage period – The period during which the entity provides insurance contract services. The period includes the insurance contract services that relate to all
premiums within the boundary of the insurance contract.
Fulfilment cash flows – An explicit, unbiased and probability-weighted estimate (ie expected value) of the present value of the future cash outflows minus the
present value of the future cash inflows that will arise as the entity fulfils insurance contacts, including a risk adjustment for non-financial risk.
Liability for incurred claims (“LIC”) – An entity’s obligation to:
a) Investigate and pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not been reported,
and other incurred insurance expenses; and
b) Pay amounts that are not included in (a) and that relate to:
i. insurance contract services that have already been provided; or
ii. any investment components or other amounts that are not related to the provision of insurance contract services and that are not in the liability for remaining
coverage
Liability for remaining coverage (“LRC”) – An entitys obligation to:
a) investigate and pay valid claims under existing insurance contracts for insured events that have not yet occurred (ie the obligation that relates to the unexpired
portion of the insurance coverage); and
b) pay amounts under existing insurance contracts that are not included in (a) and that relate to:
i. insurance contract services not yet provided (ie the obligations that relate to future provision of insurance contract services); or
ii. any investment components or other amounts that are not related to the provision of insurance contract services and that have not been transferred to the
liability for incurred claims
Notes to the Consolidated Financial Statements continued
1. ACCOUNTING POLICIES continued
1.4. New and amended standards and interpretations not yet effective in 2022 continued
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2. RISK AND CAPITAL MANAGEMENT
2.1. Risk management framework
The Sabre Insurance Group plc Board is responsible for prudent oversight of the Group’s business and financial operations, ensuring that they are conducted in
accordance with sound business principles and with applicable laws and regulations, and ensure fair customer outcomes. This includes responsibility to articulate
and monitor adherence to the Boards appetite for exposure to all risk types. The Board also ensures that measures are in place to provide independent and
objective assurance on the effective identification and management of risk and on the effectiveness of the internal controls in place to mitigate those risks.
The Board has set a robust risk management strategy and framework as an integral element in its pursuit of business objectives and in the fulfilment of its
obligations to shareholders, regulators, customers and employees.
The Group’s risk management framework is proportionate to the risks that we face. Our assessment of risk is not static; we continually reassess the risk
environment in which the Group operates and ensure that we maintain appropriate mitigation in order to remain within our risk appetite. The Group’s Management
Risk and Compliance Forum gives Management the regular opportunity to review and discuss the risks which the Group faces, including but not limited to any
breaches, issues or emerging risks. The Forum also works to ensure that adequate mitigation for the risks the Group is exposed to are in place.
2.2. Underwriting risk
The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments, or the timing thereof, differ from expectations. This is
influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of the
Group is to ensure that sufficient reserves are available to cover these liabilities.
The Group issues only motor insurance contracts, which usually cover a 12-month duration. For these contracts, the most significant risks arise from under-
estimation of the expected costs attached to a policy or a claim, for example through unexpected inflation of costs or single catastrophic events..
Refer to Note 3.5 for detail on these risks and the way the Group manages them. Note 3.5 also includes the considerations of climate change. Further discussion on
climate change can be found in the Principal Risks and Uncertainties section on pages 19 to 28 of the Strategic Report and the Responsibility and Sustainability
section on pages 38 to 49.
2.3. Credit risk
Credit risk reflects the financial impact of the default of one or more of the Group’s counterparties. The Group is exposed to financial risks caused by a loss in the
value of financial assets due to counterparties failing to meet all or part of their obligations. Key areas where the Group is exposed to credit default risk are:
Failure of an asset counterparty to meet their financial obligations (Note 4.6)
Reinsurer default on presentation of a large claim or dispute of cover (Note 3.6)
Reinsurers default on their share of the Group’s insurance liabilities (Note 3.6)
Default on amounts due from insurance contract intermediaries or policyholders (Note 3.6)
Notes to the Consolidated Financial Statements continued
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The following policies and procedures are in place to mitigate the Group’s exposure to credit risk:
A Group credit risk policy which sets out the assessment and determination of what constitutes credit risk for the Group. Compliance with the policy is monitored
and exposures and breaches are reported to the Group’s Risk Committee
Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is avoided by following policy guidelines in respect of
counterparties’ limits that are set each year by the Board of Directors and are subject to regular reviews. At each reporting date, management performs an
assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining suitable allowance for impairment
The Group sets the maximum amounts and limits that may be advanced to corporate counterparties by reference to their long-term credit ratings
The credit risk in respect of customer balances incurred on non-payment of premiums or contributions will only persist during the grace period specified in the
policy document or trust deed until expiry, when the policy is either paid up or terminated. Commission paid to intermediaries is netted off against amounts
receivable from them to reduce the risk of doubtful debts
Refer to Notes 3.6 and 4.6 as indicated above for further information on credit risk.
2.4. Liquidity risk
Liquidity risk is the potential that obligations cannot be met as they fall due as a consequence of having a timing mismatch or inability to raise sufficient liquid assets
without suffering a substantial loss on realisation. The Group manages its liquidity risk through both ensuring that it holds sufficient cash and cash equivalent assets
to meet all short-term liabilities, and matching the maturity profile of its financial investments to the expected cash outflows.
Refer to Note 6 for further information on liquidity risk.
2.5. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to concentration risk. The Group has no significant investment in any particular industrial sector
and therefore is unlikely to suffer significant losses through its investment portfolio as a result of over-exposure to sectors engaged in similar activities or which have
similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions.
A significant part of the Group’s investment portfolio consists primarily of UK government bonds and government-backed bonds, therefore the risk of government
default does exist, however the likelihood is extremely remote. The remainder of the portfolio consists of investment grade corporate bonds. The Group continues
to monitor the strength and security of all bonds.
The Group’s portfolio has a significant concentration of UK debt securities and therefore is exposed to movements in UK interest rates.
Refer to Note 4.2 for further information on investment concentration risk.
2.6. Operational risk
Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks can cause
damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by operating a
rigorous control framework and by monitoring and responding to potential risks, the Group is able to manage the risks. Controls include effective segregation of
duties, access controls, authorisation and reconciliation procedures, staff education and assessment processes, including the use of internal audit. Business risks
such as changes in environment, technology and the industry are monitored through the Group’s strategic planning and budgeting process.
2.7. Capital management
The Board of Directors has ultimate responsibility for ensuring that the Group has sufficient funds to meet its liabilities as they fall due. The Group carries out
detailed modelling of its assets and liabilities and the key risks to which these are exposed. This modelling includes the Group’s own assessment of its capital
requirements for solvency purposes.
Notes to the Consolidated Financial Statements continued
2. RISK AND CAPITAL MANAGEMENT continued
2.3. Credit risk continued
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The Group has continued to manage its solvency with reference to the Solvency Capital Requirement (“SCR”) calculated using the Standard Formula. The Group
has developed sufficient processes to ensure that the capital requirements under Solvency II are not breached, including the maintenance of capital at a level higher
than that required through the Standard Formula. The Group considers its capital position to be its net assets on a Solvency II basis and monitors this in the context
of the Solvency II SCR.
The Group aims to retain sufficient capital such that in all reasonably foreseeable scenarios it will hold regulatory capital in excess of its SCR. The Directors currently
consider that this is achieved through maintaining a regulatory capital surplus of 140% to 160%. As at 31 December 2022, the Group holds significant excess
Solvency II capital.
The Group’s IFRS capital comprised:
As at 31 December
2022 2021
£’k £’k
Equity
Issued share capital 250 250
Own shares (2,810) (2,257)
Merger reserve 48,525 48,525
FVOCI reserve (13,029) (2,363)
Revaluation reserve 831 831
Share-based payments 2,407 1,841
Retained earnings 186,322 205,900
Total 222,496 252,727
The Solvency II position of the Group both before and after final dividend is given below:
As at 31 December
2022 2021
Pre-dividend £’k £’k
Total tier 1 capital 91,191 110,114
SCR 56,516 52,955
Excess capital 34,675 57,159
Solvency coverage ratio (%) 161% 208%
As at 31 December
2022 2021
Post-dividend £’k £’k
Total tier 1 capital 86,941 86,864
SCR 56,516 52,955
Excess capital 30,425 33,909
Solvency coverage ratio (%) 154% 164%
Notes to the Consolidated Financial Statements continued
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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The following table sets out a reconciliation between IFRS net assets and Solvency II net assets before final dividend:
As at 31 December
2022 2021
£’k £’k
IFRS net assets 222,496 252,727
Less: Goodwill (156,279) (156,279)
Adjusted IFRS net assets 66,217 96,448
Unearned premium reserve 83,858 90,776
Deferred acquisition costs (13,354) (13,791)
Solvency II premium provision (53,581) (6 4 ,011)
IFRS risk margin
(1)
10,764 11, 229
Discount claims provision 11,663 2,209
Change in life reserves 1,047 (1,903)
Solvency II risk margin (7,752) (7,6 3 8)
Change in deferred tax (7,671) (3,205)
Solvency II net assets 91,191 110,114
(1) In line with industry practice, the IFRS risk margin is an explicit additional reserve in excess of the actuarial best estimate which is designed to create a margin held in reserves to allow for
adverse development in open claims.
The adjustments set out in the above table have been made for the following reasons:
Adjusted IFRS net assets: Equals Group net assets on an IFRS basis, less Goodwill.
Removal of unearned premium reserve and deferred acquisition costs: The unearned premium reserve and deferred acquisition costs must be removed as
they are not deferred under Solvency II.
Solvency II premium provision: A premium reserve reflecting the future cash flows in respect of insurance contracts is calculated and this must be discounted
under Solvency II.
IFRS risk margin: Solvency II reserves must reflect a true “best estimate” basis. Therefore, the IFRS risk margin is removed from the claims reserve.
Discount claims provision: The provision held against future claims expenditure for claims incurred is discounted in the same way as the Solvency II premium
provision.
Solvency II risk margin: The Solvency II risk margin represents the premium that would be required were the Group to transfer its technical provisions to a third
party, and essentially reflects the SCR required to cover run-off of claims on existing business. This amount is calculated by the Group through modelling the
discounted SCR on a projected future balance sheet for each year of claims run-off.
Change in deferred tax: As the move to a Solvency II basis balance sheet increases the net asset position of the Group, a deferred tax liability is generated to
offset the increase.
Notes to the Consolidated Financial Statements continued
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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Sabre Insurance Group plc’s SCR, expressed on a risk module basis, is set out in the following table:
as at 31 December 2022 as at 31 December 2021
£’k £’k £’k £’k £’k £’k
Interest rate risk 5,548 3,359
Equity risk
Property risk 956 956
Spread risk 3,264 4,965
Currency risk 1,112 1,082
Concentration risk
Correlation impact (3,660) (3,449)
Market risk 7,220 6,913
Counterparty risk 2,333 3,403
Underwriting risk 52,421 51,985
Correlation impact (6,129) (6,422)
Basic SCR 55,845 55,879
Operating risk 6,372 6,515
Loss absorbing effect of deferred taxes (5,701) (9,439)
Total SCR 56,516 52,955
The total SCR is primarily driven by the underwriting risk element, which is a function of the Group’s net earned premium (or projected net earned premium) and the
level of reserves held. Therefore, the SCR is broadly driven by the size of the business.
The Group’s capital management objectives are:
to ensure that the Group will be able to continue as going a concern
to maximise the income and capital return to its equity
The Board monitors and review the broad structure of the Group’s capital on an ongoing basis. This review includes consideration of the extent to which revenue in
excess of that which is required to be distributed should be retained.
The Group’s objectives, policies and processes for managing capital have not changed during the year.
Notes to the Consolidated Financial Statements continued
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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3. INSURANCE LIABILITIES AND REINSURANCE ASSETS
ACCOUNTING POLICY
Claims incurred include all losses occurring through the year, whether reported or not, related handling costs and any adjustments to claims outstanding from
previous years. Significant delays are experienced in the notification and settlement of certain claims, particularly in respect of liability claims, the ultimate cost
of which cannot be known with certainty at the balance sheet date. Reinsurance recoveries (or amounts due from reinsurers) are accounted for in the same
period as the related claim.
A. Provision for claims outstanding
The provision for claims outstanding is based on information available at the balance sheet date. Significant delays are experienced in the notification and
settlement of certain claims and accordingly the ultimate cost of such claims cannot be known with certainty at the balance sheet date. Subsequent information
and events may result in the ultimate liability being less than, or greater than, the amount provided. Any differences between provisions and subsequent
settlements are dealt with in the profit or loss account. Claims provisions are not discounted, with the exception of Periodic Payment Orders (“PPOs”), which
are discussed more fully in the Critical accounting estimates and judgements section in Note 3.
The provision for claims outstanding includes the following:
Claims Incurred and Reported (individual case estimates)
Claims Incurred but Not Reported (“IBNR”)/Claims Incurred But Not Enough Reported (“IBNER”)
Claims Handling Provision
(i) Claims Incurred and Reported (individual case estimates)
When claims are initially reported, case estimates are set at fixed levels based on previous average claims settlements. As soon as sufficient information
becomes available, the case estimate is amended by a claim handler within the Claims Department to reflect the expected ultimate settlement cost of the claim,
including external claims handling costs. The case estimate will be amended throughout the life of a claim as further information emerges. Case estimates
generally do not allow for possible reductions in our liability due to contributory negligence, favourable court judgments or settlements until these are known to a
high probability. Because of this, the outstanding case reserve recorded is generally greater than the probability-weighted likely settlement amount of the claim.
(ii) Claims Incurred But Not Reported (“IBNR”)/Claims Incurred But Not Enough Reported (“IBNER)
The Claims IBNR provision consists of two elements:
IBNR – An amount in respect of claims incurred but not yet recorded on the policy administration system (‘pure’ IBNR), which is typically a ‘positive’
IBNER – An adjustment to open case reserves, booked at a portfolio level, which converts the open reserve recorded on our underwriting system to a true
‘best estimate’ basis. If the case reserves held are in excess of a ‘best estimate’ basis, this will result in a ‘negative’ IBNER. If the case reserves are below a
‘best estimate’ basis, this will result in a ‘positive’ IBNER
The Group refers to these collectively as ‘IBNR’ and unless stated otherwise, when referring to IBNR this always include both elements.
These reserves are calculated using standard actuarial modelling techniques such as chain ladder and Bornhuetter-Ferguson methods. The IBNR adjustment is
set after considering the results of these statistical methods based on, inter alia, historical claims development trends, average claims costs and expected
inflation rates.
(iii) Claims Handling Provision
A provision for claims handling costs is estimated based on the number of outstanding claims at the balance sheet date and the estimated average internal cost
of settling claims.
Notes to the Consolidated Financial Statements continued
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B. Provision for unexpired risks
Provision is made for unexpired risks when, after taking account of an element of attributable investment income, it is anticipated that the unearned premiums
will be insufficient to cover future claims and expenses on existing contracts. The expected claims are calculated having regard to events which have occurred
prior to the balance sheet date. Unexpired risk surpluses and deficits are offset when business classes are managed together and a provision is made if an
aggregate deficit arises.
At each reporting date, a liability assessment is performed to ensure the adequacy of the claims liabilities net of deferred acquisition costs and unearned
premium reserves. In performing this assessment, current best estimates of future contractual cash flows and claims handling expenses are used. Any
deficiency is immediately charged to the statement of profit or loss, initially by writing off deferred acquisition costs and subsequently by establishing a provision
for losses arising from the liability assessment (“unexpired risk provision”). There is currently no unexpired risk provision.
C. Deferred acquisition costs
Deferred acquisition costs represent a proportion of commission and other acquisition costs that relate to policies that are in force at the year end. Deferred
acquisition costs are amortised over the period in which the related premiums are earned. Such costs are identified as being directly attributable to the
acquisition of business, or are indirectly attributed to acquisition activity through an allocation exercise.
D. Gross written premiums
Gross written premiums comprise all amounts during the financial year in respect of contracts entered into regardless of the fact that such amounts may relate
in whole or in part to a later financial year. All premiums are shown gross of commission payable to intermediaries (where applicable) and are exclusive of taxes,
duties and levies thereon. Insurance premiums are adjusted by an unearned premium reserve which represents the proportion of premiums written that relate
to periods of risk subsequent to the balance sheet date.
E. Unearned premium reserve (“UPR)
Unearned premiums are those proportions of the premiums written in a year that relate to the periods of risk subsequent to the balance sheet date. They are
computed principally on a daily pro-rata basis.
RISK MANAGEMENT
Refer to Notes 3.5 and 3.6 for detail on risks relating to insurance liabilities and reinsurance assets, and the management thereof.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Valuation of insurance contracts
The three key elements impacting the valuation of insurance contracts are:
i. Claims reserve
For the valuation of insurance contracts, estimates are made both for the expected ultimate cost of claims reported at the reporting date, consisting of a reserve
for claims incurred and reported, and an estimate of the sufficiency of these reserves (through the calculation of an Incurred But Not Enough Reported (“IBNER”)
estimate, and for the expected ultimate cost of claims incurred, but not yet reported (“IBNR”), at the reporting date). It can take a significant period of time before
the ultimate claims cost can be established with certainty. The claims reserve consists of an actuarial best estimate and an appropriate, explicit risk margin. The
Board has set the explicit risk margin at 8% of the net best estimate claims reserve (2021: 10%). The risk margin has been set having considered short-term
volatility in claims experience and having assessed estimation uncertainty within the reserving process. Since the last reporting period, the Group has carried out
additional mathematical modelling on effective confidence intervals within the reserving process, which, along with our assessment of the impact of inflation, has
contributed to the selection of risk margin.
ii. Outstanding claims
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and Bornhuetter-
Ferguson methods. The main assumption underlying these techniques is that the Group’s past claims development experience can be used to project future
claims development and hence ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim
and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is analysed by accident years
and types of claim. In most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratios. Instead, the assumptions used are
those implicit in the historical claims development data on which the projections are based. Additional qualitative judgement is used to assess the extent to
which past trends may not apply in the future, (e.g., to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming,
economic conditions, levels of claims inflation, climate change, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features
and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes,
taking account of all the uncertainties involved.
iii. Periodic Payment Orders (“PPO”)
Liability claims may be settled through a PPO, established under the Courts Act 2003, which allows a UK court to award damages for future loss or any other
damages in respect of personal injury. The court may order that the damages either partly or fully take the form of a PPO. To date, the Group has four PPOs
within its reserve for claims incurred and reported. Reinsurance is applied at the claim level, and therefore as PPOs generally result in a liability in excess of the
Group’s reinsurance retention, the net liability on acquisition of a PPO is not significantly different to that arising in a non-PPO situation. Management will
continue to monitor the level of PPO activity. Where Management expect the total probability-weighted cash flows for actual and potential PPOs to generate a
net outow following settlement of reinsurance recoveries, this is reflected within gross outstanding claims liabilities and the related reinsurance recoverable.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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The Group’s insurance liabilities and reinsurance assets are sumarised below:
2022 2021
Notes £’k £’k
Outstanding claims 3.1 257,4 4 3 232,516
Unearned premium reserve 3.1.1 83,858 90,776
Deferred acquisition costs 3.1.2 (13,354) (13,791)
Reinsurance assets 3.1 (116,526) (112,312)
Receivables arising from insurance and reinsurance contracts 3.2 (31,427) (38,003)
Payables arising from insurance and reinsurance contracts 3.3 5,981 7,115
Total 3.7 185,975 166,301
A reconciliation between the opening and closing balances is provided in Note 3.7.
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
Notes to the Consolidated Financial Statements continued
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3.1 Insurance liabilities and reinsurance assets
2022 2021
Notes £’k £’k
GROSS
Claims incurred and reported 327,334 309,892
Claims incurred but not reported (74,115) (81,272)
Claims handling provision 4,224 3,896
Outstanding claims liabilities 3.1.1 257,4 4 3 232,516
Unearned premium reserve 3.1.1 83,858 90,776
Total insurance liabilities – Gross 341,301 323,292
Expected to be settled within 12 months (excluding UPR) 106,486 112,975
Expected to be settled after 12 months (excluding UPR) 150,957 119, 5 41
RECOVERABLE FROM REINSURERS
Claims incurred and reported (124,477) (127,812)
Claims incurred but not reported 18,134 24,18 4
Outstanding claims liabilities 3.1.1 (106,343) (103,628)
Unearned premium reserve 3.1.1 (10,183) (8,684)
Total reinsurers’ share of insurance liabilities (116,526) (112,312)
Expected to be settled within 12 months (excluding UPR) (31,936) (43,546)
Expected to be settled after 12 months (excluding UPR) (74,407) (60,082)
NET
Claims incurred and reported 202,857 182,080
Claims incurred but not reported (55,981) (57,0 88)
Claims handling provision 4,224 3,896
Outstanding claims liabilities 3.1.1 151,100 128,888
Unearned premium reserve 3.1.1 73,675 82,092
Total insurance liabilities – Net 224,775 210,980
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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3.1.1 Movement in insurance liabilities and reinsurance assets
2022 2021
Gross RI share Net Gross RI share Net
£’k £’k £’k £’k £’k £’k
CLAIMS AND CLAIMS HANDLING EXPENSES
Claims incurred and reported 309,892 (127,812) 182,080 313,164 (123,440) 189,724
Claims incurred but not reported (81,272) 24,184 (57,088) (90,267) 31,424 (58,843)
Claims handling provision 3,896 3,896 3,649 3,649
Total at the beginning of the year 232,516 (103,628) 128,888 226,546 (92,016) 134,530
Cash paid for claims settled in the year (93,353) 10,379 (82,974) (92,247) 12,357 (79,890)
Increase in liabilities
– arising from current year claims 124,604 (20,640) 103,964 89,480 (8,072) 81,408
– arising from prior year claims (6,324) 7,5 4 6 1,222 8,737 (15,897) (7,16 0 )
Total at the end of the year 257,4 4 3 (106,343) 151,100 232,516 (103,628) 128,888
Claims incurred and reported 327, 334 (124,477) 202,857 309,892 (127,812) 182,080
Claims incurred but not reported (74,115) 18,134 (55,981) (81,272) 24 ,18 4 ( 57,08 8 )
Claims handling provision 4,224 4,224 3,896 3,896
Total at the end of the year 257,4 4 3 (106,343) 151,100 232,516 (103,628) 128,888
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.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.1 Insurance liabilities and reinsurance assets continued
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1 January
2021
Cash paid 2021 claims Claims prior
to 2021
31 December
2021
Cash paid 2022 claims Claims prior
to 2022
31 December
2022
Net movement in insurance liabilities (£’k)
160,000
120,000
140,000
80,000
100,000
40,000
20,000
0
60,000
134,530
(79,890)
81,408
(7,160)
128,888
(82,974)
103,964
1,222
151,100
Increase
Decrease
Total
2022 2021
Gross RI share Net Gross RI share Net
£’k £’k £’k £’k £’k £’k
UNEARNED PREMIUM RESERVE
At the beginning of the year 90,776 (8,684) 82,092 87, 3 5 0 ( 7, 9 05) 79,445
Written in the year 171,257 26,456 197,713 169,322 21,233 190,555
Earned in the year (178,175) (27,955) (206,130) (165,896) (22,012) (187,9 0 8)
Total at the end of the year 83,858 (10,183) 73,675 90,776 (8,684) 82,092
3.1.2 Movement in deferred acquisition costs
2022 2021
£’k £’k
DEFERRED ACQUISITION COSTS
At the beginning of the year 13,791 14,791
Additions 27,699 28,643
Recognised in the profit or loss account (28,136) (29,642)
Total at the end of the year 13,354 13,791
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.1 Insurance liabilities and reinsurance assets continued
3.1.1 Movement in insurance liabilities and reinsurance assets continued
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3.2 Receivables arising from insurance and reinsurance contracts
ACCOUNTING POLICY
Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to
initial recognition, insurance receivables are measured at amortised cost, using the effective interest rate method. The carrying value of insurance receivables is
reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable, with the impairment loss recorded in the
profit or loss account.
2022 2021
£’k £’k
Due from brokers and intermediaries 14,334 17,95 4
Due from policyholders 17,093 20,139
Less: provision for impairment of broker and intermediary receivables (90)
Total at the end of the year 31,427 38,003
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
ACCOUNTING POLICY
Payables are recognised when due. Reinsurance payables represent premiums payable to reinsurers in respect of contracts which have been entered into at the
date of the financial position.
2022 2021
£’k £’k
Insurance creditors 1,471 1,244
Amounts due to reinsurers 4,510 5,871
Total at the end of the year 5,981 7,115
Payables arising from insurance and reinsurance contracts are expected to be settled within 12 months. The carrying value of payables approximates fair value.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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3.4 Insurance claims
2022 2021
Gross RI share Net Gross RI share Net
£’k £’k £’k £’k £’k £’k
Movement in claims provision 117,953 (13,094) 104,859 97,970 (23,969) 74,001
Movement in claims handling provision 327 327 247 247
Claims handling expenses allocated 7,613 7,613 6,767 6,767
Net insurance claims 125,893 (13,094) 112,799 104,984 (23,969) 81,015
3.4.1 Claims development tables
The presentation of the claims development tables for the Group is based on the actual date of the event that caused the claim (accident year basis).
Gross outstanding claims liabilities
Accident year
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total
£’k £’k £’k £’k £’k £’k £’k £’k £’k £’k £’k
Estimate of ultimate claims costs
At the end of the accident year 84,939 75,649 103,599 111,518 165,707 120,077 126,981 101,965 89,233 124,277
– One year later 70,567 65,639 90,133 100,935 131,803 108,089 122,663 97, 9 53
87,555
– Two years later 63,197 62,039 82,537 94,294 123,651 107,98 8 127,2 25 88,755
– Three years later 65,313 60,301 79,845 91,336 122,674 113,257 125,608
– Four years later 68,763 59,149 77,0 9 5 90,789 124,128 115,403
– Five years later 64,290 58,367 7 7,03 8 92,629 124,26 4
– Six years later 63,15 3 58,718 77, 4 69 96,596
– Seven years later 63,088 58,438 7 7, 4 80
– Eight years later 63,213 58,361
– Nine years later 63,271
Current estimate of cumulative claims 63,271 58,361 77,4 80 96,596 124,264 115,403 125,608 88,755 87,555 124,277
Cumulative payments to date (59,880) (58,203) (75,753) (89,434) (87,759) (94,578) (101,313) (61,066) (53,419) (42,496)
Liability recognised in balance sheet 3,391 158 1,727 7,16 2 36,505 20,825 24,295 27,68 9
34,136
81,781 237,6 6 9
2012 and prior 15,550
Claims handling provision 4,224
Total 257,4 4 3
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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Net outstanding claims liabilities
Accident year
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total
£’k £’k £’k £’k £’k £’k £’k £’k £’k £’k £’k
Estimate of ultimate claims costs
At the end of the accident year 7 7, 316 74,609 97, 2 8 8 104,808 106,478 111,4 33 115,011 85,723 81,161 103,637
– One year later 64,071 65,639 85,814 93,664 96,446 99,649 111,5 5 0 81,882
81,826
– Two years later 59,301 60,953 81,16 4 87,824 91,806 98,641 111,3 47 80,602
– Three years later 57,739 59,741 77,86 9 85,243 91,179 99,071 111,121
– Four years later 56,947 59,008 76,409 84,995 88,545 100,853
– Five years later 56,892 58,259 76,254 84,891 88,690
– Six years later 56,593 58,481 76,011 84,987
– Seven years later 56,572 5 8 ,198 76,578
– Eight years later 56,685 58 ,146
– Nine years later 56,813
Current estimate of cumulative claims 56,813 58 ,146 76,578 84,987 88,690 100,853 111,121 80,602
81,826
103,637
Cumulative payments to date (54,565) (57,9 8 6 ) (75,567) (83,091) (83,597) (91,210) (96,127) (60,751) (53,419) (42,496)
Liability recognised in balance sheet 2,248 160 1,011 1,896 5,093 9,643 14,994 19,851
28,407
61,141 144,444
2012 and prior 2,432
Claims handling provision 4,224
Total 151,100
3.5 Underwriting risk
The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments, or the timing thereof, differ from expectations. This is
influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of the
Group is to ensure that sufficient reserves are available to cover these liabilities.
The Group only issues motor insurance contracts, which usually cover a 12-month duration. For these contracts, the most significant risk which arises is under-
estimation of the expected costs attached to a policy or a claim, for example through unexpected inflation of costs or single catastrophic events.
The above risk exposure is mitigated by diversification across a large portfolio of policyholders and geographical areas within the UK. The variability of risks is
improved by careful selection and implementation of underwriting strategies, which are designed to ensure that risks are diversified in terms of type of risk and
level of insured benefits. This is largely achieved through diversification across policyholders. Furthermore, strict claim review policies to assess all new and
ongoing claims, regular detailed review of claims handling procedures and frequent investigation of possible fraudulent claims are all policies and procedures put in
place to reduce the risk exposure of the Group. The Group further enforces a policy of actively managing and promptly pursuing claims, in order to reduce its
exposure to unpredictable future developments that can negatively impact the business. Inflation risk is mitigated by taking expected inflation into account when
estimating insurance contract liabilities.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.4 Insurance claims continued
3.4.1 Claims development tables continued
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The Group purchases reinsurance as part of its risk mitigation programme. Reinsurance ceded is placed on a non-proportional basis. This non-proportional
reinsurance is excess-of-loss, designed to mitigate the Group’s net exposure to single large claims or catastrophe losses. The current reinsurance programme in
place has a retention limit of £1m, with no upper limit. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims
provision and are in accordance with the reinsurance contracts. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its
policyholders and thus a credit exposure exists with respect to ceded reinsurance, to the extent that any reinsurer is unable to meet its obligations assumed under
such reinsurance agreements. Refer to Note 3.6 for insurance-related credit risk.
Key assumptions
The principal assumption underlying the liability estimates is that the Group’s future claims development will follow a similar pattern to past claims development
experience. This includes assumptions in respect of average claim costs, claim handling costs, claim inflation factors and claim numbers for each accident year.
Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example: one-off occurrence; changes in
market factors such as public attitude to claiming; economic conditions; and internal factors such as portfolio mix, policy conditions and claims handling procedures.
Judgement is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest rates and delays in settlement.
Sensitivities
The motor claim liabilities are primarily sensitive to the reserving assumptions noted above. It is not possible to quantify the sensitivity of certain assumptions such
as legislative changes or uncertainty in the estimation process.
The following analysis is performed for reasonably possible movements in key assumptions, including inflation, with all other assumptions held constant, showing
the impact on profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these
assumptions are non-linear.
The table shows the impact of a 10% increase in the gross loss ratio applied to all underwriting years which have a material outstanding claims reserve, and a 10%
increase in gross outstanding claims across all underwriting years, taking into account the impact of an increase in the operational costs associated with handling
those claims. We have considered the impact of excess inflation in setting the threshold for this sensitivity analysis.
Decrease
in profit aer tax
Decrease
in total equity
2022 2021 2022 2021
At 31 December £’k £’k £’k £’k
Insurance risk
Impact of a 10% increase in gross loss ratio (9,315) (7, 9 21) (9,315) (7,9 21)
Impact of a 10% increase in gross outstanding claims and claims provision (10,078) (8,710) (10,078) (8,710)
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.5 Underwriting risk continued
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A substantial increase in individually large claims which are over our reinsurance retention limit, generally will have no impact on profit before tax. The table shows
the impact of a 10% increase on a net basis.
Decrease
in profit aer tax
Decrease
In total equity
2022 2021 2022 2021
At 31 December £’k £’k £’k £’k
Insurance risk
Impact of a 10% increase in net loss ratio (11,597) (9,739) (11,597) (9,739)
Impact of a 10% increase in net outstanding claims and claims provision (12,239) (10,440) (12,239) (10,440)
Climate change
Management has assessed the short, medium and long-term risks which result from climate change. The short-term risk is low. Given the geographical diversity of
the Group’s policyholders within the UK and the Group’s reinsurance programme, it is highly unlikely that a climate event will materially impact the Group’s ability to
continue trading. More likely is that the costs associated with the transition to a low-carbon economy will impact the Group’s indemnity spend in the medium term,
as electronic vehicles are currently relatively expensive to fix. This is somewhat, or perhaps completely, offset by advances in technology reducing the frequency of
claims, in particular bodily injury claims which are generally far more expensive than damage to vehicles. These changes in the costs of claims are gradual and as
such reflected in the Group’s claims experience and fed into the pricing of policies. However, if the propensity to travel by car decreases overall this could impact
the Group’s income in the long term.
Further discussion on climate change can be found in the Principal Risks and Uncertainties section on pages 19 to 28 and the Responsibility and Sustainability
section on pages 38 to 49.
3.6 Insurance-related credit risk
Key insurance-related areas where the Group is exposed to credit default risk are:
Reinsurers default on presentation of a large claim or dispute of cover
Reinsurers default on their share of the Group’s insurance liabilities
Default on amounts due from insurance contract intermediaries or policyholders
Sabre uses a large panel of secure reinsurance companies. The credit risk of reinsurers included in the reinsurance programme is considered annually by reviewing
their credit worthiness. The Group’s placement of reinsurance is diversified such that it is not dependent on a single reinsurer. There is no single counterparty
exposure that exceeds 25% of total reinsurance assets at the reporting date. Sabre’s largest reinsurance counterparty is Munich Re. The credit risk exposure is
further monitored throughout the year to ensure that changes in credit risk positions are adequately addressed.
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.5 Underwriting risk continued
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The following tables demonstrate the Group’s exposure to credit risk in respect of overdue insurance debt and counterparty creditworthiness. Unearned premium
reserve (“UPR”) is excluded as there are no credit risks inherent in them.
Overdue insurance-related debt
Neither past due
nor impaired
Past due 1-90
days
Past due more
than 90 days
Assets that have
been impaired
Carrying value
in the balance
sheet
At 31 December 2022 £’k £’k £’k £’k £’k
Reinsurance assets (excluding UPR) 106,343 106,343
Insurance receivables 31,364 63 31,427
Total 137,707 63 137,770
Neither past due
nor impaired
Past due1-90
days
Past due more
than 90 days
Assets that have
been impaired
Carrying value in
the balance
sheet
At 31 December 2021 £’k £’k £’k £’k £’k
Reinsurance assets (excluding UPR) 103,628 103,628
Insurance receivables 37,8 40 163 38,003
Total 141,468 163 141,631
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2022 £’k £’k £’k £’k £’k £’k £’k
Reinsurance assets (excluding UPR) 71,318 35,025 106,343
Insurance receivables 31,427 31,427
Total 71,318 35,025 31,427 137,770
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2021 £’k £’k £’k £’k £’k £’k £’k
Reinsurance assets (excluding UPR) 72,498 31,13 0 103,628
Insurance receivables 38,003 38,003
Total 72,498 31,13 0 38,003 141,631
Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.6 Insurance related credit risk continued
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3.7 Reconciliation of opening to closing balances
The below table reconciles the opening and closing balances of insurance liabilities and reinsurance assets.
2022 2021
£’k £’k
Insurance liabilities and reinsurance assets – at the start of the year
Outstanding claims 232,516 226,546
Unearned premium reserve 90,776 87,350
Deferred acquisition costs (13,791) (14,791)
Reinsurance assets (112,312) (99,921)
Receivables arising from insurance and reinsurance contracts (38,003) (33,976)
Payables arising from insurance and reinsurance contracts 7,115 6,246
166,301 171,45 4
Profit or loss account movements
Net earned premium (153,218) (145,442)
Current year net incurred claims 103,964 81,408
Movement in prior year net incurred claims 1,222 ( 7,16 0 )
Claims handling expenses 7,613 6,767
Change in deferred acquisition costs 437 1,000
(39,982) (63,427)
Cash flow movements
Premiums received 178,060 165,505
Reinsurance premiums paid (27, 817) (20,574)
Claims and other claims expenses paid (90,587) (86,657)
59,656 58,274
Insurance liabilities and reinsurance assets – at the end of the year
Outstanding claims 257,44 3 232,516
Unearned premium reserve 83,858 90,776
Deferred acquisition costs (13,354) (13,791)
Reinsurance assets (116,526) (112,312)
Receivables arising from insurance and reinsurance contracts (31,427) (38,003)
Payables arising from insurance and reinsurance contracts 5,981 7,115
185,975 166,301
Notes to the Consolidated Financial Statements continued
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4. FINANCIAL ASSETS
RISK MANAGEMENT
Refer to the following notes for detail on risks relating to financial assets:
Investment concentration risk – Note 4.2
Credit risk – Note 4.6
Liquidity risk – Note 6
The Group’s financial assets are summarised below:
2022 2021
Notes £’k £’k
Debt securities held at fair value through other comprehensive income 4.1.1 229,158 234,667
Loans and receivables 4.4 7 74
Cash and cash equivalents 4.5 18,502 30,611
Total 247,667 265,352
4.1 Debt securities at fair value
4.1.1 Debt securities held at fair value through other comprehensive income
ACCOUNTING POLICY – FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
Classication
The Group classifies the following financial assets at fair value through other comprehensive income (“FVOCI”):
Debt securities
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated at fair value through the profit or loss account
(“FVTPL”):
The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
The contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount
outstanding on specified dates
Recognition and measurement
At initial recognition, the Group measures debt securities through other comprehensive income at fair value, plus the transaction costs that are directly
attributable to the acquisition of the financial asset. Debt securities at FVOCI are subsequently measured at fair value.
Impairment
At each reporting date, the Group assesses debt securities at FVOCI for impairment. Under IFRS 9 a “three-stage” model for calculated Expected Credit Losses
(“ECL”) is used, and is based on changes in credit quality since initial recognition. Refer to Note 4.6.
Notes to the Consolidated Financial Statements continued
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The Group’s debt securities held at fair value through other comprehensive income are summarised below:
2022 2021
£’k % holdings £’k % holdings
Government bonds 87,151 38 .1% 8 6 ,192 36.8%
Government-backed securities 80,753 35.2% 83,878 35.7%
Corporate bonds 61,254 26.7% 64,597 27. 5%
Total 229,158 100.0% 234,667 100.0%
4.2. Investment concentration risk
Excessive exposure to particular industry sectors or groups can give rise to concentration risk. The Group has no significant investment concentration in any
particular industrial sector and therefore is unlikely to suffer significant losses through its investment portfolio as a result of over-exposure to sectors engaged in
similar activities or which have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in
economic, political or other conditions.
A significant part of the Group’s investment portfolio consists primarily of UK government bonds and government-backed bonds, therefore the risk of government
default does exist, however the likelihood is extremely remote. The remainder of the portfolio consists of investment grade corporate bonds. The Group continues
to monitor the strength and security of all bonds. The Group does not have direct exposure to Ukrainian and Russian assets.
The Group’s exposure by geographical area is outlined below:
Government
bonds
Government-
backed
securities Corporate bonds Total
At 31 December 2022 £’k £’k £’k £’k % holdings
United Kingdom 87,151 101 25,942 113,194 49.4%
Europe (excluding UK) 48,295 25,972 74,267 32.4%
North America 32,357 9,340 41,697 18.2%
Total 87,151 80,753 61,254 229,158 100.0%
Government
bonds
Government-
backed securities Corporate bonds Total
At 31 December 2021 £’k £’k £’k £’k % holdings
United Kingdom 86,192 105 28,460 114,75 7 48.9%
Europe (excluding UK) 55,786 26,446 82,232 35.0%
North America 27,987 9,691 37,678 16.1%
Total 86,192 83,878 64,597 234,667 100.0%
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
4.1 Debt securities at fair value continued
4.1.1 Debt securities held at fair value through other comprehensive income continued
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The Group’s exposure by investment type for government-backed securities and corporate bonds is outlined below:
Agency Supranational Total
At 31 December 2022 £’k £’k £’k
Government-backed securities 37, 9 8 9 42,764 80,753
% of holdings 47.0% 53.0% 100.0%
Financial Industrial Utilities Total
At 31 December 2022 £’k £’k £’k £’k
Corporate bonds 31,229 28,121 1,904 61,254
% of holdings 51.0% 45.9% 3.1% 100.0%
Agency Supranational Total
At 31 December 2021 £’k £’k £’k
Government-backed securities 48,987 34,891 83,878
% of holdings 58.4% 41.6% 100.0%
Financial Industrial Utilities Total
At 31 December 2021 £’k £’k £’k £’k
Corporate bonds 30,642 31,863 2,092 64,597
% of holdings 47.5% 49.3% 3.2% 100.0%
4.3. Fair value
ACCOUNTING POLICY
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date, or in its absence, the most advantageous market to which the Group has access at that date.
The Group measures the fair value of an instrument using the quoted bid price in an active market for that instrument. A market is regarded as active if
transactions for the asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. A market is regarded
as active if quoted prices are readily and regularly available from the stock exchange or pricing service, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing bid price.
Fair value measurements are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Group’s view of market assumptions in the absence of observable market information.
IFRS 13 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the fair value measurement.
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
4.2. Investment concentration risk continued
Investment concentration – by area
United Kingdom 49.4%
Europe (excluding UK)
32.4%
North America
18.2%
Investment concentration – by type
Government bonds 38.1%
Government-backed securities
35.2%
Corporate bonds
26.7%
Corporate bonds – by industry
Financial 51.0%
Industrial
45.9%
Utilities
3.1%
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Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:
Level 1: fair value is based on quoted market prices (unadjusted) in active markets for identical instruments as measured on reporting date
Level 2: fair value is determined through inputs, other than quoted prices included in Level 1 that are observable for the assets and liabilities, either directly
(prices) or indirectly (derived from prices)
Level 3: fair value is determined through valuation techniques which use significant unobservable inputs
Level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. A market is regarded as
active if quoted prices are readily and regularly available from the stock exchange or pricing service, and those prices represent actual and regularly occurring market
transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing bid price. These instruments are included in
Level 1 and comprise only debt securities classified as fair value through other comprehensive income.
Level 2
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the
use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant input required to fair value an instrument
is observable, the instrument is included in Level 2. The Group has no Level 2 financial instruments.
Level 3
If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3. The Group has no Level 3 financial
instruments.
The following table summarises the classification of financial instruments:
Level 1 Level 2 Level 3 Total
As at 31 December 2022 £’k £’k £’k £’k
Assets held at fair value
Financial investments 229,158 229,158
Total 229,158 229,158
Level 1 Level 2 Level 3 Total
As at 31 December 2021 £’k £’k £’k £’k
Assets held at fair value
Financial investments 234,667 234,667
Total 234,667 234,667
Transfers between levels
There have been no transfers between levels during the year (2021: no transfers).
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
4.3. Fair value continued
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4.4. Loans and receivables
ACCOUNTING POLICY
Classication
The Group classifies its loans and receivables as at amortised cost only if both of the following criteria are met:
The asset is held within a business model whose objective is to collect the contractual cash flows
The contractual terms give rise to cash flows that are solely payments of principle and interest
Recognition and measurement
Loans and receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for
expected credit losses.
Impairment
The Group measures loss allowances at an amount equal to lifetime ECL. To measure the expected credit losses, loans and receivables have been grouped
based on shared credit risk characteristics and the days past due to create the categories namely performing, underperforming and not performing. The
expected loss rates are based on the payment profiles of receivables over a period of 36 months before year end. The loss rates are adjusted to reflect current
and forward-looking information on macro-economic factors, such as the socio-economic environment affecting the ability of the debtors to settle the
receivables. Receivables that are 30 days or more past due are considered to be ‘not performing’ and the default rebuttable presumption of 90 days prescribed
by IFRS 9 is not applied.
Performing
Customers have a low risk of default and a strong capacity to meet contractual cash flows.
Underperforming
Loans for which there is a significant increase in credit risk. A significant increase in credit risk is presumed if interest and/or principal repayments are past due.
Not performing
Interest and/or principal repayments are 30 days past due.
The Group’s loans and receivables comprises of:
2022 2021
£’k £’k
Other debtors 7 76
Provision for expected credit losses (2)
Total 7 74
The estimated fair values of loans and receivables are the discounted amounts of the estimated future cash flows expected to be received.
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
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The carrying value of loans and receivables approximates fair value. Provision for expected credit losses are based on the recoverability of the individual loans and
receivables.
ECL
rate ECL method Gross
Provision
opening
balance
(Released)/
raised in the
period
Provision closing
balance Net
At 31 December 2022 % £’k £’k £’k £’k £’k £’k
Performing 2.5% Lifetime 7 (2) 2 7
Underperforming 25.0% Lifetime
Not performing 50.0% Lifetime
Total 7 (2) 2 7
ECL
rate ECL method Gross
Provision opening
balance
(Released)/
raised in the
period
Provision closing
balance Net
At 31 December 2021 % £’k £’k £’k £’k £’k £’k
Performing 2.5% Lifetime 76 (2) (2) 74
Underperforming 25.0% Lifetime
Not performing 50.0% Lifetime
Total 76 (2) (2) 74
The forward-looking information considered was deemed to have an immaterial impact on expected credit losses.
4.5. Cash and cash equivalents
ACCOUNTING POLICY – CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held on call with banks and money market funds. Cash and cash equivalents are carried at amortised cost.
2022 2021
£’k £’k
Cash and cash equivalents 18,502 3 0,611
Total 18,502 3 0,611
Cash and cash equivalents include money market funds with no notice period for withdrawal.
The carrying value of cash and cash equivalents approximates fair value. The full value is expected to be realised within 12 months.
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
4.4. Loans and receivables continued
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4.6. Credit risk
ACCOUNTING POLICY
Impairment of nancial assets
At each reporting date, the Group assesses financial assets measured at amortised cost and debt securities at FVOCI for impairment. Under IFRS 9 a ‘three-
stage’ model for calculated Expected Credit Losses (“ECL”) is used, and is based on changes in credit quality since initial recognition as summarised below:
Performing nancial assets
Stage 1: From initial recognition of a financial asset to the date on which an asset has experienced a significant increase in credit risk relative to its initial
recognition, a stage 1 loss allowance is recognised equal to the credit losses expected to result from its default occurring over the earlier of the next 12
months or its maturity date (“12-month ECL”).
Stage 2: Following a significant increase in credit risk relative to the initial recognition of the financial asset, a stage 2 loss allowance is recognised equal to the
credit losses expected from all possible default events over the remaining lifetime of the asset (“Lifetime ECL”). The assessment of whether there has been a
significant increase in credit risk, such as an actual or significant change in instruments external credit rating; significant widening of credit spread; changes in
rates or terms of instrument; existing or forecast adverse change in business, financial or economic conditions that are expected to cause a significant change
in the counterpartys ability to meet its debt obligations; requires considerable judgement, based on the lifetime probability of default (“PD”). Stage 1 and 2
allowances are held against performing loans; the main difference between stage 1 and stage 2 allowances is the time horizon. Stage 1 allowances are
estimated using the PD with a maximum period of 12 months, while stage 2 allowances are estimated using the PD over the remaining lifetime of the asset.
Impaired nancial assets
Stage 3: When a financial asset is considered to be credit-impaired, the allowance for credit losses (“ACL”) continues to represent lifetime expected credit
losses, however, interest income is calculated based on the amortised cost of the asset, net of the loss allowance, rather than its gross carrying amount.
Application of the impairment model
The Group applies IFRS 9’s ECL model to two main types of financial assets that are measured at amortised cost or FVOCI:
Other receivables, to which the simplified approach prescribed by IFRS 9 is applied. This approach requires the recognition of a Lifetime ECL allowance on day one.
Debt securities, to which the general three-stage model (described above) is applied, whereby a 12-month ECL is recognised initially and the balance is
monitored for significant increases in credit risk which triggers the recognition of a Lifetime ECL allowance.
ECLs are a probability-weighted estimate of credit losses. The probability is determined by the estimated risk of default which is applied to the cash flow
estimates. On a significant increase in credit risk, from investment grade to non-investment grade, allowances are recognised without a change in the expected
cash flows (although typically expected cash flows do also change) and expected credit losses are rebased from 12-month to lifetime expectations.
The measurement of ECLs considers information about past events and current conditions, as well as supportable information about future events and
economic conditions.
Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the
loss allowance is recognised in the profit or loss account and accounted for as a transfer from OCI to profit or loss, instead of reducing the carrying amount of
the asset.
Write-offs
Loans and debt securities are written off (either partially or in full) when there is no realistic prospect of the amount being recovered. This is generally the case
when the Group concludes that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject
to the write-off.
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
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Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2022 £’k £’k £’k £’k £’k £’k £’k
UK Government bonds 8 7,151 87,151
Government-backed securities 80,031 722 80,753
Corporate bonds 2,839 41,235 17,180 61,254
Loans and other receivables 7 7
Cash and cash equivalents 5,340 52 13,110 18,502
Total 85,371 90,764 54,345 17,180 7 247,667
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2021 £’k £’k £’k £’k £’k £’k £’k
UK Government bonds 86,192 86,192
Government-backed securities 75,294 8,584 83,878
Corporate bonds 3,128 39,417 22,052 64,597
Loans and other receivables 74 74
Cash and cash equivalents 368 51 30,192 3 0,611
Total 75,662 97,9 5 5 69,609 22,052 74 265,352
With exception of loans and other receivables, all the Company’s financial assets are investment grade (AAA to BBB).
Analysis of credit risk and allowance for expected credit loss
The following table provides an overview of the allowance for ECL provided for on the types of financial assets held by the Group where credit risk is prevalent.
Gross carrying amount Allowance for ECL Net amount
At 31 December 2022 £’k £’k £’k
Government bonds 87,151 (3) 87,148
Government-backed securities 80,753 (2) 80,751
Corporate bonds 61,254 (27) 61,227
Loans and other receivables 7 7
Cash and cash equivalents 18,502 18,502
Total 247,667 (32) 247,6 3 5
Gross carrying amount Allowance for ECL Net amount
At 31 December 2021 £’k £’k £’k
Government bonds 86,192 (8) 86,184
Government-backed securities 83,878 (4) 83,874
Corporate bonds 64,597 (52) 64,545
Loans and other receivables 74 (2) 72
Cash and cash equivalents 30 ,611 3 0,611
Total 265,352 (66) 265,286
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
4.6. Credit risk continued
UK government bonds
AAA 0.0%
AA+ to AA-
100.0%
A+ to A-
0.0%
BBB+ to BBB- 0.0%
BB+ and below
0.0%
Not rated
0.0%
Government-backed securities
AAA 99.1%
AA+ to AA-
0.9%
A+ to A-
0.0%
BBB+ to BBB- 0.0%
BB+ and below
0.0%
Not rated
0.0%
Corporate bonds
AAA 0.0%
AA+ to AA-
4.6%
A+ to A-
67.3%
BBB+ to BBB- 28.1%
BB+ and below
0.0%
Not rated
0.0%
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4.7. Interest rate risk – financial assets
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate
instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. Currently the Group
holds only fixed rate securities.
The Group’s interest risk policy requires it to manage the maturities of interest-bearing financial assets and interest-bearing financial liabilities. Interest on fixed
interest rate instruments is priced at inception of the financial instrument and is fixed until maturity.
The Group has a concentration of interest rate risk in UK government bonds and other fixed-income securities.
The analysis that follows is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit
before tax and equity. The correlation of variables will have a significant effect in determining the ultimate impact on interest rate risk, but to demonstrate the impact
due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear.
Note that the Group’s investment portfolio has been designed such that the cash flows yielded from investments match, as far as possible, the projected outflows
inherent primarily within the claims reserve.
The impact of any movement in market values, such as those caused by changes in interest rates, is taken through other comprehensive income and has no impact
on profit after tax.
Decrease Decrease
in profit aer tax in total equity
2022 2021 2022 2021
At 31 December £’k £’k £’k £’k
Interest rate
Impact of a 100-basis point increase in interest rates on financial investments (1,940) (3,861)
Impact of a 200-basis point increase in interest rates on financial investments (3,881) (5,781)
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
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4.8. Investment income
ACCOUNTING POLICY
Investment income from debt instruments classified as FVOCI are measured using the effective interest rate which allocates the interest income or interest
expense over the expected life of the asset or liability at the rate that exactly discounts all estimated future cash flows to equal the instrument's initial carrying
amount. Calculation of the effective interest rate takes into account fees payable or receivable that are an integral part of the instrument's yield, premiums or
discounts on acquisition or issue, early redemption fees and transaction costs. All contractual terms of a financial instrument are considered when estimating
future cash flows.
2022 2021
£’k £’k
Interest income on financial assets using effective interest rate method
Interest income from debt securities 1,567 1,507
Investment fees (293) (308)
Interest income from cash and cash equivalents 100 11
Total 1,374 1,210
4.9. Net gains/(losses) from fair value adjustments on financial assets
ACCOUNTING POLICY
Movements in the fair value of debt instruments classified as FVOCI are taken through OCI. When the instruments are derecognised, the cumulative gain or
losses previously recognised in OCI is reclassified to profit or loss.
2022 2021
£’k £’k
Profit or loss
Realised fair value gains/(losses) on debt securities 22 (16)
Realised fair value gains/(losses) on debt securities reclassified to profit or loss 22 (16)
Other comprehensive income
Unrealised fair value losses on debt securities (14,175) (5,674)
Movement in expected credit loss (32) 16
Unrealised fair value losses on debt securities through other comprehensive income (14,207) (5,658)
Net losses from fair value adjustments on financial assets (14,185) (5,674)
Notes to the Consolidated Financial Statements continued
4. FINANCIAL ASSETS continued
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5. OTHER LIABILITIES
The Group’s other liabilities are summarised below:
2022 2021
Notes £’k £’k
Other liabilities at amortised cost
Lease liabilities 5.1 193
Trade and other payables, excluding insurance payables 5.3 5,005 5,831
Total 5,005 6,024
5.1. Lease liability
2022 2021
£’k £’k
As at the beginning of the year 193 194
Cash movements
Lease payments (198) (264)
Non-cash movements
Lease extension during the year 247
Interest 5 16
As at 31 December 193
Current 193
Non-current
5.2. Finance costs
ACCOUNTING POLICY
Finance costs are recognised using the effective interest method.
2022 2021
£’k £’k
Interest on lease liabilities 5 16
Total 5 16
Notes to the Consolidated Financial Statements continued
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5.3. Trade and other payables, excluding insurance payables
ACCOUNTING POLICY
Trade and other payables are recognised when the Group has a contractual obligation to deliver cash or another financial asset to another entity, or a contractual
obligation to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity. Trade and other
payables are carried at amortised cost.
2022 2021
£’k £’k
Trade and other creditors 657 321
Other taxes 4,348 5,510
Total 5,005 5,831
6. LIQUIDITY RISK
Liquidity risk is the potential that obligations cannot be met as they fall due as a consequence of having a timing mismatch or inability to raise sufficient liquid assets
without suffering a substantial loss on realisation. The Group manages its liquidity risk through both ensuring that it holds sufficient cash and cash equivalent assets
to meet all short-term liabilities and matching, as far as possible, the maturity profile of its financial investments to the expected cash outows.
The liquidity of the Group’s insurance and financial liabilities and supporting assets is given in the tables below:
Total Within 1 year 1–2 years 34 years 5–10 years Over 10 years
At 31 December 2022 £’k £’k £’k £’k £’k £’k
Reinsurance assets, excluding UPR
(1)
106,343 31,936 26,290 25,330 22,787
Government bonds 87,151 14,463 26,470 38,992 7,226
Government-backed securities 80,753 5,119 69,693 5,941
Corporate bonds 61,254 4,426 44,514 12,314
Insurance receivables 31,427 31,427
Loans and other receivables 7 7
Cash and cash equivalents
(2)
18,502 18,502
Total 385,437 105,880 166,967 82,577 30,013
Total Within 1 year 1–2 years 34 years 5–10 years Over 10 years
At 31 December 2022 £’k £’k £’k £’k £’k £’k
Insurance liabilities, excluding UPR
(1)
257,4 4 3 106,486 77,890 44,025 29,042
Insurance payable 5,981 5,981
Trade and other payables 5,005 5,005
Total 268,429 117,472 77,890 44,025 29,042
Management have considered the liquidity and cash generation of the Group and are satisfied that the Group will be able to meet all liabilities as they fall due.
(1) Unearned premiums are excluded as there are no liquidity risks inherent in them.
(2) Includes money market funds with no notice period for withdrawal.
Notes to the Consolidated Financial Statements continued
5. FINANCIAL LIABILITIES continued
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Total Within 1 year 1–2 years 34 years 5 –10 years Over 10 years
At 31 December 2021 £’k £’k £’k £’k £’k £’k
Reinsurance assets, excluding UPR
(1)
103,628 43,546 34,496 18,393 7,19 3
UK Government bonds 86,192 27,313 22,845 35,001 1,033
Government-backed securities 83,878 8,479 64,752 10,647
Corporate bonds 64,597 2,203 14,034 48,360
Insurance receivables 38,003 38,003
Loans and other receivables 74 74
Cash and cash equivalents
(2)
30,611 30,611
Total 406,983 150,229 136,127 112,4 01 8,226
Total Within 1 year 1–2 years 34 years 5 –10 years Over 10 years
At 31 December 2021 £’k £’k £’k £’k £’k £’k
Insurance liabilities, excluding UPR
(1)
232,516 112,975 75,661 32,848 11,0 32
Insurance payables 7,115 7,115
Lease liabilities 193 193
Trade and other payables 5,831 5,831
Total 245,655 126,114 75,661 32,848 11,0 3 2
(1) Unearned premiums are excluded as there are no liquidity risks inherent in them.
(2) Includes money market funds with no notice period for withdrawal.
7. OTHER OPERATING INCOME
ACCOUNTING POLICY
Other operating income consists of marketing fees, commissions resulting from the sale of ancillary products connected to the Group’s direct business, and
other non-insurance income such as administrative fees charged on direct business. Such income is recognised once the related service has been performed.
Typically, this will be at the point of sale of the product.
2022 2021
£’k £’k
Marketing fees 384 463
Fee income from the sale of auxiliary products and services 261 196
Administration fees 1,139 1,439
Total 1,784 2,098
Notes to the Consolidated Financial Statements continued
6. LIQUIDITY RISK continued
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8. OPERATING EXPENSES
2022 2021
Notes £’k £’k
Employee expenses 8.1 12,536 12,338
Property expenses 428 331
IT expense including IT depreciation 5,043 5,125
Other depreciation 17 33
Industry levies 5,913 5,000
Policy servicing costs 2,164 2,282
Other operating expenses 2,665 2,189
Expected credit loss on financial assets (34) 16
Before adjustments for deferred acquisition costs and claims handling expenses 28,732 27, 314
Adjusted for:
Claims handling expense reclassification (7,613) (6,767)
Movement in deferred acquisition costs 83 939
Total operating expenses 21,202 21,486
8.1. Employee expenses
ACCOUNTING POLICY
A. Pensions
For staff who were employees on 8 February 2002, the Group operates a non-contributory defined contribution Group personal pension scheme. The
contribution by the Group depends on the age of the employee.
For employees joining since 8 February 2002, the Group operates a matched contribution Group personal pension scheme where the Group contributes an
amount matching the contribution made by the staff member.
Contributions to defined contribution schemes are recognised in the profit or loss account in the period in which they become payable.
B. Share-based payments
The fair value of equity instruments granted under share-based payment plans are recognised as an expense and spread over the vesting period of the
instrument. The total amount to be expensed is determined by reference to the fair value of the awards made at the grant date, excluding the impact of any
non-market vesting conditions. Depending on the plan, the fair value of equity instruments granted is measured on grant date using an appropriate valuation
model or the market price on grant date. At the date of each statement of financial position, the Group revises its estimate of the number of equity instruments
that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the profit or loss account, and a corresponding
adjustment is made to equity over the remaining vesting period. The fair value of the awards and ultimate expense are not adjusted on a change in market
vesting conditions during the vesting period.
C. Leave pay
Employee entitlement to annual leave is recognised when it accrues to employees. An accrual is made for the estimated liability for annual leave as a result of
services rendered by employees up to the statement of financial position date.
Notes to the Consolidated Financial Statements continued
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The aggregate remuneration of those employed by the Group’s operations comprised:
2022 2021
£’k £’k
Wages and salaries 8,988 9,417
Issue of share-based payments 1,603 1,075
Social security expenses 1,213 1,19 3
Pension expenses 508 475
Other staff expenses 224 178
Before adjustments for deferred acquisition costs and claims handling expenses 12,536 12,338
Adjusted for:
Claims handling expense reclassification (5,860) (5,239)
Movement in deferred acquisition costs 92 535
Employee expenses 6,768 7,63 4
8.2. Number of employees
The table below analyses the average monthly number of persons employed by the Group’s operations.
2022 2021
Operations 123 124
Support 28 30
Total 151 154
8.3. Directors remuneration
Amounts paid to Directors are disclosed within the “Annual Report on Directors Remuneration” on pages 78 to 87.
8.4. Auditors’ remuneration
The table below analyses the Auditor’s remuneration in respect of the Group’s operations.
2022 2021
£’k £’k
Audit of these financial statements 180 124
Audit of financial statements of subsidiaries of the Group 175 255
Audit fees in relation to IFRS 17 transition 85
Total audit fees 440 379
Fees for non-audit services – Audit-related assurance services 79 80
Fees for non-audit services – Other non-audit services
Total non-audit fees 79 80
Total auditor remuneration 519 459
The above fees exclude irrecoverable VAT of 20%.
Notes to the Consolidated Financial Statements continued
8. OPERATING EXPENSES continued
8.1. Employee expenses continued
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9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of owned and leased assets that do not meet the definition of investment property.
2022 2021
£’k £’k
Property, plant and equipment – owned 3,996 4,066
Property, plant and equipment – leased (Right-of-use assets) 187
Total 3,996 4,253
9.1. Owned assets
ACCOUNTING POLICY
A. Owner-occupied property
Owner-occupied properties are held by the Group for use in the supply of services or, for its own administration purposes.
Owner-occupied property is held at fair value. Increases in the carrying amount of owner-occupied properties as a result of revaluations are credited to other
comprehensive income and accumulated in a revaluation reserve in equity. To the extent that a revaluation increase reverses a revaluation decrease that was
previously recognised as an expense in profit or loss, such increase is credited to income in profit or loss. Decreases in valuation are charged to profit or loss, except
to the extent that a decrease reverses the existing accumulated revaluation reserve and therefore such a decrease is recognised in other comprehensive income.
A fair value assessment of the owner-occupied property is undertaken at each reporting date with any material changes in fair value recognised. Valuation is at
highest and best use. Owner-occupied property is also revalued by an external qualified surveyor, at least every three years. UK properties do not have frequent
and volatile fair value changes and as such, more frequent revaluations are considered unnecessary, as only insignificant changes in fair value is expected.
Owner-occupied land is not depreciated. As the depreciation of owner-occupied buildings is immaterial and properties are revalued every three years by an
external qualified surveyor, no depreciation is charged on owner-occupied buildings
B. Fixtures, ttings and computer equipment
Fixtures, fittings and computer equipment are stated at historical cost less accumulated depreciation and impairment charges. Historical cost includes
expenditure that is directly attributable to the acquisition of property and equipment.
Depreciation is calculated on the difference between the cost and residual value of the asset and is charged to the profit or loss account over the estimated
useful life of each significant part of an item of fixtures, fittings and computer equipment, using the straight-line basis.
Estimate useful lives are as follows:
Fixtures and fittings 5 years
Computer equipment 5 years
The assets’ residual values and useful lives are reviewed at each statement of financial position date and adjusted if appropriate. An asset’s carrying amount is
written down to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount of the assets and are included in profit or loss before tax.
Repairs and maintenance costs are charged to the profit or loss account during the financial period in which they are incurred. The cost of major renovations is
included in the carrying amount of the asset when it is probable that future economic benefits from the renovations will flow to the Group.
Notes to the Consolidated Financial Statements continued
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Owner-
occupied
Fixtures and
fittings
Computer
equipment Total
£’k £’k £’k £’k
Cost/Valuation
At 1 January 2022 4,250 240 848 5,338
Additions 27 11 38
Disposals (226) (450) (676)
Revaluation
At 31 December 2022 4,250 41 409 4,700
Accumulated depreciation and impairment
At 1 January 2022 425 218 629 1,272
Depreciation charge for the year 17 91 108
Disposals (226) (450) (676)
Impairment losses on revaluation
At 31 December 2022 425 9 270 704
Carrying amount
As at 31 December 2022 3,825 32 139 3,996
All items disposed where either donated to charity or recycled at £NIL.
Owner-occupied
Fixtures and
fittings
Computer
equipment Total
£’k £’k £’k £’k
Cost/Valuation
At 1 January 2021 4,250 235 825 5,310
Additions 5 23 28
Disposals
Revaluation
At 31 December 2021 4,250 240 848 5,338
Accumulated depreciation and impairment
At 1 January 2021 425 185 526 1,136
Depreciation charge for the year 33 103 136
Disposals
Impairment losses on revaluation
At 31 December 2021 425 218 629 1,272
Carrying amount
As at 31 December 2021 3,825 22 219 4,066
Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT continued
9.1. Owned assets continued
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The Group holds two owner-occupied properties, Sabre House and The Old House, which are both managed by the Group. In accordance with the Group’s
accounting policies, owner-occupied buildings are not depreciated. The properties are measured at fair value which is arrived at on the basis of a valuation carried
out on 1 December 2020 by Hurst Warne and Partners LLP. The valuation was carried out on an open-market basis in accordance with the Royal Institution of
Chartered Surveyors’ requirements, which is deemed to equate to fair value. While transaction evidence underpins the valuation process, the definition of market
value, including the commentary, in practice requires the valuer to reflect the realities of the current market. In this context valuers must use their market
knowledge and professional judgement and not rely only upon historical market sentiment based on historical transactional comparables.
The fair value of the owner-occupied properties was derived using the investment method supported by comparable evidence. The significant non-observable
inputs used in the valuations are the expected rental values per square foot and the capitalisation rates. The fair value of the owner-occupied properties valuation
would increase (decrease) if the expected rental values per square foot were to be higher (lower) and the capitalisation rates were to be lower (higher).
Management has performed a fair value assessment of the owner-occupied property which includes a review of current market rental costs. Expected rental costs
per square foot are above the rates as at the date of the last external valuation and do not indicate a decrease in the fair value of the owner-occupied property.
The fair value measurement of owner-occupied properties of £3,825k (2021: £3,825k) has been categorised as a Level 3 fair value based on the non-observable
inputs to the valuation technique used.
The following table shows reconciliation to the closing fair value for the Level 3 owner-occupied property at valuation:
2022 2021
Owner-occupied £’k £’k
At 1 January 3,825 3,825
Revaluation losses
Impairment losses
At 31 December 3,825 3,825
The fair value of owner-occupied includes a revaluation reserve of £800k (2021: £800k) (excluding tax impact) and is not distributable.
Revaluation losses are charged against the related revaluation reserve to the extent that the decrease does not exceed the amount held in the revaluation surplus in
respect of the same asset. Any additional losses are charged as an impairment loss in the profit or loss account. Reversal of such impairment losses in future
periods will be credited to the profit or loss account to the extent losses were previously charged to the profit or loss account.
The table below shows the impact a 15% decrease in property markets will have on the Company’s profit after tax and equity:
At 31 December
Decrease
in profit aer tax
Decrease
in total equity
2022
£'k
2021
£'k
2022
£'k
2021
£'k
Owner-occupied property
Impact of a 15% decrease in property markets (131) (131) (465) (465)
Historical cost model values
If owner-occupied properties were carried under the cost model (historical costs, less accumulated depreciation and impairment losses), the value of owner-
occupied properties in the balance sheet would have been £2,816k (2021: £2,845k).
Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT continued
9.1. Owned assets continued
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9.2. Leased assets
ACCOUNTING POLICY
Right-of-use assets
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying assets or to restore the underlying asset or the site on which it is located, less any
lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as property and equipment.
In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
Fixed payments, including in-substance fixed payments
Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date
Amounts expected to be payable under a residual value guarantee
The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising
from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the
Group changes its assessment of whether it will exercise a purchase, extension or termination option.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less
and leases of low-value assets, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT continued
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Right-of-use assets
Additional information on the right-of-use assets by class of assets is as follows:
Computer
equipment Total
£’k £’k
As at 1 January 2022 187 187
Additions
Depreciation (187) (187)
As at 31 December 2022
The Group’s right-of-use asset has expired during 2022 and no new lease for IT equipment has been entered into. The right-of-use asset has therefore been
derecognised.
Computer
equipment Total
£’k £’k
As at 1 January 2021 189 189
Additions 247 247
Depreciation (249) (249)
As at 31 December 2021 187 187
Lease liabilities
Lease liabilities are presented in the statement of financial position as follows:
2022 2021
£’k £’k
As at 1 January 193 194
Additions 247
Accretion of interest 5 16
Payments (198) (264)
As at 31 December 193
Current 193
Non-current
Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT continued
9.2. Leased assets continued
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The following are the amounts recognised in the profit or loss account:
2022 2021
£’k £’k
Depreciation expense of right-of-use assets 187 249
Interest expense on lease liabilities 5 16
Expenses relating to short-term leases (included in IT expenses)
Expenses relating to low-value assets (included in other operating expenses) 14 14
Variable lease payments
Total 206 279
The Group had total cash outflows for leases of £212k in 2022 (2021: £278k). The Group had no non-cash additions to right-of-use assets or lease liabilities. The
lease contract expired during 2022.
10. TAX CHARGE
ACCOUNTING POLICY
The taxation charge in the profit or loss account is based on the taxable profits for the year. It is Group policy to relieve profits where possible by the surrender of
losses from Group companies with payment for value.
2022 2021
£’k £’k
Current taxation
Charge for the year 2,644 6,935
2,644 6,935
Deferred taxation (Note 11)
Origination and reversal of temporary differences (1) 124
(1) 124
Current taxation 2,644 6,935
Deferred taxation (Note 11) (1) 124
Tax charge for the year 2,643 7,059
Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT continued
9.2. Leased assets continued
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Governance Financials
Tax recorded in other comprehensive income is as follows:
2022 2021
£’k £’k
Current taxation
Deferred taxation (3,563) (1,069)
(3,563) (1,069)
The actual income tax charge differs from the expected income tax charge computed by applying the standard rate of UK corporation tax of 19.00% (2021: 19.00%)
as follows:
2022 2021
£’k £’k
Profit before tax 12,750 37,199
Expected tax charge 2,423 7,0 6 8
Effect of:
Expenses not deductible for tax purposes 9 6
Adjustment of deferred tax to average rate of 23.5% (2)
Other permanent difference
Adjustment in respect of prior periods 9 (99)
Income/loss not subject to UK taxation 6 8
Other Income Tax Adjustments 198 76
Tax charge for the year 2,643 7,059
Effective income tax rate 20.73% 18.98%
Notes to the Consolidated Financial Statements continued
10. TAX CHARGE continued
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11. DEFERRED TAX CHARGE
ACCOUNTING POLICY
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date where transactions or events
have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exception.
Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from
which the future reversal of the underlying timing differences can be deducted.
Provisions and
other temporary
dierences
Depreciation in
excess of capital
allowances
Share-based
Payments
Fair value
movements in
debt securities at
FVOCI Total
£’k £’k £’k £’k £’k
At 1 January 2021 21 (24) 347 (469) (125)
(Debit)/Credit to the profit or loss (2) (2) (114) (6) (124)
(Debit)/Credit to other comprehensive income 1,069 1,069
At 31 December 2021 19 (26) 233 594 820
(Debit)/Credit to the profit or loss (19) 6 20 (6) 1
(Debit)/Credit to other comprehensive income 3,563 3,563
At 31 December 2022 (20) 253 4,151 4,384
2022 2021
£’k £’k
Per statement of financial position:
Deferred tax assets 4,404 846
Deferred tax liabilities (20) (26)
4,384 820
From 1 April 2023, The Finance Act 2021 increases the UK corporation tax from 19% to 25%. This means that 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 adjusted deferred tax balances accordingly. The impact of this adjustment on the
deferred tax balances is not material.
Notes to the Consolidated Financial Statements continued
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12. DIVIDENDS
ACCOUNTING POLICY
Dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividend is approved.
2022 2021
pence per share £’k pence per share £’k
Amounts recognised as distributions to equity holders in the period
Interim dividend for the current year 2.8 6,960 3.7 9,218
Final dividend for the prior year 9.3 23,172 11.7 29,168
12.1 30,132 15.4 38,386
Proposed dividends
Final dividend
(1)
1.7 4,250 9.3 23,250
(1) Subsequent to 31 December 2022, the Directors declared a final dividend for 2022 of 1.7p per ordinary share. This dividend will be accounted for as an appropriation of retained earnings in
the year ended 31 December 2022 and is not included as a liability in the Statement of Financial Position as at 31 December 2022.
The trustees of the employee share trusts waived their entitlement to dividends on shares held in the trusts to meet obligations arising on share incentive schemes,
which reduced the dividends paid for the year ended 31 December 2022 by £118k (2021: £114k).
13. PREPAYMENTS, ACCRUED INCOME AND OTHER ASSETS
2022 2021
£’k £’k
Prepayments and accrued income 1,278 821
Total 1,278 821
The carrying value of prepayments, accrued income and other assets approximates to fair value. There are no amounts expected to be recovered more than 12
months after the reporting date.
14. GOODWILL
ACCOUNTING POLICY
Goodwill has been recognised in acquisitions of subsidiaries and represents the difference between the cost of the acquisition and the fair value of the net
identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses.
Impairment of goodwill
The Group perform an annual impairment review which involves comparing the carrying amount to the estimated recoverable amount and recognising an
impairment loss if the recoverable amount is lower than the carrying amount. Impairment losses are recognised through the profit or loss account and are not
subsequently reversed.
The recoverable amount is the greater of the fair value of the asset less costs to sell and the value in use.
The value in use calculations use cash flow projections based on financial budgets approved by management.
Notes to the Consolidated Financial Statements continued
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On 3 January 2014 the Group acquired Binomial Group Limited, the parent of Sabre Insurance Company Limited, for a consideration of £245,485k satisfied by cash.
As from 1 January 2014, the date of transition to IFRS, goodwill was no longer amortised but is subject to annual impairment testing. Impairment testing involves
comparing the carrying value of the net assets and goodwill against the recoverable amount.
The goodwill recorded in respect of this transaction at the date of acquisition was £156,279k. There has been no impairment to goodwill since this date, and no
additional goodwill has been recognised by the Group.
The Group performed its annual impairment test as at 31 December 2022 and 31 December 2021. The Company considers the relationship between the Group’s
market capitalisation and the book value of its subsidiary undertakings, among other factors, when reviewing for indicators of impairment.
Key assumptions
The market capitalisation of the Company as at 31 December 2022 had reduced to £266,000k from £459,500k at 31 December 2021. This provided an indication
that the underlying value had been impaired, and therefore the Directors carried out an impairment assessment based on the Cash Generating Units (“CGUs”)
within the Group.
The group has identified one CGU, for which goodwill has been fully allocated. The Group has assessed the recoverable amount of the CGU as its “value-in-use”.
Value-in-use is defined as the present value of the future cash flows expected to derive from the CGU and represents the recoverable amount for the CGU.
We have used a dividend discount model to estimate the value-in-use, wherein dividend payments are discounted to the present value. Dividends have been
estimated, based on forecasted financial information, over a four-year forecast period with and terminal growth rate applied. The key assumptions used in the
preparation of future cash flows are: plan-period financial performance, dividend payout ratio, long-term growth rates and discount rate.
The key assumptions used in the calculation for the value in use is set out below
Plan period financial performance set in-line with the Group’s expectations
Dividend payout ratio in line with the Group’s strategy
Long-term growth rate beyond the plan period of 2%
Discount rate of 9.5%, being a calculated cost of capital using market rate returns of Sabre and comparable insurers
These calculations use post-tax cash flow projections based on the Group’s capital models. As the value-in-use exceeds the carrying amount, the recoverable
amount remains supportable.
The Group has conducted sensitivity testing to the recoverable amount, in order to understand the relevance of these various factors in arriving at the value in use.
Dividend within the plan period – To assess the impact of reasonable changes in performance on our base case impairment analysis and headroom, we flexed the
dividend within the plan period by +10% and -10%. In doing so, the value in use varied by approximately 10.0% around the central scenario.
Long term growth rate – To assess the impact of reasonable changes in the long-term growth rate on our base case impairment analysis and headroom, we
flexed the long-term growth rate by +1% and -1%. In doing so, the value in use varied by approximately 7.1% around the central scenario.
Discount rate – To assess the impact of reasonable changes in the dividend payout ratio on our base case impairment analysis and headroom, we flexed the
average discount rate by +2% and -2%. In doing so, the value in use varied by approximately 13.0% around the central scenario.
When applying these stressed factors, no scenario suggested an impairment of goodwill would be required.
Notes to the Consolidated Financial Statements continued
14. GOODWILL continued
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15. SHARE CAPITAL
2022 2021
£’k £’k
Authorised share capital
250,000,000 ordinary shares of £0.001 each 250 250
Issued ordinary share capital (fully paid up):
250,000,000 ordinary shares of £0.001 each 250 250
All shares are unrestricted and carry equal voting rights.
As at 31 December 2022, The Sabre Insurance Group Employee Benefit Trust held 1,431,576 (2021: 866,855) of the 250,000,000 issued ordinary shares with a
nominal value of £1,431.58 (2021: £866.86) in connection with the operation of the Group’s share plans. Refer to Notes 16 and 17 for additional information on own
shares held.
16. SHARE-BASED PAYMENTS
The Group operates equity-settled share-based schemes for all employees in the form of a Long-Term Incentive Plan (“LTIP”), Deferred Bonus Plan (“DBP”) and
Share Incentive Plans (“SIP”), including Free Shares and Save As You Earn (“SAYE”). The shares are in the ultimate parent company, Sabre Insurance Group plc.
Free shares donated at listing Shares bought/(sold) on open market Total
Number of shares
Average
price
(pence) £ Number of shares
Average
price
(pence) £ £
As at 31 December 2020 63,031 0.001 63 541,208 275.975 1,493,601 1,493,664
Shares purchased 928,186 256.295 2,378,897 2,378,897
Shares disposed (176,672) 255.443 (451,296) (451,296)
Shares vested (39,901) 0.001 (40) (448,997) 259.367 (1,164,550) (1,164,590)
As at 31 December 2021 2 3,130 0.001 23 843,725 267.46 3 2,256,652 2,256,675
Shares purchased 807,981 141.293 1,141,621 1,141,621
Shares disposed
Shares vested (23,130) (23) (220,130) 267.4 6 3 (588,766) (588,789)
As at 31 December 2022 1,431,576 196.253 2,809,507 2,809,507
In thousands £’k £’k £’k
As at 31 December 2021 2,257 2,257
As at 31 December 2022 2,810 2,810
As at 31 December 2022 there were NIL (2021: NIL) exercisable shares outstanding.
The Group recognised a total expense in the profit or loss for the year ended 31 December 2022 of £1,603k (2021: £1,075k), relating to equity-settled share-based
plans.
Notes to the Consolidated Financial Statements continued
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Long-Term Incentive Plan (“LTIP)
The LTIP is a discretionary share plan, under which the Board may grant share-based awards (“LTIP Awards”) to incentivise and retain eligible employees.
LTIP Awards – Awards with performance conditions
The LTIP with performance conditions is a discretionary share plan, under which the Board may grant share-based awards (“LTIP Awards”) to incentivise and retain
eligible employees. The vesting of LTIP Awards may (and, in the case of an LTIP Award to an Executive Director other than a Recruitment Award, will) be subject to
the satisfaction of performance conditions. Any performance condition may be amended or substituted if one or more events occur which cause the Board to
consider that an amended or substituted performance condition would be more appropriate and would not be materially less difficult to satisfy.
LTIP Awards which are subject to performance conditions will normally have those conditions assessed as soon as reasonably practicable after the end of the
relevant performance period and, to the extent that the performance conditions have been met, the LTIP Awards will vest either on that date or such later date as
the Board determines. LTIP Awards (other than Recruitment Awards) granted to the Executive Directors will normally be subject to a performance period of at least
three years. LTIP Awards (other than Recruitment Awards) which are not subject to performance conditions will normally vest on the third anniversary of the date of
grant or such other date as the Board determines.
The LTIP Awards issued by the Group for 2020 has two performance metrics with a 50%/50% weighting, being Total Shareholder Return (“TSR”) and Earnings Per
Share (“EPS”).
The Group’s TSR is compared to the TSR of the constituents of the FTSE 250 Index (excluding investment trusts and extractive industries). The TSR tranche will
vest in accordance with the following schedule:
2020LTIP grantTSR performance
Below median 0%
Median (Threshold) 25%
Between median and upper quartile Straight-line
Upper quartile (Stretch) 100%
The Group’s EPS performance is the Groups cumulative EPS over the performance period.
2020LTIP grantEPS performance
Below 48.6p 0%
48.6p (Threshold) 25%
Between threshold and target Straight-line
54.0 (Target) 60%
Between target and stretch Straight-line
66.7p or higher (Stretch) 100%
Notes to the Consolidated Financial Statements continued
16. SHARE-BASED PAYMENTS continued
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Shares granted under the 2019 LTIP did not meet the required performance measures and shares granted under the plan were forfeited in 2022.
The following table lists the inputs to the model used to value the remaining LTIP plan for the year ended 31 December 2022. The TSR fair value of the award
granted is measured using the Monte Carlo method and the Black-Scholes model is used for the EPS fair value. The amount recognised as an expense under
IFRS2 is adjusted to reflect the actual number of share awards that vest.
2020 LTIP grant
Weighted average fair value per award at grant date 226 pence
Share price at grant date 282 pence
Expected term 4.43 years
Expected volatility
(1)
30.09%
Expected exercise price on outstanding awards NIL
Grant-date TSR performance of the Group (2.73%)
Average risk – free interest rate 0.10%
(1) Volatility has been estimated using the historical daily average volatility of the share price of similar companies to Sabre over a period of time. This assumption has no impact on the fair value
of the EPS tranche, as the Awards were granted with a nil-cost exercise price.
Shares granted under the LTIP with performance conditions have a three-year vesting period. The Leadership Team Awards are subject to a two-year post-vesting
holding period. To reflect the lack of liquidity of the two-year holding period, a discount rate of 15.40% for the 2020 LTIP grant has been applied in determining the
fair value of the grant to the Leadership Team.
Notes to the Consolidated Financial Statements continued
16. SHARE-BASED PAYMENTS continued
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The tables below detail the movement in the LTIP:
LTIP with performance conditions
Number and WAEP
Number £
Outstanding at 1 January 2022 1,149, 3 5 9 NIL
Granted NIL
Forfeited (541,079) NIL
Vested NIL
Outstanding at 31 December 2022 608,280 NIL
(1) Weighted average exercise price – as a proxy for fair value.
LTIP with performance conditions
Number and WAEP
Number £
Outstanding at 1 January 2021 1, 9 3 5,124 NIL
Granted NIL
Forfeited (499,442) NIL
Vested (286,323) NIL
Outstanding at 31 December 2021 1,149,359 NIL
LTIP Awards – Restricted Share Awards (“RSA”)
From 2021 the Group no longer issues awards under the LTIP Awards with performance conditions, but instead issues RSAs.
The RSAs are structured as nil-cost rewards, to receive free shares on vesting. Shares will normally vest three years after grant date, subject to continued
employment and the satisfaction of pre-determined underpins. Awards are also subject to an additional two-year holding period, so that the total time prior to any
potential share sale (except to meet any tax liabilities arising from the award) will generally be five years.
The total number of shares awarded under the scheme was 540,574 (2021: 441,684) with an estimated fair value at grant date of £1,238k (2021: £1,170k). The fair
value is based on the average closing share price of the five trading days before the grant date.
The awards granted during the year ended 31 December 2022 are subject to the following underpins:
Maintaining a solvency ratio in excess of 140%
Achieving a Return of Tangible Equity in excess of 10%
No material regulatory censure
Overall Committee discretion
Future dividends are accrued separately and are not reflected in the fair value of the grant.
Notes to the Consolidated Financial Statements continued
16. SHARE-BASED PAYMENTS continued
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Notes to the Consolidated Financial Statements continued
16. SHARE-BASED PAYMENTS continued
Deferred Bonus Plan (“DBP”)
To encourage behaviour which does not benefit short-term profitability over longer-term value. Directors and some key staff were awarded shares in lieu of a bonus, to be
deferred for two years, using the market value at the grant date. The total numbers of shares awarded under the scheme was 171,234 (2021: 278,084) with an estimate fair
value of £404k (2021: £672k). Of this award, the number of shares awarded to Directors and Persons Discharging Managerial Responsibilities (“PDMRs”) was 144,659
(2021: 247,007) with an estimated fair value of £341k (2021: £597k). Fair values are based on the share price at grant date. All shares are subject to a two-year service
period and are not subject to performance conditions.
Future dividends are accrued separately and are not reflected in the fair value of the grant.
The DBP is recognised in the profit or loss account on a straight-line basis over a period of two years from grant date.
Share Incentive Plans (“SIPs”)
The Sabre Share Incentive Plans provide for the award of free Sabre Insurance Group plc shares, Partnership Shares (shares bought by employees under the
matching scheme), Matching Shares (free shares given by the employer to match partnership shares) and Dividend Shares (shares bought for employees with
proceeds of dividends from partnership shares). The shares are owned by the Employee Benefit Trust to satisfy awards under the plans. These shares are either
purchased on the market and carried at fair value or issued by the parent company to the trust.
Matching Shares
The Group has a Matching Shares scheme under which employees are entitled to invest between £10 and £150 each month through the share trust from their
pre-tax pay. The Group supplements the number of shares purchased by giving employees 1 free matching share for every 3 shares purchased up to £1,800.
Matching shares are subject to a three-year service period before the matching shares are awarded. Dividends are paid on shares, including matching shares, held
in the trust by means of dividends shares. The fair value of such awards is estimated to be the market value of the awards on grant date.
In the year ended 31 December 2022, 12,317 (2021: 6,987) matching shares were granted to employees with an estimated fair value of £13k (2021: £13k).
As at 31 December 2022, 28,826 (2021: 16,838) matching shares were held on behalf of employees with an estimated fair value of £31k (2021: £31k). The average
unexpired life of Matching Share awards is 1.5 years (2021: 1.1 years).
Save as You Earn (“SAYE”)
The SAYE scheme allows employees to enter into a regular savings contract of between £5 and £500 per month over a three-year period, coupled with a
corresponding option over shares. The grant price is equal to 80% of the quoted market price of the shares on the invitation date. The participants of the SAYE
scheme are not entitled to dividends and therefore dividends are excluded from the valuation of the SAYE scheme.
Estimated fair value of options at grant date:
SAYE 2020: 71p
SAYE 2021: 55p
SAYE 2022: 40p
The following table lists the inputs to the Black-Scholes model used to value the awards granted in respect of the 2022 SAYE scheme.
2022 SAYE
Share price at grant date 216 pence
Expected term 3 years
Expected volatility
(1)
31.0%
Continuously compounded risk-free rate 1.5%
Continuously compounded dividend yield 6%
Strike price at grant date 181.3 pence
(1) Volatility has been estimated using the historical daily average volatility of the share price of the Group for the year immediately preceding the grant date.
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17. RESERVES
Own shares
Sabre Insurance Group plc established an Employee Benefit Trust (“EBT”) in 2017 in connection with the operation of its share plans. The investment in own shares
as at 31 December 2022 was £2,810k (2021: £2,257k). The market value of the shares in the EBT as at 31 December 2022 was £1,523k (2021: £1,593k).
Merger reserve
Sabre Insurance Group plc was incorporated as a limited company on 21 September 2017. On 11 December 2017, immediately prior to the Company’s listing on the
London Stock Exchange, Sabre Insurance Group plc acquired the entire share capital of the former ultimate parent company of the Group, Barbados TopCo Limited
(“TopCo”). As a result, Sabre Insurance Group plc became the ultimate parent of the Sabre Insurance Group. The merger reserve resulted from this corporate
reorganisation.
FVOCI reserve
The FVOCI reserve records the unrealised gains and losses arising from changes in the fair value of debt securities at FVOCI. The movements in this reserve are
detailed in the consolidated Statement of Comprehensive Income.
Revaluation reserve
The revaluation reserve records the fair value movements of the Group’s owner-occupied properties. Refer to Note 9 for more information on the revaluation of
owner-occupied properties.
Share-based payments reserve
The Group’s share-based payments reserve records the value of equity settled share-based payment benefits provided to the Group’s employees as part of their
remuneration that has been charged through the income statement. Refer to Note 16 for more information on share-based payments.
Notes to the Consolidated Financial Statements continued
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18. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc is the ultimate parent and ultimate controlling party of the Group. The following entities included below form the Group.
Name Principle Business Registered Address
Binomial Group Limited Intermediate holding company Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Sabre Insurance Company Limited Motor insurance underwriter Sabre House, 150 South Street, Dorking, Surrey, United Kingdom, RH4 2YY
Barbados TopCo Limited
(1)
Non-Trading Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY
Barb IntermediateCo Limited
(2)
Non-Trading 26 New Street, St Helier, Jersey, JE2 3RA
Barb MidCo Limited
(2)
Non-Trading 26 New Street, St Helier, Jersey, JE2 3RA
Barb BidCo Limited
(2)
Non-Trading 26 New Street, St Helier, Jersey, JE2 3RA
Barb HoldCo Limited
(2)
Non-Trading 26 New Street, St Helier, Jersey, JE2 3RA
Other controlled entities
EBT – UK SIP Trust Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
The Sabre Insurance Group EBT Trust Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
(1) In process of liquidation
(2) Dissolved in February 2023
No single party holds a significant influence (>20%) over Sabre Insurance Group plc.
Both Employee Benefit Trusts (“EBTs”) were established to assist in the administration of the Group’s employee equity-based compensation schemes. UK registered
EBT holds the all-employee SIP. The Jersey-registered EBT holds the Long-Term incentive Plan (“LTIP”) and Deferred Bonus Plan (“DBP”).
While the Group does not have legal ownership of the EBTs and the ability of the Group to influence the actions of the EBTs is limited to a trust deed, the EBT was
set up by the Group with the sole purpose of assisting in the administration of these schemes, and is in essence controlled by the Group and therefore consolidated.
During the period ended 31 December 2022, the Group donated no shares to the EBTs (2021: NIL).
Key Management compensation
Key Management includes Executive Directors, Non-executive Directors and Directors of subsidiaries which the Group considers to be senior management
personnel. Further details of Directors’ shareholdings and remuneration can be found in the “Annual Report on Directors Remuneration” on pages 78 to 87.
The aggregate amount paid to Directors during the year was as follows:
2022 2021
Remuneration
1,894 2,317
Contributions to defined contribution pension scheme
7 3
Shares granted under LTIP 864 692
Total 2,765 3,012
Notes to the Consolidated Financial Statements continued
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19. SEGMENT INFORMATION
The Group provides short-term motor insurance to clients, which comprises three lines of business, motor vehicle insurance, motorcycle insurance and taxi
insurance, which are written solely in the UK. The Group has no other lines of business, nor does it operate outside of the UK. 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.
2022
Motor vehicle Motorcycle Taxi Total
Note £’k £’k £’k £’k
Profit or Loss Account information
Gross written premium 134,903
23,062
13,292 171,257
Less: Reinsurance premium ceded (21,440)
(3,694)
(1,322) (26,456)
Net written premium 113,463
19,368
11, 970 144,801
Gross written premium 134,903
23,062
13,292 171,257
Less: Change in unearned premium reserve 19,260
(5,236)
(7,10 6) 6,918
Gross earned premium 154,163
17,826
6,186 178,175
Reinsurance premium ceded (21,440)
(3,694)
(1,322) (26,456)
Less: Change in unearned premium reserve 184
960
355 1,499
Reinsurance premium payable (21,256)
(2,734)
(967) (24,957)
Net earned premium 132,907
15,092
5,219 153,218
Insurance claims, excluding claims handling expenses (88,266)
(24,253)
(5,761) (118,280)
Insurance claims recoverable from reinsurers 6,522
6,385
187 13,094
Net insurance claims (81,744)
(17,868)
(5,574) (105,186)
Net loss ratio 61.5%
118.4%
106.8% 68.7%
Segment reinsurance assets 106,519
6,385
3,622 116,526
Segment insurance liabilities (297, 873)
(26,299)
(17,129) (341,301)
Segment net insurance liabilities (191,354) (19,914) (13,507) (224,775)
Other than reinsurance assets and insurance liabilities, the Group does not allocate, monitor or report assets and liabilities per business line and does not consider
the information useful in the day-to-day running of the Group’s operations. The Group also does not allocate, monitor, or report other income and expenses per
business line.
Notes to the Consolidated Financial Statements continued
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Restated 2021
Motor vehicle Motorcycle Taxi Total
Note £’k £’k £’k £’k
Profit or Loss Account information
Gross written premium 164,582 3,231 1,509 169,322
Less: Reinsurance premium ceded (21,019) (30) (184) (21,233)
Net written premium 143,563 3,201 1,325 148,089
Gross written premium 164,582 3,231 1,509 169,322
Less: Change in unearned premium reserve (622) (2,941) 137 (3,426)
Gross earned premium 163,960 290 1,646 165,896
Reinsurance premium ceded (20,814) (238) (181) (21,233)
Less: Change in unearned premium reserve 574 208 (3) 779
Reinsurance premium payable (20,240) (30) (184) (20,454)
Net earned premium 143,720 260 1,462 145,442
Taxi’ was not shown as a separate line of business in the 2021 Annual Report and Accounts, as it was not considered to be a separate, material element of
premium income. Following the partnership with Freeway, premium from the provision of taxi insurance has increased significantly and as such it is now considered
both useful and relevant to disclose this separately. The 31 December 2021 business lines have been restated to split Taxi from Motor vehicle.
The Group did not report claims information per business line in prior years as the contribution of motorcycle and taxi business lines were considered immaterial
and a breakdown of claims numbers was not considered meaningful.
Notes to the Consolidated Financial Statements continued
19. SEGMENT INFORMATION continued
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2022 2021
Aer tax
£’k
Per share
pence
Aer tax
£’k
Per share
pence
Profit for the year attributable to equity holders 10,107 4.06 3 0,140 12.09
Diluted earnings per share
2022
Aer tax
£’k
Weighted
average number
of shares
£’k
Per share
pence
Profit for the year attributable to equity holders 10,107 248,865 4.06
Net share awards allocable for no further consideration 1,880 (0.03)
Total diluted earnings 250,745 4.03
2021
Aer tax
£’k
Weighted
average number
of shares
£’k
Per share
pence
Profit for the year attributable to equity holders 30,140 249,221 12.09
Net share awards allocable for no further consideration 2,320 (0.11)
Total diluted earnings 251,541 11.9 8
21. CONTINGENT LIABILITY
In the 2021 Annual Report and Accounts, the Group disclosed a contingent liability regarding a contested determination in relation to the 2015, 2016 and 2017
corporation tax filings of a subsidiary of the Group, which is currently dormant. During 2022 HMRC accepted the Group's appeal against their determination and as
such, the matter is now fully closed with no change in the tax position of the Group.
22. EVENTS AFTER THE BALANCE SHEET DATE
Other than the declaration of a final dividend as disclosed in Note 12, 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.
20. EARNINGS PER SHARE
Basic earnings per share
Notes to the Consolidated Financial Statements continued
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2022 2021
Notes £’k £’k
Assets
Investments 2 450,000 580,963
Debtors 4 3 128
Prepayments 211 204
Cash and cash equivalents 861 915
Total assets 451,075 582,210
Equity
Issued share capital 5 250 250
Own shares (2,810) (2,257)
Merger reserve 236,949 369,515
Share-based payments reserve 2,407 1,841
Retained earnings 212,581 212,794
Total equity 449,377 582,143
Liabilities
Creditors: Amounts falling due within one year 3 1,607
Accruals 91 67
Total liabilities 1,698 67
Total equity and liabilities 451,075 582,210
No income statement is presented for Sabre Insurance Group plc as permitted by section 408 of the Companies Act 2006. The loss after tax of the parent company
for the period was £103,094k (2021: £40,846k profit after tax).
The attached notes on pages 166 to 169 form an integral part of these financial statements.
Parent Company Statement of Financial Position
as at 31 December 2022
The financial statements were approved by the
Board of Directors and authorised for issue on
13March 2023.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
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2022 2021
Notes £’k £’k
ORDINARY SHAREHOLDERS’ EQUITY – at 1 January 250 250
At 31 December 250 250
OWN SHARES – at 1 January (2,257) (1,494)
Net movement in own shares (553) (763)
At 31 December (2,810) (2,257)
MERGER RESERVE – at 1 January 369,515 369,515
Transfer from retained earnings (132,566)
At 31 December 236,949 369,515
SHARE-BASED PAYMENT RESERVE – at 1 January 1,841 1,817
Settlement of share-based payments (1,037) (1,051)
Charge in respect of share-based payments 1,603 1,075
At 31 December 2,407 1,841
RETAINED EARNINGS – at 1 January 212,794 210,449
Share-based payments 447 (115 )
Profit for the year (103,094) 40,846
Transfer to merger reserve 132,566
Ordinary dividends paid (30,132) (38,386)
At 31 December 212,581 212,794
Total equity at 31 December 449,377 582,143
Parent Company Statement of Changes In Equity
for the year ended 31 December 2022
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2022 2021
£’k £’k
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit after tax for the year (103,094) 40,846
Adjustment for:
Impairment of subsidiary 2.1 132,566
Operating cash flows before movements in working capital 29,472 40,846
Movements in working capital:
Change in debtors 124 (47)
Change in prepayments (7) (36)
Change in trade and other payables 1,607 (183)
Change in accruals 24 (96)
Net cash generated from operating activities 31,220 40,484
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (1,142) (1,928)
Dividends paid (30,132) (38,386)
Net cash used by financing activities (31,274) (40,314)
Net (decrease)/ increase in cash and cash equivalents (54) 170
Cash and cash equivalents at the beginning of the year 915 745
Cash and cash equivalents at the end of the year 861 915
Parent Company Statement of Cash Flows
for the year ended 31 December 2022
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Notes to the Parent Company Financial Statements
for the year ended 31 December 2022
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated and company financial statements are included in the specific notes to which they
relate. These policies have been consistently applied to all the years presented, unless otherwise indicated.
1.1 Basis of preparation
These financial statements present the Sabre Insurance Group plc company financial statements for the period ended 31 December 2022, comprising the parent
company statement of financial position, parent company statement of changes in equity, parent company statement of cash flows, and related notes.
The financial statements of the Company have been prepared in accordance with UK-adopted international accounting standards, comprising International
Accounting Standards (“IAS”) and International Financial Reporting Standards (“IFRS”), and the requirements of the Companies Act 2006. Endorsement of
accounting standards is granted by the UK Endorsement Board (“UKEB”).
In accordance with the exemption permitted under section 408 of the Companies Act 2006, the Company’s income statement and related notes have not been
presented in these separate financial statements.
The financial statements are prepared in accordance with the going concern principle using the historical cost basis, except for those financial assets that have been
measured at fair value.
The financial statements values are presented in pounds sterling (£) rounded to the nearest thousand (£’k), unless otherwise indicated.
The accounting policies that are used in the preparation of these separate financial statements are consistent with the accounting policies used in the preparation of
the consolidated financial statements of Sabre Insurance Group plc as set out in those financial statements.
As permitted by section 408 of the Companies Act 2006, the statement of comprehensive income of the parent company is not presented. The additional
accounting policies that are specific to the separate financial statements of the Company are set out below.
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2. INVESTMENTS
The Company’s financial assets are summarised below:
2022 2021
£’k £’k
Investment in subsidiary undertakings 450,000 580,963
Total 450,000 580,963
2.1 Investment in subsidiary undertakings
ACCOUNTING POLICY – INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investment in subsidiaries is stated at cost less any impairment.
2022 2021
£’k £’k
As at 1 January 580,963 579,889
Additions 1,603 1,074
Impairment (132,566)
As at 31 December 450,000 580,963
The only operating insurance subsidiary of the Company is Sabre Insurance Company Limited, from which the value of the Group is wholly derived, as there are no
other trading entities within the Group. The Company performed its annual impairment test as at 31 December 2022 and 31 December 2021. The Company
considers the relationship between the Group’s market capitalisation and the book value of its subsidiary undertakings, among other factors, when reviewing for
indicators of impairment. As at 31 December 2022 and 31 December 2021, the Company’s securities were traded on a liquid market, therefore market capitalisation
could be used as an indicator of value.
The Group performed its annual impairment test as at 31 December 2022 and 31 December 2021. The Company considers the relationship between the Group’s
market capitalisation and the book value of its subsidiary undertakings, among other factors, when reviewing for indicators of impairment.
Having carried out this assessment the Board concluded, on the basis of the cautious assumptions outlined below, that the value of the investment in subsidiary
should be set at £450,000k (2021: £580,963k). This impairment has been taken to the parent company profit or loss account, and transferred to the merger reserve.
There is no impact on the distributable capital available to the Group or Sabre Insurance Group plc as a result of this adjustment.
Key assumptions
The market capitalisation of the Company as at 31 December 2022 had reduced to £266,000k from £459,500k at 31 December 2021. This provided an indication that
the underlying value had been impaired, and therefore the Directors carried out an impairment assessment.
We have used a dividend discount model to estimate the value-in-use, wherein dividend payments are discounted to the present value. Dividends have been estimated,
based on forecasted financial information, over a four-year forecast period, with a terminal growth rate applied. The key assumptions used in the preparation of future
cash flows are: plan-period financial performance, dividend payout ratio, long-term growth rates and discount rate.
Notes to the Parent Company Financial Statements continued
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The key assumptions used in the calculation for the value in use is set out below:
Plan period financial performance set in-line with the Group’s expectations
Dividend payout ratio in line with the Group’s strategy
Long-term growth rate beyond the plan period of 2%
Discount rate of 9.5%, being a calculated cost of capital using market rate returns of Sabre and comparable insurers
These calculations use post-tax cash flow projections based on the Group’s capital models. As the value-in-use exceeds the carrying amount, the recoverable
amount remains supportable.
The Group has conducted sensitivity testing to the recoverable amount, in order to understand the relevance of these various factors in arriving at the value in use.
Dividend within the plan period – To assess the impact of reasonable changes in performance on our base case impairment analysis and headroom, we flexed the
dividend within the plan period by +10% and -10%. In doing so, the value in use varied by approximately 10.0% around the central scenario.
Long term growth rate – To assess the impact of reasonable changes in the long-term growth rate on our base case impairment analysis and headroom, we
flexed the long-term growth rate by +1% and -1%. In doing so, the value in use varied by approximately 7.1% around the central scenario.
Discount rate – To assess the impact of reasonable changes in the dividend payout ratio on our base case impairment analysis and headroom, we flexed the
average discount rate by +2% and -2%. In doing so, the value in use varied by approximately 13.0% around the central scenario.
Name of subsidiary Place of incorporation Principal activity
Directly held by the Company
Binomial Group Limited United Kingdom Intermediate holding company
Barbados TopCo Limited
(1)
Guernsey Non-trading company
Barb IntermediateCo Limited
(2)
Jersey Non-trading company
Barb MidCo Limited
(2)
Jersey Non-trading company
Barb BidCo Limited
(2)
Jersey Non-trading company
Barb HoldCo Limited
(2)
Jersey Non-trading company
Indirectly held by the Company
Sabre Insurance Company Limited United Kingdom Motor insurance underwriter
(1) In process of liquidation
(2) Dissolved in February 2023
The registered office of each subsidiary is disclosed within Note 18 of the consolidated Group accounts.
3. CREDITORS
2022 2021
£’k £’k
Due within one year
Creditors
Amounts due to Group undertakings 1,607
As at 31 December 1,607
Notes to the Parent Company Financial Statements continued
2. INVESTMENTS continued
2.1 Investment in subsidiary undertakings continued
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
4. DEBTORS
2022 2021
£’k £’k
Due within one year
Amounts due from Group undertakings 126
Other debtors 3 2
As at 31 December 3 128
5. SHARE CAPITAL AND RESERVES
Full details of the share capital and the reserves of the Company are set out in Note 15 and Note 17 to the consolidated financial statements.
6. DIVIDEND INCOME
ACCOUNTING POLICY – DIVIDEND INCOME
Dividend income from investment in subsidiaries is recognised when the right to receive payment is established.
7. RELATED PARTY TRANSACTIONS
Sabre Insurance Group plc, which is incorporated in the United Kingdom and registered in England and Wales, is the ultimate parent undertaking of the Sabre
Insurance Group of companies.
The following balances were outstanding with related parties at year end:
2022 2021
£’k £’k
Due (to)/from
Sabre Insurance Company Limited (1,607) 126
Total (1,607) 126
The outstanding balance represents cash transactions effected by Sabre Insurance Company Limited on behalf of its parent company, and will be settled within one year.
8. SHARE-BASED PAYMENTS
Full details of share-based compensation plans are provided in Note 16 to the consolidated financial statements.
9. RISK MANAGEMENT
The risks faced by the Company, arising from its investment in subsidiaries, are considered to be the same as those presented by the operations of the Group.
Details of the key risks and the steps taken to manage them are disclosed in Note 3 to the consolidated financial statements.
10. DIRECTORS AND KEY MANAGEMENT REMUNERATION
The Directors and key management of the Group and the Company are the same. The aggregate emoluments of the Directors and the remuneration and pension
benefits payable in respect of the highest paid Director are included in the Directors’ Remuneration Report in the Governance section of the Annual Report and Accounts.
Notes to the Parent Company Financial Statements continued
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Financial Reconciliations
as at 31 December 2022
Adjusted Prot Before Tax
2022
£’k
2021
£’k
2020
£’k
Profit before tax 12,750 37,19 9 49,122
Add:
Amortisation of intangible assets
Exceptional items
Adjusted profit before tax 12,750 37,19 9 49,122
Adjusted Prot After Tax
2022
£’k
2021
£’k
2020
£’k
Profit after tax 10,107 30,140 39,798
Add:
Amortisation of intangible assets
Exceptional items
Tax on exceptional items
Adjusted profit after tax 10,107 30,140 39,798
Net Loss Ratio
2022
£’k
2021
£’k
2020
£’k
Net insurance claims 112,799 81,015 8 8,110
Less: Claims handling expenses (7,613) (6,767) (7,637)
Net claims incurred 105,186 74,248 80,473
Net earned premium 153,218 145,442 165,707
Net loss ratio 68.7% 51.1% 48.6%
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Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Expense Ratio
2022
£’k
2021
£’k
2020
£’k
Total expenses 34,149 34,444 36,670
Plus: Claims handling expenses 7,613 6,767 7,637
Net operating expenses 41,762 41,211 44,307
Net earned premium 153,218 145,442 165,707
Expense ratio 27.3% 28.3% 26.7%
Combined Operating Ratio
2022
£’k
2021
£’k
2020
£’k
Total expenses 34,149 34,444 36,670
Net insurance claims 112,799 81,015 8 8,110
146,948 115,459 124,780
Net earned premium 153,218 145,442 165,707
Combined operating ratio 96.0% 79.4% 75.3%
Solvency Coverage Ratio – Pre-Dividend
2022
£’k
2021
£’k
2020
£’k
Solvency II net assets 91,191 110,114 122,500
Solvency capital requirement 56,516 52,955 60,327
Solvency coverage ratio – pre-dividend 161.4% 207. 9% 20 3.1%
Solvency Coverage Ratio – Post-Dividend
2022
£’k
2021
£’k
2020
£’k
Solvency II net assets 91,191 110,114 122,500
Less: Final dividend (4,250) (23,250) (29,250)
Solvency II net assets (post-dividend) 86,941 86,864 93,250
Solvency capital requirement 56,516 52,955 60,327
Solvency coverage ratio – post-dividend 153.8% 164.0% 154.6%
Financial Reconciliations continued
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Return on Tangible Equity
2022
£’k
2021
£’k
2020
£’k
IFRS net assets at year end 222,496 252,727 266,400
Less:
Goodwill at year end (156,279) (156,279) (156,279)
Closing tangible equity 66,217 96,448 110,121
Opening tangible equity 96,448 110,121 111,138
Average tangible equity 81,333 103,285 110,6 30
Adjusted profit after tax 10,107 30,140 39,798
Return on tangible equity 12.4% 29.2% 36.0%
Dividend Payout Ratio
2022
£’k
2021
£’k
2020
£’k
Adjusted profit after tax 10,107 30,140 39,798
Dividend declared in respect of the financial year 11, 250 32,500 53,000
2019 deferred special dividend (13,000)
Effective dividend declared in respect of the financial year 11, 250 32,500 40,000
Dividend payout ratio 111.3% 107.8% 100.5%
Financial Reconciliations continued
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Shareholders
Shareholder Profile as at 31 December 2022
Balance Ranges
Total
Number of
Holdings
Percentage
of Holders
Total
Number of
Shares
% Issued
Capital
1-100 10 3.37% 469 0.00%
101-1,000 32 10.77% 16,096 0.01%
1,001-10,000 58 19.53% 255,024 0.10%
10,001-100,000 69 23.23% 2,640,319 1.06%
100,001-1,000,000 76 25.59% 24,897,78 5 9.96%
1,000,001-999,999,999 52 17.51% 222,190,307 88.88%
Totals 297 100.00% 250,000,000 100.00%
Party Type
No Of
Holders
% of Holders
within Type Balance
% Issued
Capital
Male 35 11.78% 341,004 0.14%
Female 12 4.04% 15,803 0.01%
Nominee 194 65.32% 212,812,437 85.12%
Bank 1 0.34% 72 0.00%
Limited Company 26 8.75% 27,018,973 10. 81%
Other Organisation 29 9.76% 9, 811,711 3.92%
Total 297 100.00% 250,000,000 100.00%
Party Type
No Of
Holders
% of Holders
within Type Balance
% Issued
Capital
Private Individuals 47 15.82% 356,807 0.14%
Nominee Companies 194 65.32% 212,812,4 37 85.12%
Limited & Public Limited
Companies
26 8.75% 27,018,973 10.81%
Other Organisations & Banks 30 10.10% 9,811,78 3 3.92%
Total 297 100.00% 250,000,000 100.00%
Share Price during the financial year ending
31December 2022
London Stock Exchange, pence per 0.01 pence share
Highest 238.5p
Lowest 82.8p
Shareholder Information
2023 Financial Calendar
Full Year Results 14 March 2023
Trading Update 25 May 2023
Annual General Meeting 25 May 2023
Half Year Results 27 July 2023
Trading Update 12 October 2023
2023 Dividend Calendar
2022 Final Dividend Payment Dates
*
Ex-dividend date 20 April 2023
Record date 21 April 2023
Payment date 1 June 2023
2023 Interim Dividend Payment Dates
**
Ex-dividend date 17 August 2023
Record date 18 August 2023
Payment date 20 September 2023
* subject to shareholder approval
** dates and dividend not yet finalised
Shareholder Queries
General Shareholder Queries
Enquiries relating to shareholdings, such as the transfer of shares,
change of name or address, lost share certificates or dividend
cheques, should be referred to the Companys Registrar at: Equiniti,
Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.
Shareholder helpline is 0371 384 2030 (UK), +44 121 415 7047
(International) and 0371 384 2255 (MiniCom).
Lines are open 8.30am to 5.30pm, Monday to Friday, excluding Bank
Holidays in England and Wales.
Registrar Share Dealing Service
For telephone share dealing call 0345 603 7037 between 8.00am and
4.30pm, Monday to Friday.
For internet dealings log onto www.shareview.co.uk/dealing
Dividend mandates
Shareholders who wish dividends to be paid directly into a bank or
building society should contact the Company’s Registrar, Equiniti
Limited, foradividend mandate form. This method of payment
removes the risk of delay or loss of dividend cheques in the post and
ensures that your account is credited on the due date.
Electronic communications
Shareholders can elect to receive shareholder documents electronically
by registering with Shareview at www.shareview.co.uk. This will save
on printing and distribution costs, creating environmental benefits.
When you register, you will be sent an email notification to say when
shareholder documents are available on our website and you will be
provided with a link to that information. When registering you will need
your shareholder reference number which can be found on your share
certificate or proxy form. Please contact Equiniti Limited if you require
any assistance or further information. Equiniti Limited’s shareholder
helpline is 0371 384 2030 (UK), +44 121 415 7047 (International) and
0371 384 2255 (MiniCom). Lines are open 8.30am to 5.30pm,
Monday to Friday, excluding Bank Holidays in England and Wales.
Cautionary note regarding forward-looking statements
This Annual Report includes statements that are forward-looking in
nature. Forward-looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Except as
required by the Listing Rules, Disclosure and Transparency Rules and
applicable law, the Company undertakes no obligation to update, revise
or change any forward-looking statements to reflect events or
developments occurring on or after the date of this Annual Report.
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Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
Website
The corporate website address is
www.sabreplc.co.uk
The investor section of the website includes:
Regulatory news
Share price information
Financial results announcements
Registered office
Sabre House
150 South Street
Dorking
Surrey
RH4 2YY
Registered in England and Wales. Registered number 10974661
Shareholder Information continued
Directors, advisers and other information
Directors
Andy Pomfret – Chair
Geoff Carter
Ian Clark
Karen Geary
Michael Koller
Alison Morris
Rebecca Shelley
Adam Westwood
Company Secretary
Anneka Kingan
Auditor
PricewaterhouseCoopers LLP
7 More London Riverside, London, SE1 2RT
Company Brokers
Barclays Bank plc
1 Churchill Place, London, E14 5LB
Numis Securities Limited
45 Gresham St, London, EC2V 7BF
Peel Hunt LLP
100 Liverpool Street, London, EC2M 2AT
Principal Bankers
National Westminster Bank plc
250 Bishopgate, London, EC2M 4AA
Lloyds Bank plc
25 Gresham Street, London EC2V 7HN
Public Relations
Teneo Strategy Limited
5
th
Floor, 6 More London Place, London, SE1 2DA
Solicitors
Dickson Minto W.S.
16 Charlotte Square, Edinburgh,EH2 4DF
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial reconciliations Shareholder information Directors, Advisers and
other information
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