Delivering
growth
AR2023
Annual Report and
Accounts 2023
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Conte nts
Strategic Report
02 Introduction
05 The Sabre journey
06 Our Investment Case
07 Market Context
09 Our Values
10 Chief Executive Officer’s Review
13 Our Business Model
14 Key Performance Indicators
16 Principal Risks and Uncertainties
25 Viability Statement
27 Section 172 Statement
31 Chief Financial Officer’s Review
35 Responsibility and Sustainability
49 FCA Consumer Duty
Corporate Governance
51 Chair’s Governance Letter
52 Board of Directors
56 Governance Report
62 Audit Committee Report
65 Risk Committee Report
67 Nomination and Governance
Committee Report
70 Remuneration Committee Report
74 Directors’ Remuneration Policy
81 Annual Report on Directors’
Remuneration
92 Directors’ Report
95 Statement of directors’
responsibilities in respect of the
financial statements
Financial Statements
97 Independent Auditor’s Report
105 Consolidated Profit or Loss Account
106 Consolidated Statement of Comprehensive Income
107 Consolidated Statement of Financial Position
108 Consolidated Statement of Changes in Equity
109 Consolidated Statement of Cash Flows
110 Notes to the Consolidated Financial Statements
169 Parent Company Statement of Financial Position
170 Parent Company Statement of Changes in Equity
171 Parent Company Statement of Cash Flows
172 Notes to the Parent Company Financial Statements
176 Financial Reconciliations
179 Glossary
181 Shareholder Information
182 Directors, Advisers and Other Information
SABRE ONLINE:
sabreplc.co.uk
09
Find out about
how our values
underpin our
strategy
Check Sabre’s
financial results
for the year
10 5
10
Hear from
Sabre’s CEO,
Geoff Carter
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2023
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.
Protability
andgrowth.
Sabre Insurance Group is a UK-based motor insurer,
providingfairly priced policies to a wide range of customers.
Webenefit from our pricing expertise, experience and vast
historical data in the more‘specialist’ areas of the market.
2023 saw strong premium growth of 31% and the Group
improved performance across most key measures.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
02
Key highlights
Early and decisive
pricing action
positioned the Group
well for improved
insurance market
conditions, resulting
inpremium and
profitability growth
in2023.
Key financial highlights Operational highlights
– Strict adherence to “profitability is a target,
volume is an output” philosophy maintained
and proving its effectiveness.
– Enhanced loss ratio resulting from careful
and well-timed pricing action.
– Sabre’s highest ever annual gross written
premium.
– Claims inflation remains high, with costs
being met by increasing prices across the
market.
– Direct system re-platforming delivered
on-time and on-budget.
– Insurer-hosted pricing being rolled-out to
ensure ongoing pricing excellence.
170.9 %
Post-dividend solvency coverage ratio
2022: 153.8%
coverage ratio
86.3%
Combined operating ratio
2022: 93.4%
coverage ratio
9.0 p
Total dividend in repsect of 2023
2022: 4.5p
£225.1m
Gross written premium
2022: £171.3m
£23.6m
Profit before tax
2022: £14.0m
205.3%
Pre-dividend solvency coverage ratio
2022: 161.4%
Alternative Performance Metrics are reconciled to IFRS
reported figures on pages 176 to 178 of the Annual Report
and Accounts.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
03
At a glance
Our values
Sabre’s values underpin our strategy and our key
business principles of generating strong cash returns,
market-leading underwriting performance and
controlled, attractive growth across the cycle.
>70 0
Years’ combined experience
in the claims team
161
Employees
c.1000
Insurance brokers
c.290k
In-force policies
OUR
LOCATION
OUR
VALUES
LONDON
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READ MORE
Our Values on
page 09
OUR CHANNELS
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.
Price Comparison Websites
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.
Direct distribution
Our business
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.
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.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
04
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.
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
direct customer insights through
operating our own brands.
IF THE WORST HAPPENS
Sabre’s dedicated claims handling team
are experts in their field, targeting fast,
fair claims payments. We 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.
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 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.
RENEWING YOUR POLICY
Sabre has a bespoke,
full-automated pricing
model.We never charge
morefor a renewing
customerthan we would for
the same new customer.
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.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
05
Our Investment Case
Our strategy
Disciplined Underwriting
– Actuarially-driven pricing strategy
utilising an agile proprietary module.
– Risks individually modelled and
priced using Sabre’s advanced
pricing algorithm, built upon
yearsof data collection and
expertanalysis.
– Unique and extensive catalogue
ofclaims data, compiled from
morethan 19 years of successful,
consistent underwriting.
– Robust and extensive claims
management operation, combined
with counter-fraud expertise.
Risk Management
– Focus on allowing acceptable
underwriting risk while minimising
exposure to other risks within the
business.
– Maintain sufficient capital to allow
operational resilience and meet
regulatory requirements under all
reasonably foreseeable outcomes.
– Exposure to large individual claims
is managed through prudent use
ofreinsurance.
Controlled growth
– Sabre grows where market
conditions allow, without
compromising profitability.
Operations
– Non-core operations are outsourced,
while expertise is retained in-house.
– Our team consists of talented people
making good decisions every day.
Distribution
– Brokers account for approximately
64% of the gross written premium in
2023, with the remainder being sold
through our direct brands,
Insure2Drive and GoGirl.
– Broker relationships allow us to
leverage their well-established
brands, customer relationships and
retail pricing capabilities.
– Direct brands ensure we can offer
products to customers not served by
traditional brokers, while allowing a
direct line of sight to customer and
price comparison site data.
Long and medium-term opportunity
A Resilient Business
– Target margin above industry norms,
meaning even in years where costs are
significantly greater than expected, the
Group has been able to deliver an
underwriting profit.
– Underwriting discipline allows early pricing
action where market conditions change,
meaning future claims costs are fully
covered and underwriting performance
canrecover quickly from one-off shocks
such as the 2022 rapid inflation.
– 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. The Group holds a significant
excess of assets over liabilities, providing
astrong balance sheet able to withstand
themost extreme foreseeable shocks.
£23.6m
Profit before tax
Reliable Dividend Flow
– Sabre’s core business is fundamentally
capital-generative. The majority of capital
generated by the Group has historically
beenreturned to shareholders by way
ofanordinary and special dividends.
– Since IPO the Group’s dividend payout ratio
has remained above 98.4% of earnings.
9.0 p
Total dividend in repsect of 2023
Low-Risk and Capital-Light
– The Group looks to balance maximum
earnings generation with effective risk
management, limiting the amount of
regulatory capital required to be held.
– The Group invests in government-backed
assets and highly rated corporate bonds.
These assets power the Group’s exceptional
target underwriting returns.
– Reinsurance is used to limit exposure to
individual large claims. Sabre purchases
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.
170.9 %
Post-dividend solvency
capital ratio
Optimised for Growth
– Sabre’s market share of c. 303k policies
represents a very small share of the total
motor insurance market (c. 28m motor
policies), leaving considerable scope for
market share growth when market
conditions are favourable.
– A technologically-focused approach
tounderwriting excellence, constantly
optimising pricing opportunities while
deploying best-in-class underwriting
andclaims teams.
– We consider entering new partnerships
orexecuting acquisitions in complementary
areas (such as the Motorcycle and
Taxiproducts).
31.4%
Premium growth
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
06
Market Context
Underlying
market
conditions
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
Motor insurance pricing in the UK entered a downturn in 2018, with
average premiums dropping by 14% between Q1 2018 and Q1 2022.
Over the same period, CPI increased by over 10% and, in Sabre’s
view, motor insurance claims costs increased even further. Pricing
appeared to recover somewhat between Q2 2022 and Q1 2023,
andby March 2023 average premiums in the market had recovered
to2018 levels. Clearly, with claims costs having inflated during this
period, industry price increases to that point were insufficient to cover
costs. Since Q1 2023, prices have further corrected, with rapid price
increases throughout the remainder of 2023. By the end of 2023,
average premiums were 30% higher than they were in December
2022. It is Sabre’s view that these price increases have gone some
way to cover the increasing costs of claims, but that they are in no
wayexcessive as compared to the costs of providing cover in the UK.
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 continues to make more modest
increases reflecting current inflation. As such, Sabre’s price
competitiveness has increased as market prices correct to
reflectinflation.
Drivers of cost inflation
In previous years, we have described why claims cost inflation was
significantly ahead of wider economic inflation. We still see evidence
that claims costs across the motor insurance industry are rising, but
against a continued backdrop of wider economic inflation. Key
elements driving 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
The outlook for inflation
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, rental 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 remains suppressed
– 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 Sabre’s policy pricing – we charge an
amount based on what we expect to pay out for claims incurred over
the period of that policy, factoring in our prudent view of inflation.
Asall the inflationary factors are market-wide, we expect that market
price increases will reflect this inflation, but as discussed earlier, this
has 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.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
07
Our Customers
Sabre’s business model is designed to
withstand, adapt to, and thrive over the
long term within a changing environment.
Current
market
issues
Political and regulatory
Previously, we commented that 2022 saw a period of ‘bedding-in’
ofnew rules, such as whiplash reforms and the General Insurance
Pricing Practice rules, as insurers have adapted to operating in the
newenvironment. We commented that insurers had adjusted pricing
because 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, as highlighted by the outstanding Supreme Court decision
on mixed injury valuations. Whilst we have seen some reduction in the
frequency of certain types of claims, 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 continued to be a feature of 2023’s political
landscape and whilst 2023 was certainly less tumultuous than 2022,
the general election expected in 2024 has cast some uncertainty over
the legislative agenda this year. 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.
We are aware that there appears to be an increased regulatory
focuson the value presented by non-core products, such as premium
financing and add-ons. Whilst these do not form a significant part
ofSabre’s income or strategy, we watch with keen interest
developments in this area. We have complied fully with all current
requirements, including the Consumer Duty. None of the regulatory
changes in 2023 required any material change to the business. We
present a statement of compliance on page 49 of this report.
Economic
Since 2022, economic issues have become 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 in 2022
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
reduced in 2022, although they recovered somewhat in 2023. This has
little real-world impact for Sabre, 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 balance sheet strength is
alsosmall, as 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
In last year’s Annual Report we commented that as individuals’
spending power declined, 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
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 continue to 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 have continued to insure electric vehicles at a fair
pricewhile others in the market appeared to withdraw due to cost
challenges associated with the repair of these important evolving
technologies. 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.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
08
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Our Values
Core to
Sabre’s
approach
to business
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 42.
Focused on our strategy
Our strategy is simple, clear and well understood by our
stakeholders. This is discussed in detail on page 06, 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 35 to 48.
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, 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 36.
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 37 to 40.
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 42 to 48 and a summary of our charitable
programme can be found on page 41.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
09
£225.1m
Gross written premium
£23.6m
Profit before tax
Chief Executive
Ofcer’s Review
GEOFF CARTER
Chief Executive Officer
READ MORE:
Principal
risks and
uncertainties
on page 16
Record premium levels, enhanced
margins and strong profit
In our 2022 Report and Accounts we outlined several expectations
for2023:
– Early, decisive decision to react to emerging claims inflation would
protect the financial position of Sabre for the longer term;
– We would rebound quickly to historical levels of performance;
– We would take advantage of growth opportunities as many
competitors reacted belatedly with high rate increases.
I am pleased that not only did these predictions come through, but that
the positive impact on our business exceeded our expectations at the
start of 2023.
We saw sustained, strong premium growth through the second
halfof 2023 with year-on-year premium levels over 100% by the
endof the year. This was delivered while continuing to execute our
disciplined growth strategy, applying significant rate increases which
resulted in a return to forward-looking expected loss ratios in line with
our historical norms faster than anticipated. We have benefitted from
good new customer growth as well as maintaining our normal levels
of customer retention.
At the same time, we made excellent progress on getting our
emerging Motorcycle account to a sustainable position and further
developed our taxi portfolio. Looking forward, we will now build out
our Motorcycle portfolio through partnerships with additional expert
brokers. Whilst the Taxi portfolio remains at an earlier stage of
development, and the Taxi market continues to be highly competitive,
we will maintain a low footprint until we are confident that this product
can grow profitably.
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
10
56.3%
Net loss
ratio
2023. I welcome Bryan to the Board and would like to thank
Michaelfor his contribution and support. In addition to these changes,
we inform the market that Ian Clark is leaving the Board with effect
from 22 May 2024, and therefore will not be standing for re-election
atthe Company’s 2024 Annual General Meeting. Ian has served on
the Board of Sabre Insurance Company Limited since 2014 and the
Board of Sabre Insurance Group plc since its listing in 2017. Ian’s
market knowledge has been invaluable to the Group, and he leaves
with my huge thanks for his contribution to the success of the Group.
Market
The UK motor insurance market remains a sophisticated, efficient,
andwell-served marketplace. In the latter half of 2023, we saw
systemic under-pricing in the market reduce considerably, with
insurers switching focus towards improving underwriting profits.
Thereare, as ever, many uncertainties in the market. The key ones are:
– Uncertainty on small personal injury costs pending the outcome
ofthe related Supreme Court decision
– Potential change in the critical Ogden discount rate
– Impact of changes in reinsurance costs
– Continuing elevated levels of claims inflation
– Potential change of government and an increased focus from
regulators on the affordability of car insurance and instalment rates
charged for monthly policies
We will continue to maintain a prudent position balancing the possible
positive and negative impacts.
In 2023 we also witnessed withdrawals from the motor insurance
market, few new entrants and expect very poor industry-level
profitability. This gives some degree of greater certainty that pricing
discipline will be maintained for some time to come.
Reflections on 2023
Despite the significantly improved financial results, 2023 was not
astraightforward year, with several unexpected challenges. This
performance was delivered through both dedication to our disciplined
growth strategy and the exceptional commitment from my colleagues,
for which I and my fellow Board members are greatly appreciative.
The decisive early action we took in response to the well-publicised
inflationary pressures at the start of the year, increasing our pricing
accordingly, wasn’t reflected at the time in the pricing actions from
many of our competitors. Whilst this did negatively impact our
premium levels in the first quarter of the year, we continued to focus
on margin over volume – believing that the broader market correction
would be more dramatic the more time passed. This proved to be the
case with very high levels of rate increases in the second half of the
year. This led to exceptionally high year-on-year premium levels and
areturn to our long-term target margins.
In mid-2023 our original motorcycle distributor, MCE Insurance, was
placed into administration. We worked extensively with the FCA to
ensure the best possible customer outcomes from this –
including working with potential acquirers, providing
limited cash flow funding to the business and
ultimately taking the servicing of the policies
in-house until renewal.
At the end of the year, we experienced a cyber-attack linked to the
worldwide Citrix bleed vulnerability. We had established contingency
processes in place and I was pleased with the effectiveness of our
response. Critically, I could not be more impressed by the way our
people reacted to minimise customer impact. Our distribution and
outsourced strategy meant we were able to continue to sell policies
throughout the disruption as well as dealing effectively and efficiently
with customer claims. Whilst our IT security protocols worked well and
prevented the loss of sensitive customer data, there are always lessons
that can be learnt and we will continue to invest further in this area.
There were many other positive developments during the year. Our
new direct-to-customer policy administration system was launched
byour E-Commerce Team on time and to budget. We are now looking
forward to enhancing customer service at the same time as reducing
costs through the additional functionality the new system possesses.
We have also rolled out the initial stages of Insurer Hosted Pricing on
schedule. This will allow us to deploy more sophisticated pricing at
speed as we move forward.
Board changes
Towards the end of 2023 we were distressed by the sudden death
ofour Chair, Andy Pomfret. Andy was an excellent Chair of the Group
and a great support to me and other members of the Executive
Team as we worked through some difficult years. Despite the
sad loss I am pleased that our Board succession plan worked
effectively and would like to congratulate Rebecca Shelley
who has stepped into the role of Company Chair.
Other changes to the Board during the year were
thejoining of Bryan Joseph as Non-executive Director
and Chair of the Risk Committee, the enrolling of Karen
Geary as Chair of the Remuneration Committee and the
departure of Michael Koller from the Board in December
We have continued to have focus
on ensuring all polices are priced
correctly for the current
environment.
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£18.1m
Profit aer
tax
Capital and dividend
Our strong capital generation has allowed us to declare an ordinary
dividend in line with our policy and distribute excess capital by way of
ameaningful special dividend. We anticipate being able to benefit from
potential further profitable growth whilst also being able to pay an
attractive dividend.
People
I am delighted by the ongoing commitment of our people across
theorganisation, evidenced in 2023 and in the performance of the
Company and the low levels of employee turnover. We reflected this
commitment during the year by paying inflation linked pay rises, paying
annual performance and Christmas bonuses, providing a cost-of-living
bonus, running two employee share plans, while rolling out further
employee benefits such as free breakfasts. We continue to support
our employees with training and development, and it was great to
seemany promotions and career moves in the year.
In line with good governance, during 2023 the Company consulted
itsmajor shareholders regarding the changes to the Company’s
Remuneration Policy for Executive Directors (the ‘Policy’). The updated
Policy will be put to vote at the Company’s Annual General Meeting on
23 May 2024.
Customers
We kept customers at the forefront of our decision making this year,
especially as we dealt with some of the implications of the MCE
administration and the cyber incident. Going forward we are fully aligned
to the emerging consumer duty requirements, as well as enhancing
service to our direct customers through new system capability.
Environmental, Social and Governance (“ESG”)
We continue to view consideration of ESG issues as an important
aspect of our corporate decision making and remain committed to our
key environmental targets and values, which encompass fairness to
our employees, customers, partners and the planet. We have made
steady progress against our net-zero ambitions, which have included
a full office refurbishment and re-launch of our employee
Sustainability Forum.
Outlook for 2024
We anticipate that the business we wrote in 2023 will earn through
atattractive margins delivering an increase in profitability in 2024.
Ialso expect that market pricing discipline will hold allowing us to
growfurther. Our Insurer-Hosted Pricing will continue to be rolled out,
allowing more sophisticated pricing to be delivered to the market and
we expect to add new Motorcycle distribution partners. Beyond this,
much of our focus in 2024 will be on ‘below the radar’ developments
as we continue to invest in our pricing and claims capabilities to
maintain our position as a leading motor insurer.
GEOFF CARTER
Chief Executive Officer
18 March 2024
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D
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How we manage risk
Claims handling
Sabre’s emphasis on the technical
aspects of claims handling draws
on over 800 years of experience,
encompassing cutting-edge
fraud mitigation, excellent
cost control and a high-quality
experience for claimants.
Distribution
Sabre employs a diversified, multi-channel
distribution strategy through broker
partnerships and selling direct to
customers through the Group’s direct
brands, Insure 2 Drive and Go Girl.
The vast majority of new business in
theUK market is sold through price
comparison websites, and so
settingtheright price in this
highlycompetitivemarket
is critical.
Underwriting
discipline
Sabre’s team of actuaries and underwriting
experts calculate the right price for each
policy which will, on average, generate the
Group’s target margin.
This requires access to high-quality
data, cutting-edge pricing tools,
personal expertise and a sharp
focus on achieving
target margins.
Our Business Model
Strong cash generation
Our underwriting discipline and
streamlined operating model give
usconfidence that we can deliver
our target dividend payout ratio ofa
minimum of 70% of profit after tax.
£18.1m
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.
£225.1m
Gross written premium
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.
4.
Analysis
and pricing
expertise
3.
Strong broker
relationships
2.
Proprietary
data
1.
Experienced
management
andoperational
teams
OUR PURPOSE
To provide motor insurance to the widest possible range of drivers using fair, risk-based pricing.
Generate excess capital and return this to shareholders or reinvest in the business.
Our inputs Value creation
RISK MANAGEMENT
Reinsurance: Sabre operates an
excess-of-loss reinsurance policy
across its entire portfolio, limiting
the cost of any single accident to
£1m in the policy year.
Balance sheet: All financial
investments are investment-grade
bonds, with over two-thirds in very
low-risk government bonds and
government-backed assets.
CORE OPERATIONS
Sabre’s focus on its key
strengthsand experienced
leadership team has built highly
efficient underwriting and claims
management processes, with
routine, volume dependent tasks
being outsourced to expert
partners. This allows for a low
expense base, which can flex
inline with business volumes.
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Key
Performance
Indicators
How our KPIs link to Sabre’s
strategy
Sabre’s strategic priorities are outlined on page 06
of this report.
The most fundamental of these is underwriting
profitability, and as such our KPIs focus on
measures of profitability – specifically loss ratio,
expense ratio, and combined operating ratio
andprofit after tax. As the Group is focused
onmanaging risk, maintaining an appropriate
solvency coverage is also 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 an overarching
element of Sabre’s strategy, and is measured
through return on tangible equity.
PERFORMANCE
For performance
on all our KPIs
please see
CFO’s review
pages 31 to 34
STRATEGY
To see how
our KPIs link
to Sabre’s
strategy see
page 06
PRINCIPAL RISKS
To see how
our KPIs link
to Sabre’s
principal risks
see page 16
Strategy
1. Disciplined Underwriting
2. Risk Management
3. Controlled Growth
4. Operations
5. Distribution
Principal risks
1. Insurance
2. Operations
3. Finance and Capital
4. IT and systems
5. Governance and Compliance
6. People
7. Macro Risks
Gross written premium
£’m
Net loss ratio
%
Expense ratio
%
Combined operating
ratio %
£225.1m 56.3% 30.0% 86.3%
2022: £171.3m 2022: 66.0% 20 22 : 27.4% 2022: 93.4%
Denition
The Group’s 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.
Links to Strategy
1
2
3
4
5
Links to Strategy
1
4
5
Links to Strategy
3
4
5
Links to Strategy
1
3
4
5
Principal Risks
1
2
4
5
6
7
Principal Risks
1
2
5
6
7
Principal Risks
1
2
4
5
6
7
Principal Risks
1
2
4
5
6
7
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Net profit margin
%
Solvency coverage ratio
%
Return on tangible
equity
%
Profit before tax
£’m
15.8% 205.3% 22.7% £23.6m
2022: 8.6% 2022: 161.4% 2022: 13.3% 2022: £14.0m
Denition
The Group’s net underwriting
profit margin measures how
much net profit is generated as a
percentage of the Group’s net
insurance revenue.
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 2023.
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 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
To control net insurance revenue
and total insurance expense
such that our net profit margin
remains over 20%.
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.
Links to Strategy
1
2
3
4
5
Links to Strategy
1
4
5
Links to Strategy
3
4
5
Links to Strategy
1
3
4
5
Principal Risks
1
2
5
6
7
Principal Risks
1
2
5
6
7
Principal Risks
1
2
3
5
6
7
Principal Risks
1
3
5
7
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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 KPIs 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 KPIs
please see
CFO’s Review
pages 31 to 34
RECONCILIATION
TO IFRS
MEASURES
A reconciliation
between IFRS
and non-IFRS
measures is
given on pages
176 to 178.
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Principal Risks and
Uncertainties
Risk management
Managing risk effectively is core to Sabre’s strategy and is integral to
delivering sustainable long-term growth for its investors. The 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 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 delegates the oversight of risk to the Group’s Risk
Committee, who are responsible for understanding the major risk
areas and ensuring that appropriate controls are in place to manage
theGroup’s risk exposure, and for providing oversight and advice to
theBoard in relation to the Group’s risk exposure. Further information
on the Group’s Risk Committee can be found on pages 65 to 66.
TheGroup Risk Committee works closely with the Remuneration
Committee to ensure that the management of risk is accurately
reflected when making remuneration decisions.
Sabre has set a robust and proportionate 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.
Sabre’s objectives regarding risk management are that:
– All significant risks are identified, measured, assessed, prioritised,
managed, monitored and tested in a consistent and effective manner
across the Group
– Appropriate and reliable risk management tools (such as likelihood
and impact indicators) are deployed to support the rating and the
management of risks, and particularly Management’s reporting
ofrisks and making decisions around them
– All Directors, Management and employees are accountable for
managing risks in line with their roles
– The Group complies with all relevant legislation, regulatory
requirements, guidance and code of practice
– The Board receives timely, dependable assurance that Management
is managing the significant risks of the Group
Risk assessment, identification and evaluation
Sabre’s assessment of risk is not static. The Board and Management
continually assess the risk environment in which the Group operates
and ensure that Sabre maintains appropriate mitigation in order to
remain within 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 the Group
consider to be within its risk appetite. To do this, risk is managed
inthefirst line of defence by Management, is reviewed and challenged
by the second line of defence – the Risk and Compliance functions and
the third line of defence – Internal Audit.
Three lines of defence model
First line
– Day-to-day
responsibility
for identifying,
assessing,
managing and
controlling risks
Second line
– Facilitating the
risk management
processes
– Oversight and
challenge of risk
management and
controls
– Testing of all
controls
Third line
– Provision of
independent
assurance
through
Internal Audit
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Chief Risk Officer
Collates and reviews the logs, risk register
and controls and provides challenge
Remuneration Committee
Receives Annual Report and update from
Chief Risk Officer, and Risk Committee
regarding Management’s risk management
throughout the year to consider when
making remuneration decisions
Risk Committee
Reviews, discusses and challenges the risk
register, logs, controls and risk management and
informs the Board of any concerns they have and
updates the Board on the Company’s top risks.
Provides feedback to the Chief Risk Officer and
Management Team on risks
Management Risk and
Compliance Forum ("MRCF")
Review, discuss and approve the
risk logs, risk and control changes
Leadership Team
Produce risk logs, risk
registers and risk controls
PLC Board
Reviews and discusses the top risks
the Company faces. Provides
feedback to the Chief Risk Officer
and Management on risks
Risk Universe
The Group uses a Risk Universe to aid in the identification of risks
andto ensure that no risks are overlooked. Sabre has identified its
RiskUniverse as:
Group
Insurance
risks associated with the business of the
Company including claims, reserving, pricing
andunderwriting
Operations
risks associated with inadequate or failed internal
processes and systems, or from an external
event including product development, suppliers,
distribution, and customers
Finance and
Capital
risks associated with the Company not being able
to meet its financial and solvency obligations
including capital management, investments,
solvency, taxation
IT and
Systems
risks that arise from the development,
implementation, maintenance and utilisation
ofthe technology ecosystem which includes
infrastructure, software and cyber protections
Regulatory,
Governance
and
Compliance
risks associated with not complying with laws
and regulations
People
risks associated with our employees
Macro
risks that arise from outside the Group
Risk reporting In addition, the Group operates a Management Risk and Compliance
Forum toallow the Leadership Team to come together and specifically
discuss risk and compliance for Sabre. Management are required to
identify and assess the risks and controls for their respective areas.
Management liaise with the Chief Risk Officer and her team, who
maintain a Risk Register and a Controls register. Risks are rated on an
inherent basis (before any controls are inplace) and on a residual basis
(post any controls in place), using Sabre’s Risk Impact and Likelihood
Matrix, which uses a multi-point scale of 1–5 for both impact and
likelihood ratings. The impact areas for risk are defined as:
Business process interruption
Customers
Earnings/Financial/Solvency
People and Environment
Reputation and Regulatory
Management consult with their direct reports to ensure that all risks
and controls are correctly identified and assessed. Individual risk
registers and control registers are submitted for regular review by
theChief Risk Officer and are collated to create the Group’s Risk
andControls Registers. The Risk and Controls Registers and other
riskinformation are regularly reviewed by the Group’s Management
Risk and Compliance Forum and Risk Committee.
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Risk culture
The Group has adopted the following principles to guide decision making
throughout the Group and its attitudes to risk and its management:
– The Group conducts its business with integrity, due skill, care and
diligence and observes high standards of market conduct
– The Group organises and controls its affairs responsibly and
effectively with sound risk management systems and procedures
– The Group treats its customers fairly and communicates with them
in a way which is clear, fair and not misleading
– The Group manages conflicts of interest fairly, both between itself
and its clients and between itself and reinsurers, brokers,
shareholders and other stakeholders
– The Group manages risk in a cost-effective manner, subject to
compliance with applicable legislation and regulatory requirements
and effective management of risk exposures
– The Group’s employees all play an active role in the management
ofrisk
– The Group deals with its regulators and other supervisory bodies
inan open and co-operative way, making full and open disclosure
ofrisk events where appropriate
– The Group ensures that adequate processes and controls are in
place to ensure that it meets the requirements of a listed company,
including rules relating to disclosure, transparency and management
of conflicts of interest
– The Group considers the needs of all relevant stakeholders in making
material decisions
Risk appetite
The Board recognises that it is both necessary and desirable for the
Group to assume and accept a 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. Any residual risk with an impact
of four and higher and a likelihood rating of four and higher is deemed
to be outside the Group’s risk appetite, and Management will work
toimprove the controls to reduce the residual ratings of the risk.
Therisk appetite is reviewed by the Group’s Management Risk and
Compliance Forum and Risk Committee annually to confirm that the
four and above ratings for impact and likelihood remain an appropriate
guide to the Group’s risk appetite.
Emerging risks
The management of emerging risks is a key element of Sabre’s
strategic risk management. Sabre identifies and monitors emerging
risks, which are issues which may be of potential significance, but
have not fully materialised yet. Emerging risks are identified by horizon
scanning and recorded in the Group’s Emerging Risk Log, and the
Management Risk and Compliance Forum and Risk Committee review
the Emerging Risk Log at each meeting, allowing the impact of the
emerging risk to be mitigated where possible.
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InsuranceAssessment 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.
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.
Although Sabre is a UK-based business, global issues, such as those in the Middle East, Ukraine and the
Red Sea, canhave a significant impact on the Group. The Group has reviewed the impact on its risk profile
from continued global instability and has updated the individual risks accordingly, notably increases in
inflation and energy costs, and supply chain issues.
The following table shows the main risks the Group faces, their impacts and how they are mitigated.
Key
LINK TO STRATEGY* CHANGE IN RISK RATING FROM PRIOR YEAR
Disciplined Underwriting
1
Increase
Risk Management
2
Decrease
Controlled Growth
3
No Change
Operations
4
New Risk
Distribution
5
* Further information on the Group’s strategy can be found on page 06.
Risk Description Mitigation
Pricing
Change from
prior year
Link to
strategy
1
2
3
Failure to price risks effectively can result
inworse-than-expected loss ratios or
significant unexpected changes in volumes
ofbusiness written. Pricing considerations
include 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 a change.
Management continually monitors the
marketfor pricing developments, but
prioritises maintenance of appropriate
margins over the volume of business written.
Expected behavioural changes, suchas a
reduction in miles travelled following the
pandemic, 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.
Reserving
Change from
prior year
Link to
strategy
1
2
3
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 adjustment 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, external actuaries assess the
adequacy of the Group’s reserves. The Group
also commissions an additional independent
actuarial review on a triennial basis.
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Risk Description Mitigation
Customers
Change from
prior year
Link to
strategy
1
2
3
4
5
Failure of the Company to meet customer
requirements or expectations.
Sabre’s business is built around the
customer, with the goal to provide access
tofairly priced motor insurance. We want
ourcustomers to experience high-quality
customer service and peace of mind. The
Group has an established claims handling
function and Actuarial Team ensuring that
claims are appropriately handled and pricing
is fair. During 2023, the Group implemented
the requirements under the Consumer
Dutylegislation.
Suppliers and
outsourced
operations
Change from
prior year
Link to
strategy
2
4
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
to minimise customer detriment, financial
damage and failure to meet regulatory
requirements.
Product
development
Change from
prior year
Link to
strategy
4
5
Sabre could fail in the implementation of new
products and services. This could manifest
ininappropriate pricing, poor provision of
services to customers or failure to sell new
products at expected volumes.
All material product developments have a
project risk assessment completed ensuring
that related risks are identified and where
possible mitigated.
Risk Description Mitigation
Claims
Change from
prior year
Link to
strategy
1
2
3
4
The inappropriate handling of claims could
cause customer detriment and financial loss
for Sabre.
The Group has in place strong controls,
authority levels, rigorous review processes
and a robust internal claims training
programme. 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.
Large losses
Change from
prior year
Link to
strategy
1
2
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
Link to
strategy
1
2
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.
Insurance Operations
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Risk Description Mitigation
Capital
management
Change from
prior year
Link to
strategy
1
2
3
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. Rapid
growth in the business, such as that seen
in2023, can cause additional strain on the
Group’s capital.
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.
Investments
Change from
prior year
Link to
strategy
2
3
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 the
impact of any movement in interest rates is
mitigated by a converse movement in the
value of claims liabilities, which are
discounted. Sabre has an Investment Policy
and the appointment of an outsourced
investment manager ensures that investment
decisions are made on the basis of the most
up-to-date and relevant information.
Accounting
Change from
prior year
Link to
strategy
2
4
Failure to comply with Accounting Standards.
The introduction of IFRS 17 in 2023 has
increased inherent risk for the 2023 year-end
accounts.
Finance processes are designed to minimise
the risk of error in the Group’s financial
reporting. 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.
Taxation
Change from
prior year
Link to
strategy
2
4
Failure to comply with tax legislation. Sabre engages with appropriate tax
specialists and maintains a Corporate Tax
Strategy (available at https://www.sabreplc.
co.uk/about-us/corporate-tax-strategy/)
Finance processes are designed to minimise
the risk of error in the Group’s reporting and
payment of taxes.
Risk Description Mitigation
Distribution
Change from
prior year
Link to
strategy
5
Whilst the Group accesses the market
through almost all brokers within 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 regularly
reviews the financial stability and solvency
ofits larger brokers.
Business
processes
Change from
prior year
Link to
strategy
1
2
4
Sabre’s business processes could fail causing
business disruption or customer detriment.
Sabre has experienced employees and a
supportive training environment to ensure
processes are carried out as required. Any
failures in the processes are reported and
reviewed by Management and any lessons
learned are implemented.
Financial
crime
Change from
prior year
Link to
strategy
2
4
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Group.
Ownership and management of operational
risks sit with the first line business functions.
While 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.
Operations continued Finance and Capital
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Finance and Capital
Risk Description Mitigation
Software and
infrastructure
Change from
prior year
Link to
strategy
4
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.
Data security
and cyber
Change from
prior year
Link to
strategy
4
Loss of data, including personal data, could
lead to significant financial or reputational
detriment and there is the risk of not
complying with the appropriate regulation.
Theft of the Group’s intellectual property
could impact the ability of the Group to
compete in the market.
The Group maintains several layers of
security to ensure that perimeter and internal
systems remain secure and resilient to
attack. This approach includes a least
privilege approach to data by our employees
and the implementation of sophisticated
monitoring systems.
The Group utilises expert third-party
companies and software to ensure data
isalways protected.
Risk Description Mitigation
Default
Change from
prior year
Link to
strategy
2
4
5
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 continued 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
Link to
strategy
2
4
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. While 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. The Group maintains a
LiquidityPolicy.
Investors
Change from
prior year
Link to
strategy
2
4
The Group fails to meet investor expectations. The Group maintains dialogue with its
investors throughout the year through its
financial reporting, Annual General Meeting
and investor roadshows. The Group has in
place an experienced Management Team and
Board to ensure the success of the Group.
IT and Systems Finance and Capital continued
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Risk Description Mitigation
People and
culture
Change from
prior year
Link to
strategy
4
The quality of our employees is central to the
success of Sabre, and the potential loss of
employees or the inability to recruit quality
employees may have an adverse impact on
the performance of the Group.
Sabre seeks to create a positive and
collaborative working environment and
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
Further information on this can be found in
the ‘Our People’ section of this report on
pages 37 to 40.
Risk Description Mitigation
Regulatory,
governance
and
compliance
Change from
prior year
Link to
strategy
2
4
The Group is subject to a number of
regulatory regimes, including prudential
regulation by the Prudential Regulation
Authority (“PRA”) and conduct regulation by
the Financial Conduct Authority (“FCA”) and
governance regimes including The UK
Corporate Governance Code, the Senior
Managers’ and Certificate Regime
(“SMCR”), GDPR, Solvency II Rules and
Consumer Duty.
Failure to comply fully with prevailing
regulation can lead to reputational damage
and monetary or other sanctions which may
impair the Group’s ability to function.
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 and governance matters.
The Group operates a risk management
framework which is approved by the Board to
control the Group’s risks. The Group monitors
governance and regulatory developments in
the UK and closely monitors its exposure to
regulatory and governance risks. The Group
culture ensures the interests of our
customers and the delivery of good
outcomes are paramount. The Group’s Head
of Compliance reviews and monitors
operational activity to ensure regulatory
requirements are adhered to. The Group
engages with both regulators on all
relevantconsultations.
Legal
Change from
prior year
Link to
strategy
2
4
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
management framework (including controls)
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.
ESG
Change from
prior year
Link to
strategy
2
4
Sabre could fail to meet its key stakeholder
expectations or legislative or regulatory
requirements related to ESG. Also, Sabre
sees risks attached to societal factors relating
to ESG such as a lack of diversity.
The Group has a strategy regarding its
customers, people, community, partners and
environment. ESG remains on the Board’s
agenda and the Chief Financial Officer is the
Board Director responsible for ESG. Further
information on this can be found in the
Responsibility and Sustainability section
ofthis report on pages 35 to 48.
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Risk Description Mitigation
Climate
Change from
prior year
Link to
strategy
2
4
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. Further information on this
canbe found in the Responsibility and
Sustainability section of this report on
pages35 to 48.
The Board has appointed the Chief Financial
Officer to oversee the management of this
risk and its impact on the Company 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
42 to 48 of this report.
Inflation and
interest rate
increases
Change from
prior year
Link to
strategy
1
2
3
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. This
increased to over 12% in 2022 and remained
relatively high in 2023. We expect this wider
inflation not only to 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 claims and wider 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.
Geo-political
Change from
prior year
Link to
strategy
2
3
4
At the time of writing the report, there was
heightened global tension, including the war
in Ukraine, conflict in the Middle East and the
Red Sea. Although Sabre is a UK based
business, global issues such as these can
have a significant impact on the Group.
The Group reviewed the impact of these
events and have updated their ratings where
impacted, notably its supply chain on both
claims and general expenses, impact of
inflation and energy costs. The Group
continues to monitor the exposure and
impact of these events.
Macro
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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.
The impact of climate change
We discuss the impact of climate change in detail on pages 42 to 48
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.
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 2026.
The impact of inflation
The current economic environment is recovering from a period
ofunexpectedly high inflation. Persistency remains uncertain
andinvestment markets are vulnerable to increased levels of
volatility.Interest rates remain materially higher than the few
yearspreceding 2022.
The short-term impact of an unexpected increase in the cost of claims
during 2022 has continued to impact loss ratios in the first half of 2023
as premium written in the lower-inflationary environment earned
through. The correction made to reserves in 2022 appears appropriate
and further strengthening has not been required. The price increases
implemented to reflect inflation have resulted in an improvement in
combined operating ratios in the second-half of 2023. While we have
seen inflation pressures decrease during 2023, 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 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 2026, 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 Group’s 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 Board’s 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.
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Risk category
Scenario
Ination
Pricing and
reserving errors
Cost of living
increase
Changing interest
rate environment
Reinsurance pricing,
availability and
exposure
Temporary cessation
in ability to write
business
One-off major
loss event
Pricing
Reserving
Claims
Large losses
Reinsurance
Customers
Suppliers and outsourced operations
Product development
Distribution
Business processes
Financial crime
Capital management
Investments
Accounting
Taxation
Default
Liquidity
Investors
Software and infrastructure
Data security and cyber
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:
– Inflation: Increase in gross and net reserves, increase in loss ratio
for12 months, increase in operational expenses
– Pricing and reserving errors: Increase in gross and net reserves,
short-term significant increase in loss ratio
– Cost of living increase: Increase in operating expenditure
– Changing interest rate environment: Decline in bond values
– Reinsurance pricing, availability and exposure: Significant
reinsurance rate increase and failure of a large reinsurer
– Temporary cessation in ability to write business: Significant
reduction in premium for one month
– One-off major loss event: A significant immediate expense
ofunspecified nature
We have also modelled worst-case scenarios which combine
theseevents.
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Section 172
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.
Fair, risk-based
pricing and
reliable returns
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Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
27
This table demonstrates where further information on how the Board
has met these responsibilities is disclosed:
Long-term results Our strategy p06
Market Context p07
CEO’s Review p10
Business Model p13
KPIs p14
Principal Risks and Uncertainties p16
CFO’s Report p31
Viability Statement p25
Audit Committee Report p62
Risk Committee Report p65
Employees Business Model p13
CEO’s Review p10
‘Employees’ section of the CSR Report p37 to 40
Board Principal Decisions p30
Chair’s Governance Letter p51
Remuneration Committee Report p70 to 73
Directors’ Remuneration Report p81 to 91
Employee Designated NED p60
Stakeholders Strategy Operations p06
Strategy Distribution p06
Strategic Priorities p06
CEO’s Review p10
Business Model p13
CSR Report p35 to 48
Community and
environment
CEO’s Review p10
CSR Report p35 to 48
Directors’ Report p92 to 94
Reputation Strategy Report p06
CEO’s Review p10
Governance Report p56 - 61
Fairness for
shareholders
Strategy Report p06
Governance Report p56 - 61
Remuneration Committee Report p70 to 73
Directors’ Remuneration Report p74 to 80
– 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 well as
Company-specific matters
– Reports from 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, Sabre’s Executive Team
carry forward stakeholder consideration into and throughout the
business. Sabre operates a culture of openness and transparency, with
management at all levels working amongst their 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
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 35 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 employees, on pages 35 to 48 of
the Strategic Report.
Listening to the needs of stakeholders
The 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
throughout the year in order to discuss their concerns 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
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28
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.
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 broker’s 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.
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.
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Sabre Insurance Group plc Annual Report and Accounts 2023
29
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. The Board held two ‘strategy days’ during the year,
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 the Group’s
strategic objective to prioritise writing profitable business over growth
remained appropriate and 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.
Dividend
The Group’s dividend policy states that an ordinary dividend will be
paid based on 70% of the year’s 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 2023, the Board made the decision to declare a full ordinary
and interim dividend in line with the Group’s policy. 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.
Key Board decisions during the
financial year ended 31 December
2023
The Board recognises the importance
ofmaking decisions in a manner
whichensures that all of the Group’s
stakeholders are treated consistently
andfairly. This can be demonstrated
through the key decisions made by the
Board during the financial year ended
31 December 2023.
Inflation and economic uncertainty
The war in Ukraine, along with other local and global factors,
contributed to an environment of significant economic uncertainty
andhigh inflation which began in 2022 and persisted throughout 2023.
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.
– In 2022, costs incurred in servicing insurance contracts (claims
costs) increased significantly and unexpectedly. Costs continued
torise into 2023, albeit more predictably. The Board acted to ensure
the financial stability of the firm by continuing to challenge
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 Group’s reinsurance programme was renewed on expiring
terms, significantly limiting the impact of volatility in the costs
oflong-term care
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Sabre Insurance Group plc Annual Report and Accounts 2023
30
ADAM WESTWOOD
Chief Financial Officer
READ MORE:
Principal
risks and
uncertainties
on page 16
Chief Financial Officer’s Review
Strong gross written
premium growth and
capital generation
Highlights
2023 2022
(1)
Gross written premium* £225.1m £171.3m
Net loss ratio* 56.3% 66.0%
Combined operating ratio* 86.3% 93.4%
Net profit margin* 15.8% 8.6%
Profit before tax £23.6m £14.0m
Profit after tax £18.1m £11.1m
Solvency coverage ratio (pre-dividend)* 205.3% 161.4%
Solvency coverage ratio (post-dividend)* 170.9% 153.8%
Return on tangible equity* 22.7% 13.3%
(1) All relevant 2022 numbers are restated under IFRS 17
*Alternative Performance Metrics are reconciled to IFRS reported figures on
pages176 to 178 of the Annual Report and Accounts
2023 has been an exciting year in
themotor insurance market, in which
along-awaited correction to pricing
across the market was delivered rapidly
as insurers dealt with the twin impacts
ofhigh inflation and sustained under-
pricing. Sabre was well-placed to benefit
from these market conditions, having
taken timely and necessary pricing
action throughout 2022 and 2023.
In some respects, the numbers speak for themselves in 2023, with
theperformance of the Group improving significantly since 2022. In the
first half of the year, Sabre continued to increase prices in order to meet
elevated levels of inflation and return margins towards historical norms.
Market pricing, however, remained low until mid-March, at which point
it appears other insurers started to increase their own prices having
suffered underwriting losses in 2022. As had been anticipated since
the start of the downturn in market pricing, once this happened Sabre’s
competitiveness on its core Motor Vehicle policies increased
significantly, allowing the Group to grow its gross written premium.
This rapid growth had a minimal impact on the first half of 2023, as all
premium written by the Group is recognised in profit through insurance
revenue evenly over a period of one year. This growth started to impact
on profits in H2, as did the improved loss ratio resulting from decisive
pricing action in 2022 and 2023.
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Our gross written premium has increased by 31.4% vs 2022, with
theincrease being almost entirely driven by the Group’s core (and
most profitable) line of business – Motor Vehicle. The increase in gross
written premium is even more sizeable when compared to the second
half of 2022, being 58.1% up for H2 2023 vs H2 2022. This has been
slightly offset by a reduction in Motorcycle business, which was
expected as the relationship with one of the Group’s distributors
wasterminated during the year. Premium from the Taxi business
hasgrown marginally, although that market remains challenging
andtherefore the Group remains cautious as pricing in the Taxi market
remains relatively low.
Customer instalment income, which is ‘earned’ in the same way
aspremium, has increased in line with premium earned on the
directbusiness. As has always been the case, the Group only earns
instalment income on its Direct book from the provision of premium
financing to those customers who choose to pay monthly, and as such
this remains a very small element of the Group’s insurance revenue.
Investment return has started to reflect the reinvestment of maturing
assets, as well as increase in total assets invested in the Group’s
portfolio. The Group’s investment strategy remains unchanged, being
invested in a low-risk mix of UK government bonds, other government-
backed securities and diversified investment-grade corporate bonds.
Fair value gains and losses on the investment portfolio are taken
through other comprehensive income and largely reflect market
movements in yields of risk-free and low-risk assets. We do not expect
to realise any of these market value movements within profit as we
continue to hold invested assets to maturity.
The move to reporting under IFRS 17 has brought some changes
tothe presentation of the Profit or Loss Account and Statement of
Financial Position, although I continue to stress that the economic
reality of the business and capital position of the Group remain
unaffected by the change. We will continue to report numbers in
sufficient detail such that we believe readers of this Report and
Accounts will be able to understand the Group’s performance in
historic terms. For example, whilst ‘Insurance Revenue’ is the top-line
in the Profit or Loss Account (it represents ‘earned premium’ plus
‘customer instalment income’), we continue to report gross written
premium on the same basis as under the previous accounting regime.
The below table shows how the familiar measures used to calculate
our KPIs build up into the income entries in the IFRS 17 Profit or
LossAccount.
2023 2022
(1)
Gross written premium £225.1m £171.3m
Less: Unearned element of liability for remaining
coverage (£40.6m) £6.9m
Gross earned premium £184.5m £178.2m
Reinsurance expense (£28.5m) (£25.0m)
Net earned premium £156.0m £153.2m
Customer instalment income £3.7m £3.3m
Insurance service expense (£139.5m) (£126.6m)
Amounts recoverable from reinsurers £31.5m £6.3m
Insurance service result £51.8m £36.2m
Represented by:
Insurance service result before reinsurance
contracts held £48.7m £54.9m
Net expense from reinsurance contracts held £3.0m (£18.7m)
£51.8m £36.2m
(1) All relevant 2022 numbers are restated under IFRS 17
This rapid growth and the on-target profitability of business written
during the year allowed the Group to generate significant organic
capital. The Directors have chosen to distribute this capital by way of
aspecial and ordinary dividend, bringing the total dividend in respect
of2023, including the interim already paid, to 9.0 pence per share.
Revenue
2023 2022
(1)
Profit or loss
Gross written premium £225.1m £171.3m
Insurance revenue £188.2m £181.5m
Net earned premium £156.0m £153.2m
Other technical income £1.2m £1.8m
Customer instalment income £3.7m £3.3m
Interest revenue calculated using the effective
interest method £3.8m £1.7m
Fair value gains on debt securities through OCI NIL £22k
Other comprehensive income
Fair value gains/(losses) on debt securities through OCI £9.3m (£14.2m)
Gross written premium by product
Motor vehicle £199.0m £134.9m
Motorcycle £11.8m £23.1m
Taxi £14.3m £13.3m
Policy counts by product
Motor vehicle (‘000) 234 217
Motorcycle (‘000) 44 74
Taxi (‘000) 12 12
(1) Al relevant 2022 numbers are restated under IFRS 17
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The Group’s expense ratio has increased slightly from 2022, a result
primarily of earned premium remaining at similar levels, with the rapid
growth later in the year not reflected fully in the earned position, set
against normal inflation in the cost base and some one-off
expenditure, including the building refurbishment (£0.4m) and a
write-down in the valuation of the Group’s headquarters office estate
(£0.3m) which was impacted by the higher inflation environment and
ageneral slow down in demand for office buildings. We have seen this
increase reverse in H2 however, with the expense ratio falling from
31.8% in H1 to 28.3% in H2.
Net insurance financial result
The net insurance financial result is a new concept under IFRS 17
andrepresents the ‘run-off’ of discounting applied to claims reserves.
When a claim is recorded, the claim cost is discounted to reflect the
time value of money at the prevailing rate. This reduces the overall
claims cost and is why the claims expense is lower on a discounted
basis. The ‘other side’ of this is the run-off of discounting, which
reflects the increase in the real-world value of the claim as payment
becomes closer. The reduction in claims liabilities and reinsurance
assets resulting from applying discounting to those balances is
recorded within insurance contract liabilities and reinsurance assets
respectively in the Statement of Financial Position.
2023 2022
(1)
Insurance finance expense for insurance contracts
issued (£10.2m) (£6.0m)
Reinsurance finance income for reinsurance
contracts held £3.6m £3.2m
Net insurance financial result (£6.6m) (£2.8m)
(1) All relevant 2022 numbers are restated under IFRS 17
The cost associated with the discounting run-off has increased in 2023
due to claims which were recorded at high discount rates having
run-off during the year. During 2022, much of the claims reserve
would have been discounted at lower rates, and hence a lower
discounting run-off.
2023 2022
(1)
Undiscounted gross claims incurred £139.6m £126.7m
Discounting
(2)
(£20.3m) (£19.3m)
Directly attributable expenses £6.1m £6.2m
Amortisation of insurance acquisition costs £14.1m £12.9m
Insurance service expense £139.5m £126.6m
Undiscounted reinsurance recoveries (£41.4m) (£17.3m)
Discounting
(2)
£9.8m £11.0m
Amounts recoverable from reinsurers for
incurred claims (£31.5m) (£6.3m)
Undiscounted net claims incurred
(3)
£96.0m £108.7m
Net earned premium £156.0m £153.2m
Current-year undiscounted net loss ratio 64.3% 67.7%
Prior-year undiscounted net loss ratio (2.7%) 3.3%
Financial-year undiscounted net loss ratio 61.6% 71.0%
Undiscounted combined operating ratio 91.6% 98.4%
Undiscounted net loss ratio by product
Motor vehicle 55.0% 63.4%
Motorcycle 73.3% 121.9%
Taxi 117.1% 116 .6%
(1) All 2022 numbers are restated under IFRS 17 where applicable
(2) Includes discounting on Period Payment Orders (“PPOs”)
(3) Calculation of undiscounted net loss ratio allows for the impact of discounting
on long-term non-life annuities, Periodic Payment Orders (“PPOs”), consistent
with presentation under IFRS 4
Whether on a discounted or undiscounted basis, the improvement
inloss ratio across the business as a whole is clear, with a significant
improvement in Motor Vehicle and Motorcycle, whilst the small Taxi
business remains challenging. Whilst the full-year net loss ratio is not
sufficiently low across the whole business to return the Group to
historical levels of profitability in 2023, the loss ratio for H2 is far closer,
being 51.5% on an IFRS 17 basis and 57.5% on an undiscounted basis.
It is also very pleasing to note that profitability on the core Motor
Vehicle product has returned towards our historical norms and has
improved throughout 2023. Given the significant growth in this
product relative to Motorcycle and Taxi, this should have a much
greater impact in 2024.
Operating expenditure
2023 2022
(1)
Profit or loss
Insurance service expense £139.5m £126.6m
Reinsurance expense £28.5m £25.0m
Current-year net loss ratio 58.8% 61.9%
Prior-year net loss ratio (2.5%) 4 .1%
Financial-year net loss ratio 56.3% 66.0%
Other operating expenses £26.6m £22.8m
Expense ratio 30.0% 27.4%
Combined operating ratio 86.3% 93.4%
Net loss ratio by product
Motor vehicle 50.4% 59.0%
Motorcycle 65.2% 113 .4%
Taxi 108.8% 107.0%
(1) All relevant 2022 numbers are restated under IFRS 17
The year-on-year improvement in profitability is evident from the
lossand combined ratios reported above. The inflation shock in 2022
clearly had a very significant impact on 2022’s result, and this had a
knock-on impact into 2023, particularly in the first half of the year, as
the rating action taken during 2022 took some time to earn through.
The numbers reported above are on an IFRS 17 basis, therefore are
‘discounted’ loss ratios. Undiscounted figures are shown below, along
with other elements which make up the ‘insurance service expense’,
which effectively equals discounted claims expense, plus an allocation
of operating expenses directly attributable to handling claims and the
amortisation of insurance acquisition costs, which in Sabre’s case is
analogous to commission expense under the previous standard.
£225.1m
Gross written premium
£23.6m
Profit before tax
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33
Dividends and solvency
2023 2022
(1)
Interim ordinary dividend (paid) 0.9p 2.8p
Final ordinary dividend (proposed) 4.2p 0.0p
Total ordinary dividend (paid and proposed) 5.1p 2.8p
Special dividend (proposed) 3.9p 1.7p
Total dividend for the year (paid and proposed) 9.0p 4.5p
The dividend proposed is in line 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.
Excluding the capital required to pay this dividend, the Group’s SCR
coverage ratio at 31 December 2023 would be 170.9%.
ADAM WESTWOOD
Chief Financial Officer
18 March 2024
Cash and investments
2023 2022
Government bonds £107.0 m £ 87. 2m
Government-backed securities £81.9m £80.8m
Corporate bonds £75.7m £61.3m
Cash and cash equivalents £35.1m £18.5m
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
2023 2022
(1)
Gross insurance liabilities £374.8m £314.3m
Reinsurance assets (£166.7m) (£137.0m)
Net insurance liabilities £20 8.1m £177.4m
(1) All 2022 numbers are restated under IFRS 17 where applicable
The Group’s net insurance liabilities continue to reflect the underlying
profitability and volume of business written. Generally, the gross
insurance liabilities are more volatile and impacted by the recording
and settlement of individually large 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.
Other comprehensive income
The introduction of IFRS 17 has added a ‘net insurance financial result’
to other comprehensive income. This reflects the impact of changes
indiscount rate on the value of claims liabilities. This is therefore
recorded alongside the change in market value of debt securities at
fairvalue. Where there is a true movement in risk-free rates, these
amounts should be similar but opposite. The inclusion of the impact
ofdiscount rate movements within other comprehensive income, as
opposed to the Profit or Loss Account, is a policy decision designed
tomatch the impact of movements in discount rate to fair-value
movements in investments already recorded within other
comprehensive income under IFRS 9.
2023 2022
(1)
Key elements of other comprehensive income
Net insurance financial result (discounting ‘run-off’) (£7.0m) £10.7m
Fair value gains/(losses) on debt securities through OCI £9.3m (£14.2m)
(1) All relevant 2022 numbers are restated under IFRS 17
Given that asset-liability matching is imperfect with regard to levels
ofrisk and duration, these two figures do not perfectly offset, however
these have been particularly large in 2022 and 2023 due to the volatile
economic environment.
Taxation
In 2023 the Group recorded a corporation tax expense of £5.5m (2022:
£2.9m), an effective tax rate of 23.5%, as compared to an effective tax
rate of 21.0% in 2022. The effective tax rate is similar 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
2023 2022
(1)
Basic earnings per share 7.27p 4.45p
Diluted earnings per share 7.20p 4.42p
(1) All relevant 2022 numbers are restated under IFRS 17
Basic earnings per share for 2022 of 7.27p 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.
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Sabre Insurance Group plc Annual Report and Accounts 2023
34
Our responsibility and
sustainability framework:
Our
Customers
Our
Partners
Our
Community
Our
Environment
Our People
Our
Shareholders
Responsibility and Sustainability
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
Group’s activities. We are committed to our
part in building a sustainable future.
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Our Customers
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.
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 a 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 our outsourced partners.
Our Customers
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. We have generated a deep pool of data,
which allows us to provide the best possible, risk-adjusted prices.
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Our People
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
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 2023 employed
161people. We are pleased to say that over 45% of our
employees have been with the Group for ten or more years.
Communication with Employees
Sabre encourages internal communication through a two-way dialogue
between the Leadership Team and employees. Throughout the year
we have done this through:
– Regular ‘CEO lunches’, where Geoff Carter hosts a lunch with teams
across the Group
– ‘Listen & Learn’ sessions, where Karen Geary, the Non-executive
Director responsible for Employee Engagement, hosted Q&A
sessions with employees
– Continued use of ‘Ask Sabre’, an email facility, which allows
employees to raise questions regarding the business
– An employee Happiness Survey which is a facility to post
commentsanonymously
– An Employee Satisfaction Survey, which is sent annually to
employees to allow them a safe space to provide feedback
anonymously to the Leadership Team
– Presentations at Full Year and Half Year to update employees on the
Group’s financial results and answer any questions they may have in
relation to the announcements
– Appraisals twice a year for all employees
– Regular social and charity events
Changes During the Year
During the year, the Company reviewed and increased the starting
salaries for trainees, and the Company confirms that the Real Living
Wage is paid as the minimum to all full-time employees. As in prior
years, the Company gave employees pay rises during the year. For our
people who were rewarded pay rises through our annual pay review
process, before any individual performance adjustments, the average
pay rise was 6.7%, with individual pay rises between 5.2% and 8.9%,
including a Christmas bonus of £1,050. In order to allow for greater
employee flexibility and to ease the burden during pregnancy and those
initial few months with a new born baby, we reviewed our family leave
policies. As a result, we enhanced our maternity and paternity pay and
brought in paid leave for those whose babies require neo natal care.
Our People
In addition to this, the Group has an employee portal and a dedicated
Whistleblowing Hotline through which employees can report any
concerns anonymously. Sabre also has an internal whistleblowing
champion, Alison Morris. Annual training and regular reminders are
provided to all employees regarding whistleblowing.
Employee Policies and Code of Conduct
Policies are in place to support and develop the Group’s employees,
allof which are subject to regular review. 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
2023 all employee policies were reviewed to ensure that they are
fairand inclusive by outlining the responsibilities of both the Group
andour employees. All employee policies are available through the
Employee Portal which allows for easier access to the employee
aswell as 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.
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Employee wellbeing
The Group has a number of trained mental health champions and
mental health first aiders. Their roles are to promote positive mental
health and to signpost to relevant support and help, where appropriate.
The Group also has an employee assistance programme with a
24-7-365 telephone service with advisers who can aid discussions on
work, marital, financial or family problems, health information as well
as providing up to six sessions of employee counselling per year.
Number of Mental Health First Aiders:
2
Number of Mental Health Champions:
9
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 2023 the Group provided development training for its future
leaders and key individuals, 29 employees were provided with
bespoke training focusing on soft skills and self-development.
Duringthe year the Group has provided a workshop for ‘Women
inLeadership’. 13 of our female employees attended the workshop
which focused on embracing different communication and leadership
styles as well as creating a community within the workplace, which
has continued. 92% of managers attended Menopause Awareness
training which concentrated on how to help employees who may
besuffering due to menopause symptoms as well as a general
understanding on how this can have an effect on the overall wellbeing
of our female employees. The Group provided a workshop on ‘Sleep
and the Menopause’ by a registered nutritionist, which led to the
creation of amenopause support group that has continued throughout
the year. InNovember the Group provided a ‘Men’s Health’ workshop
which covered nutrition, exercise, prostate cancer awareness and
mental health, with 36 attendees.
During 2023, the Company supported employees with the following
qualifications:
– Foundation Insurance Test, Chartered Insurance Institute
– Foundation Certificate in People Management, Chartered Institute
ofPersonnel and Development
– Chartered Management Accountant Qualification, Chartered
Institute of Management Accountants
– Advanced Diploma, Chartered Insurance Institute
– CIPD Level 5 Associate Diploma in Organisational Learning &
Development
– Mental Health Champions, St John Ambulance
– First Aid Qualification, St John Ambulance
– IOSH training (Institution of Occupational Safety and Health)
All of these qualifications are paid for by the Group. Employees also
receive study leave and the costs of professional memberships.
Employee Share Plans
In 2023, the Group launched its sixth Save As You Earn (“SAYE”)
grant, allowing employees to purchase shares in the Group at a
reduced rate. The Group allows employees to contribute a 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 2023 SAYE grant saw 38% ofemployees participate.
As at 31 December 2023, 48% of employeeswere participating in one
of the Company’s SAYE grants.
Benets
The Company operates a generous benefits package including
enhanced holiday leave, matched pension contributions and one
toone pension training, private health care, salary extras employee
portal (discounts on many high street shops), eye tests, yearly
flujabs,performance bonus, mini health MOTs, a life assurance
policy,enhanced policy allowance, daily employee breakfasts,
weeklyfruit deliveries, share save schemes andsupport towards
professional qualifications.
Sabre has a formal hybrid working model whereby all employees are
able to work from home for a maximum of two days per week. This
allows employees to retain the benefits of working from home, whilst
maintaining a collaborative, primarily office-based culture.
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 more of a benefit of purchasing an electric vehicle
through a salary sacrifice scheme as it generates tax savings for the
employee. To date 4% of employees have ordered an electric vehicle
through the scheme. The Group also offers a cycle to work scheme to
all employees, which has a tax saving benefit to the employee and can
save on the cost of a bike and accessories.
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Diversity and inclusion: New Listing Rule LR9.8.6R (9 -11)
The requirements of the New Listing Rule are:
– At least 40% of the Board are women
– At least one senior Board position (Chair, CEO, CFO, SID) is held
byawoman
– At least one member of the Board is a non-white ethnic minority
(bases on ONS categories)
– Publish gender and ethnicity data of their Executive Management
(the FCA has defined Executive Management as the Executive
Committee or most Senior Executive or managerial body below the
board (or where there is no such formal committee or body, themost
senior level of managers reporting to the Chief Executive), including
the Company Secretary but excluding administrative and support staff.)
As of 31 December 2023 37.5% of the Board are women, therefore
we do not meet this target. All other targets have been met. Data is
collected on a self-reporting basis using the categories in the FCA
tables for gender and diversity reporting. The Group operates a
Diversity & Inclusion Policy for the Board which operates within
theFCA listing rules.
Inclusivity, diversity and equality
The Group is fully 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, and operate an 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; and
– 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 module, 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all respects.
During the recruitment and interview process we ensure fair,
non-discriminatory and consistent processes are followed, and
Sabrehas a policy of advertising all roles internally (where practical)
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. During 2023 we have had 15 internal secondments
which allows for further training and development within specialist
areas. We also had 7 internal promotions supporting Sabre’s ethos
ofinternal development within the Group. Of these promotions 42%
were female employees.
Number of Board
members % of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID & Chair)*
Number in
executive
management
% of executive
management
Men 5 62.5% 2 4 80%
Women 3 37.5% 1 1 20%
Other categories N/A N/A N/A N/A N/A
Not specified/prefer not to say N/A N/A N/A N/A N/A
Number of Board
members % of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID & Chair)*
Number in
executive
management
% of executive
management
White British or other white (incl. minority white groups) 7 87.5% 3 5 100%
Mixed/multiple ethnic groups – – – – –
Asian/Asian British – – – – –
Black/African/Caribbean/Black British 1 12.5% – – –
Other ethnic group including Arab – – – – –
Not specified/prefer not to say – – – – –
*As of 31 December 2023 our SID was acting as interim Chair.
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Number and % of women on the Board
Female 37.5%
Male
62.5%
3
5
As at 31 December 2023
Total
100%8
3/8
37.5%
Female 37.5
%
Male
62.5
%
3
5
As at 31 December 2022
Total
100
%
8
Number and % of women on the Executive Team**
Female 20%
Male
80%
1
4
As at 31 December 2023
Total
100%5
1/5
20%
Female
20%
Male
80%
1
4
As at 31 December 2022
Total
100%5
Number and % of women on the Leadership Team**
Female 33.3%
Male
66.7%
3
6
As at 31 December 2023
3/9
33.3%
Total
100%9
Female
33.3%
Male
66.7%
3
6
As at 31 December 2022
Total
100%9
Number and % of women in senior roles
(reporting to members of the Leadership Team)**
Female 42.9%
Male
57.1%
9
12
As at 31 December 2023
Total
100%21
9/21
42.9%
Female
39.1%
Male
60.9%
9
14
As at 31 December 2022
Total
100%
23
Number and % of women working for Sabre
Female 42.2%
Male
57.8%
68
93
As at 31 December 2023
Total
100%161
68/161
42.2%
Female
42.4%
Male
57.6%
64
87
As at 31 December 2022
Total
100%
151
**Includes directors of subsidiaries
Gender pay gap
Whilst Sabre has fewer than 250 employees, and therefore it 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. By publishing this information, the Group is ensuring
accountability with regard to gender pay. The Gender Pay Gap Report
is available on the Group’s website: https://www.sabreplc.co.uk/
about-us/corporate-governance/gender-pay-gap-report/
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 Company’s Gender Pay
GapReport.
Sabre’s approach to data protection
Sabre has a General Data Protection Regulation (”GDPR”) Oversight
Committee (the “Committee”) which is chaired by our Data Protection
Officer (“DPO”). 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 DPO 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.
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Since 2019, Sabre has operated a Charity and Social
Committee (the “Committee”) to prioritise and plan
fundraising and social events. The Committee is run by
employees and during the year had a change of Chair,
Secretary and Treasurer. It consists of ten employees
fromacross Sabre with varying lengths of tenure.
Charities supported
At the beginning of 2023, the Committee asked employees to
nominate new charities that they wished for the Group to partner
with,that were local to Sabre and that we could make a difference
toby fundraising and volunteering employees' time.
The new Charity Partners chosen were:
St Catherine’s Hospice
St Catherine’s Hospice offers both physical and emotional support to
those living with a terminal illness whose families live in Sussex and
East Surrey. Further information on St Catherine’s Hospice can be
found here: https://www.stch.org.uk/
The Children’s Trust
The Children’s Trust deliver rehabilitation, education and community
services through skilled teams who work with children and young
people who have brain injuries and their families. Further information
on The Children’s Trust can be found here: https://www.
thechildrenstrust.org.uk/
Our Community
Other charities supported during the year were:
Children in Need
Dorking Foodbank
Macmillan
Movember
Rainbow Trust
Royal British Legion Poppy Appeal
Stockport Children’s Charity
Walk the Walk
Charity events during the year
The Committee arranged a Charity Partnership Launch Day and
arranged involvement in a number of charity events including; the
StCatherine’s Hospice Dragon Boat Race, the Sabre Annual Car
Park-ty, Sabre Charity football match and bingo as well as sponsoring
The Children’s Trust’s annual Elf Run.
Give a Day Away
In addition, Sabre relaunched its Give a Day Away Scheme, where
employees can take time out of their working day to volunteer for
charities. During the year employees took part in leaflet dropping for
StCatherine’s Hospice ahead of their annual midnight walk and The
Children’s Trust Shop Challenge which saw employees helping at two
different locations in their Charity Shops to compete against each
other for the best window display and the best sales figures. A total
of26 employees from the Claims, Policy Operations and e-Commerce
departments volunteered and gave up a total of 74 hours of their time.
The employees really enjoyed participating in these events and we
look forward to supporting them to take part in these events next year.
By the end of the financial year, Sabre and its employees had raised
£9,864.98 for St Catherine’s Hospice and £10,280.98 for The Children’s
Trust. The total donations by the Group and its employees amounted
to £32,475.96, of which £10,890.66 was raised by employees (2022:
£2,316) and £21,585.30 donated by Sabre (2022: £21,397).
Our Community
£21,585
Total donation to charity
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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 also
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.
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 issued 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 2023, we continued to work with Mazars to assist with our
carbon footprint analysis and climate-related risk assessment.
Our Environment
Our Partners
Brokers
Approximately 64% of our premium income was sourced through
brokers in 2023. 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.
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 Environment
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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 over 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.
When considering climate-related risks and opportunities, the associated materiality is considered by Management and the Risk Committee.
Allrisks are assigned a ‘likelihood’ and ‘impact’ assessment, which is aligned to the wider risk management framework. The resultant ‘inherent’
risk is note below. This is considered alongside a subjective assessment as described in the later section ‘How We Decide What to Measure’
Risk/opportunity Description
Physical
operational
Primary time
horizon:
medium-term
Risk rating: low
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.
Operational Impact
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
Risk rating: low
It appears clear that an increased number of unpredictable extreme weather events will increase the overall cost of claims. While this is
expected to have a 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.
Financial Impact
An increase in the frequency of adverse weather events is likely to increase the total cost of claims, although we consider this would be
immaterial in the short-term, with pricing action taken to address increased costs in the medium-term. The impact of one-off individually
material events is mitigated by our reinsurance programmes.
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 likelihood of a material increase in
claims being sufficiently rapid not to be compensated by re-pricing is considered to be very low. 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
Risk rating: low
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.
Financial and Operational Impact
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.
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,
such as whether or not to shift the insured footprint towards “green
vehicles” and approving the office refurbishment . 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 50 to 95.
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 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.
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Risk/opportunity Description
Transitional
market change
Primary time
horizon:
medium-term
Risk rating:
medium
The transition from internal combustion engine personal transport to other methods and technologies will change the types of vehicles
insured and potentially the nature and volume of insurance purchased.
We note that the developments of potential new markets presents both a risk and an opportunity.
Financial Impact
We expect that the cost profile of repairs will change, and hence there is a potential liability cost related to transitional market change
Operational Impact
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).
Litigation
Primary time
horizon: long-term
Risk rating:
medium
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.
Financial Impact
Litigation can be costly, regardless of the outcome. Whilst we consider direct litigation against Sabre to be highly unlikely, industry-wide
litigation could impact the Group indirectly.
Operational Impact
Industry-wide disruption due to the consequences of undetermined future legislation has the potential to impact on the Group’s ability to
sell policies to customers. Direct litigation against the Group would cause significant distraction for Management.
Investments
Primary time
horizon: long-term
Risk rating: low
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.
Financial Impact
Given the short-tail nature of our investments (average duration c. two 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.
Whilst the disclosure above has focussed on the risks presented by
climate change, Sabre remains alert to the opportunities presented,
some of which are noted below. Note that Sabre does not necessarily
intend to exploit all of these opportunities in the near-term.
– Provision of insurance products and services tailored towards
alternative modes of transport
– Collecting sufficient data to provide competitively priced traditional
insurance for electric vehicles and vehicles powered by other new
technologies
– Reducing overall costs to the business by making use of cheap,
sustainable energy sources
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.
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.
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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 standing agenda item during 2023 for the monthly 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 16 to 24 of this report.
Recent climate-related issues considered by those charged with
governance include progression of the office refurbishment project
and assessment as to the continued suitability of climate-risk analysis
as disclosure in this report.
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.
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. This exercise is expected to be carried
out once every three years and was last carried out in 2022. This will
be revisited on an ad-hoc basis if Management consider the relevant
circumstances to have changed materially. We considered this in the
context of three Shared Socioeconomic Pathways (“SSP’s”), being:
– SSP1 ‘sustainability pathway’, generally the best-case scenario
where warming is below 1.5
o
C 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 from a physical risk perspective 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.
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 0.6%
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, Sabre’s risk from climate-related
perils on our insurance portfolio is low.
3. Sabre’s flood capital requirement makes up less than 1.7% of our
total base SCR. If Sabre’s flood SCR was uplifted by 100%, this would
cause less than a 2.5% increase in Sabre’s total SCR. Therefore, Sabre’s
SCR could tolerate some increase in climate capital requirements.
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Separately, for the first time in 2022, we reported 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 68,443 tCO
2
e/yr as at 31 December 2023
(2022 (restated following updated formula): 61,202 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 11,165 tCO
2
e/yr to 2023 emissions (2022: 11,223 tCO
2
e/
yr). The weighted average carbon intensity across the portfolio was
34.0 tCO
2
e/$MM as at 31 December 2023 (2022: 39.6tCO
2
e/$MM).
The medium-term reduction in emissions reported as at 31 December
2023 is consistent with the Group’s Net-Zero objectives, despite an
increase in 2023. The increase in Scope 1 emissions in 2023 is due to
the installation of the new air conditioning system, which we expect
will generate greater efficiencies in the long-term.
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.
We believe our operational activities are consistent with a scenario
well-below 2ºC, 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 all other indirect emissions which occur
in the Group’s value chain
Tonnes of CO
2
e/year 2023 2022 2021
Scope 1 130 – 42
Scope 2 32 43 43
Operational footprint 162 43 85
Scope 3, excluding insured emissions 20,937 19,902 23,673
Total footprint, excluding insured emissions 21,099 19,945 23,758
Number of FTE* employees 162 154 142
Operational footprint per employee 1.00 0.28 0.60
Insurance revenue £188m £181m £170m
Operational footprint per £m of insurance
revenue 0.86 0.25 0.50
Building energy usage (KWh) 143,147 200,237 201,683
* Full-time equivalent (“FTE”)
The footprint is calculated in accordance with the GHG Protocol on
calculating organisational footprints. Activity data has been converted
into carbon emissions using published emissions factors or appropriate
estimation techniques. Management have obtained external quality
assurance for the GHG data presented here.
All relevant and measurable emissions have been included in these
calculations. Specifically: Scope 1 – ‘F gas’; Scope 2 – electricity; Scope
3: Category 1- Purchased goods and services, Category 2 – Capital
goods, Category 3 – Fuel and energy-related activities, Category 4 –
Upstream transportation and distribution, Category 5 – Waste generated
in operations, Category 6 – Business travel, Category 7 – Employee
commuting, Category 15 – Investments (including insured emissions).
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. Clearly, motor
vehicles are a material source of carbon emissions and we are aware
that Sabre’s products enable the use of such vehicles. 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 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.
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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 2023 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2023, we made further progress through:
– Completion of replacement of all windows within our Head Office,
enhancing efficiency
– Replacement of the air conditioning system within our Head Office
– Transfer of half of our office estate to a fully renewable energy supplier
– Re-launch of the Group’s sustainability forum
The costs associated with these initiatives are largely immaterial to the
Group as a whole, however the Board remains open to the approval of
appropriate additional expenditure in relation to climate-related
initiatives as and when required.
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 operational carbon neutrality and ‘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. As the Group’s understanding of its carbon
footprint, and the factors which can and cannot be controlled,
grows,it will become more able to set accurate and detailed targets.
This will be reviewed along with the Net-zero Roadmap in 2024 and
updated disclosures will be made as appropriate in the 2024 Annual
Report and Accounts.
– 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
Our analysis goes some way to ensuring consistency with this
objective, however we note that a holistic statement about the
interdependencies of these factors along with their impact on
valuecreation will be enhanced and disclosed in more detail in
future reports. This will be considered along with a review of
theGroup’s Net-zero roadmap in 2024 and consistency with this
recommendation will be reviewed and reported on within the 2024
Annual Report and Accounts.
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 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 of the level of influence held by the Group and expected
societal trends. The Group has defined net-zero in-line with Science-
Based Targets initiative’s net-zero standard framework.
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.
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
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Our Shareholders
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 45
Consistent
Strategy
a. Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
‘Strategy for Climate Change’,
page 43
Partially Consistent
b. Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy, and
financial planning.
‘Strategy for Climate Change’,
page 43
Partially consistent
c. Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower scenario.
‘Strategy for Climate Change’,
page 43
Consistent
Risk management
a. Describe the organisation’s processes for
identifying and assessing climate-related
risks.
‘Managing Climate-Related Risks’,
page 45
Consistent
b. Describe the organisation’s processes
for managing climate-related risks.
‘Managing Climate-Related Risks’,
page 45
Consistent
c. Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
‘Managing Climate-Related Risks’,
page 5
Consistent
Metrics and targets
a. Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
‘Our Metrics and Targets’, page47
Consistent
b. Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas
(“GHG”) emissions and the related risks.
‘Our Metrics and Targets’, page 46
c. Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
againsttargets.
‘Our Metrics and Targets’, page47
Partially consistent (see above)
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.
Note that we have also ensured that the Supplemental Guidance for
Insurance Companies has been followed, specifically:
– Strategy (b) Describe the potential impacts of climate-related risks
and opportunities on core products and services – ‘Strategy for
Climate Change’, Page 43
– Strategy (c) Disclose certain information where climate-related
scenario analysis is performed – detailed climate-related analysis
isnot performed across the portfolio given the nature of the risks
insured, therefore additional disclosure is not required
– Risk Management (a) Describe processes for identifying and
assessing climate-related risks on portfolios – ‘Managing Climate-
Related Risks’, Page 45
– Risk Management (b) Describe key tools or instruments related to
climate-related risks in relation to product development or pricing –
‘Managing Climate-Related Risks’, Page 45
– Metrics and Targets (a) Provided aggregated exposure to
weather-related catastrophes – Exposure is negligible due to nature
of insurance products sold
– Metrics and Targets (v) Disclose weighted-average carbon
intensity emissions associated with commercial property and
speciality lines – Not applicable
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Governance
Sabre has put in place a robust governance process:
– In September 2022 the Board approved the Company’s
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; and
– Consumer Duty is reported on at the Company’s Leadership,
Executive and Risk Committees during the year.
Post-implementation
Regulatory requirements apply to new and existing products.
Athorough ongoing programme is in place:
– A framework has been built that will provide the Board with
assurance that customers will receive good outcomes;
– The Company’s Head of Compliance is responsible for ensuring
theregulatory requirements are fully adhered to;
– Our products are designed to meet the demands and needs of our
target market and deliver fair value to the end consumer;
– An Employee Working Group has been formed with the purpose
ofcontinuing to develop our approach; and
– Senior management uses management information to closely
monitor and understand customer outcomes.
Monitoring
Monitoring and training will be key to assuring customers are receiving
good outcomes:
– All employees 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; and
– Management information is used to determine the value, benefits
and outcomes received by the customers of our products.
Sabre recognises the importance of
afirm’s culture and purpose in its ability
to be able to deliver good outcomes
forcustomers.
The FCA regulatory requirements for Consumer Duty came into
forceon 31 July 2023. This regulation 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.
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
FCA Consumer Duty
Strategic Report Governance Financials
About Sabre Our Investment
Case
Market Context Our Values CEO’s Review Our Business
Model
KPIs Principal risks
and Uncertainties
Viability
Statement
Section 172
Statement
CFO’s Review Responsibility and
Sustainability
FCA
Consumer Duty
Sabre Insurance Group plc Annual Report and Accounts 2023
49
51 Chair’s Governance Letter
52 Board of Directors
56 Governance Report
62 Audit Committee Report
65 Risk Committee Report
67 Nomination and Governance Committee Report
70 Remuneration Committee Report
74 Directors’ Remuneration Policy
81 Annual Report on Directors’ Remuneration
92 Directors’ Report
95 Statement of directors’ responsibilities in respect
of the financial statements
Corporate
Governance
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2023
50
Our Board
19March 2024, will be leaving the Board with effect from 22 May
2024 and therefore will not stand for re-election at the 2024 Annual
General Meeting.
Finally, as announced in November, Michael Koller left the Board
witheffect from 31 December 2023. I would like to thank both Ian
andMichael for their contributions to the Board and to wish them well
in their future endeavors.
Diversity
Diversity remains a key consideration in the Board’s succession
planning. I am pleased to report that during the year Sabre became
compliant with the FCA’s Board Diversity and Parker Review’s targets
regarding one of the Board members being from an ethnic minority.
Asat 31 December 2023 the Board did not reach the requirement that
40% of the Board should be women, however remained compliant
with the FTSE Women Leaders Review that at least one senior Board
position is held by a female. Further information on the Group’s
Diversity Policy and its application can be found on page 39.
Remuneration
During the year, the Remuneration Committee reviewed the Directors’
Remuneration Policy (the ‘’Policy’’), and the changes are presented to
shareholders for approval at the 2024 Annual General Meeting. The
Policy remains broadly unchanged from the previously-approved
version, and the proposed changes are to provide greater clarity around
reward. Ibelieve these changes are appropriate, and hope shareholders
will support the changes. Further information on the Group’s Remuneration
Policy and its application can be found on pages 74 to 80.
Annual General Meeting
Sabre’s Annual General Meeting provides 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 23May 2024 at the Group’s offices at OldHouse,
142South Street, Dorking, RH4 2EU.
REBECCA SHELLEY
Interim Chair
18 March 2024
REBECCA SHELLEY
Interim Chair
Dear Shareholders,
I was appointed as Interim Chair of the Board following the sad and
untimely passing of Andy Pomfret. On behalf of the Board, I would like
to honour his exceptional leadership and extend our heartfelt gratitude
for his invaluable contribution to the business. It was a great privilege
to work alongside him, and he will be missed.
On behalf of the Board, I present Sabre’s Governance Report for the
financial year ended 31 December 2023. This report explains Sabre’s
governance framework, how Sabre applies the provisions of the UK
Corporate Governance Code (the ’’Code’’) and includes the reports
from the Audit, Risk, Nomination &Governance and Remuneration
Committees. The Board is responsible to shareholders for the strategic
direction, management and control of the Group’s activities and is
committed to the highest standards of corporate governance in
delivering in these areas. The Group’s strategy, culture andpurpose
are aligned and are discussed at every Board meeting. With regards
tocompliance with the Code, the Board considers that appropriate
corporate governance standards were in place throughout 2023,
except for those set out on page 61.
The Board
As at the year ended 31 December 2023, the Board consisted of
eightDirectors who had 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. Further information about our Directors and
theexperience they bring to the Group is set outon pages 52 to 55
ofthis Annual Report.
During the year, we welcomed Bryan Joseph as a Non-executive
Director, who was subsequently appointed Chair of the Risk
Committee. Bryan also joined the Audit and Nomination & Governance
Committees. Further information regarding the process for this
appointment can be found in the Nomination & Governance Committee
Report, on pages 67 to 69. Also during the year, when I became Chair,
Karen Geary took over from me as Remuneration Committee Chair.
From May 2023, Ian Clark was no longer independent (as defined by
the UK Corporate Governance Code). However, due to Ian’s significant
contribution to the Group over the last ten years and his knowledge of
the insurance industry, the Group asked him to remain on the Board as
a Non-executive Director. During the year Ian left the Risk, Audit and
Nomination & Governance Committees and as announced on
Chair’s Governance Letter
Chair's Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Statement of Directors’
responsibilities
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2023
51
KEY
Audit Committee
member
Nomination &
Governance
Committee
member
Remuneration
Committee
member
Risk Committee
member
Chair of
Committee
A
N
R
RI
2023
Board Gender Disclosure
Female 3/8 (37.5%)
Male
5/8 (62.5%)
2022
Female 3/8 (37.5%)
Male
5/8 (62.5%)
Board Ethnicity Disclosure
Black/African/
Caribbean/
Black British
1 (12.5%)
White British or
other White
(including
minority-white
groups)
7 (87.5%)
Chair and Non-executive Directors’ Tenure
<3 years 2 (33.3%)
3-6 years
2 (33.3%)
6 years plus
2 (33.3%)
Senior
Independent
Director
Non-executive
Director
responsible
forEmployee
Engagement
S
E
N I
* On appointment as Company Chair
*
Independent
I
R
REBECCA SHELLEY
Interim Company Chair
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.
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 Conduit Holdings Limited, Hilton Food Group and Liontrust
AssetManagement.
Board of Directors
As at 31 December 2023
Directors’ skills and experience matrix
Skill and Experience
Number of
Directors
% of the
Board
Boardroom (outside of Sabre) – Chair, CEO, NED,
Audit, REM, NOM
7/8 87.5%
Communications 5/8 62.5%
Compliance, Regulatory and Legal 5/8 62.5%
Customer 2/8 25%
ESG incl. sustainability 3/8 37. 5%
Financial 4/8 50%
HR incl. Remuneration 5/8 62.5%
Insurance (outside of Sabre) 5/8 62.5%
IT incl.Digital, Cyber and Data 1/8 12.5%
Legal
1/8 12.5%
Marketing 2/8 25%
Operations 3/8 37.5%
Risk Management 4/8 50%
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
52
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.
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 of Aviva PLC and Chairman of
Aviva Insurance Limited, its general insurance subsidiary and is Chair of
Mighty Quin Consulting Limited, a company through which he provides
strategic advice within the insuranceindustry. Ian is also the Honorary
Treasurer of the Worshipful Company of Insurers and a Trustee of its
charitable funds and a Trustee of the African Revival charity.
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, and joined
as Financial Controller in 2014.
Skills and experience
Adam is a qualified chartered accountant, having joined Ernst &Young
LLP’s 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.
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/Direct Line
Group. 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.
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
53
E I IR RIRI NN A
IA NRI
ALISON MORRIS
Non-executive Director
Appointment
Alison Morris was appointed as Non-executive Director of Sabre
Insurance Group plc in May 2022, and is 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. Alison was previously a 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.
BRYAN JOSEPH
Non-executive Director
Appointment
Bryan Joseph was appointed a Non-Executive Director of Sabre
Insurance Group plc in June 2023, and is Chair of the Risk Committee.
Skills and experience
Bryan brings more than 40 years of industry experience to Sabre’s
Board and has worked in a number of senior actuarial roles throughout
his career, spanning the insurance and reinsurance industry
internationally. Bryan is currently a partner with Vario Partners LLP,
where he is one of the founding partners of that business. Prior to this,
Bryan led the PwC actuarial practice globally and was a member of the
firm’s insurance leadership team. Bryan was Chair of the Board of XL
Insurance Company SE and was an Independent Non-executive
Director of XL Re Europe SE and of AXA XL Insurance Company UK
Limited and AXA Underwriting Agencies Limited, chairing the audit
committees of the UK entities. Bryan has been appointed as an
Independent Non-executive Director on the Boards of Lancashire
Holdings Limited and Lancashire Syndicates Limited.
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 and Chair of the Remuneration Committee.
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 FTSE 100 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 Senior Independent and Non-executive Director and Chair of the
Remuneration Committee of Mobico 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.
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
54
A IR
ANDY POMFRET
Up until his death in November 2023, Andy Pomfret was the
Company’s Chair. He 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.
Hisbiography can be found in the Annual Report and Accounts
forthe financial year which ended on 31 December 2022.
Changes during the year:
MICHAEL KOLLER
Non-executive Director
Appointment
Michael Koller was appointed aNon-executive Director of Sabre
Insurance Group plc in September 2020. It is noted that Michael Koller
left the Board with effect from 31 December 2023.
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 2005–2007 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. Previously Michael was a Non-executive
Director at Sanitas AG in Switzerland and Chief Risk Officer for Amlin
AG Zurich. Alongside his executive roles, since 1995, Michael lectures
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
55
Board Committees
The terms of reference of each Committee are documented and agreed by the Board. The Committees’ terms of reference
are reviewed annually and are 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,
including pension rights
and any compensation payments.
To oversee remuneration and
workforce policies 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 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 70.
The Nomination and Governance
Committee Report can be found
on page 67.
Governance Report
The Board is collectively responsible for setting Sabre Insurance Group
and its subsidiaries’ (the “Group”) strategic aims and providing the
leadership to put them into effect through the management of the
Group’s business within a 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 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.
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 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, whilst maintaining a balanced approach to risk within
a framework of effective controls and taking into account the interests of a diverse range of stakeholders. There are certain matters which are
reserved for the Board’s decision.
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
56
The Board and Leadership
The Company Directors and details of their experience and the date
oftheir appointment are set out on pages 52 to 54.
As at 31 December 2023, the Board consisted of eight Directors:
TheInterim Company 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
Company’s Non-executive Directors, apart from Ian Clark, remained
independent as at 31 December 2023. It is noted that Rebecca
Shelley, who was appointed Interim Chair upon the death of Andy
Pomfret, was considered independent on appointment. As Ian Clark
was no longer deemed independent, due to his tenure on the Board,
he left the Nomination & Governance Committee in May 2023 and
leftthe Audit and Risk Committees in September 2023, once Bryan
Joseph was appointed as Risk Committee Chair. Although Ian was
nolonger deemed independent (as defined by the UK Corporate
Governance Code) with effect May 2023 due to his tenure on the
Board, his significant contribution to the Company and his knowledge
of the insurance industry meant that the Board asked Ian to remain as
a Non-executive Director for at least a further year. It is noted that Ian
Clark will leave the Board with effect from 22 May 2024, and that
Michael Koller left the Board with effect from 31 December 2023.
The Board of Directors recognise the need and importance of acting
with integrity, and do so in their roles as Directors of the Company. 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.
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.
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
their 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 Ofcer
– 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 and
customers
– 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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
57
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 & Governance Committee
– The Remuneration Committee
The terms of reference of these Committees are approved by the
Board, reviewed annually and are available on the Company’s website
at www.sabreplc.co.uk/about-us/corporate-governance.
The Committee Reports are set out on pages 62 to 73.
Board and Committee meetings
The attendance of Directors at Board and Committee meetings held
inthe financial year ended 31 December 2023 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,
Bryan Joseph upon his appointment to the Board joined the Risk and
Audit Committees, and the Nomination & Governance Committee
later in the year. Following this, and subsequent to approval by the
PRA and FCA, Bryan became Chair of the Risk Committee with effect
from 12 September 2023. Ian Clark left the Nomination & Governance
Committee in May 2023 when he was deemed no longer independent
by the UK Corporate Governance Code, and remained as Risk
Committee Chair and a member of the Audit Committee until Bryan
was appointed as Chair of the Risk Committee, allowing there to be
representation from the Risk Committee at the Audit Committee and
vice versa. Upon her appointment as Interim Chair in November 2023,
Rebecca Shelley left the Risk Committee, stepped down as Chair of
the Remuneration Committee, but remained a member of the
Remuneration Committee. Following this change, Karen Geary
became Chair of the Remuneration Committee. Details of the
membership of each Committee as at 31 December 2023 can
befound in each relevant Committee Report.
The activities of the Board during the year are set out across the page
and the reports from each of these Committees are set out on pages
62 to 73 of this Annual Report.
During the financial year ended 31 December 2023, the Board
scheduled and formally met six times, during which it reviewed,
discussed and approved:
– The financial performance of the Company
– The 2022 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 2022
– The Notice of Meeting and Proxy Form for the 2023 Annual
GeneralMeeting
– The 2023 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 2022, and an interim
dividend for the financial year which ended on 31 December 2023
– The results of the Group’s 2022 external Board Effectiveness
Review, and the internal review of the Board for 2023
– The 2024 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 2023, the Board met an
additional three times as a Committee to discuss the Half Year Trading
Update and Half Year Results and to sign off the Q1 and Q3 2023
statements, and once more following the death of Andy Pomfret,
toagree Board changes and recruitment plans.
Effectiveness
The Board is structured to provide the Company 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. Decisions at Board meetings are taken by a majority vote of the Directors and in the case of an equality of votes the
Company’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.
Attendance by Directors at scheduled Board and Committee meetings
(number attended/number required to attend)
Director
Board (schedule
meetings)
Board Committee
Meetings &
Unscheduled
Meetings
Audit
Committee Risk Committee
Nomination &
Governance
Committee
Remuneration
Committee
Geoff Carter 6/6 4/4 – – – –
Ian Clark* 6/6 4/4 7/ 7 3/3 3/3 –
Karen Geary 6/6 4/4 – 4/4 5/5 5/5
Bryan Joseph** 3/3 1/3 3/4 1/1 1/1 –
Michael Koller 6/6 4/4 7/8 – 4/5 5/5
Alison Morris 6/6 3/4 8/8 4/4 5/5 –
Andy Pomfret 5/5 3/4 3/3 – 3/4 –
Rebecca Shelley 6/6 4/4 – 4/4 4/4 5/5
Adam Westwood 6/6 4/4 – – – –
* Left the Nomination & Governance Committee with effect from 25 May 2023, and the Risk and Audit Committees with effect from 12 September 2023
** Joined the Risk and Audit Committees with effect from 1 June 2023 and joined the Nomination & Governance Committee with effect from 20September 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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
58
Diversity
The Board recognises that it is vital it is diverse in its make-up to
ensure creative and innovative thinking, improved decision making
andthat this 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 2023, the Board
had three female Directors out of eight, which is the equivalent to
37.5% of the Board being female, and the Company recognises that
the Board does not meet the 40% female representation target set
bythe FTSE Women Leader’s Review. The Board does meet the
requirement that at least one senior Board position is held by a female,
as Rebecca Shelley is the Interim Chair and was formerly the Senior
Independent Director. The Board also meets the Parker Review
targetthat at least one member of the Board is from a minority ethnic
background. Further information on Sabre’s approach to diversity and
inclusion can be found on page 39 of this report.
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 Company’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 usually 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 Company’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 Company 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 Company.
The other public company commitments of the Chair and the other
Directors are as indicated in their biographies on pages 52 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.
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. Having carried out an external
Board effectiveness review in 2022, this year an exercise sponsored
by the Chair and assisted by the Company Secretary was completed.
The questionnaire used as part of the process consisted of questions
covering the Board, the Committees and the Chair’s performance
andwas completed by all of the Directors of the Company and Sabre
Insurance Company Limited (the Company’s operating subsidiary).
Theresults of this review were discussed at the Board meeting
inFebruary 2024. The review concluded that the Board and its
Committees remained effective and identified areas for improvement.
These recommendations were discussed at the Board meeting
inFebruary and implemented post that meeting. They included
Management ensuring papers were sent with sufficient time for
Non-executive Directors to review and included executive summaries
which highlighted key issues, and that a follow-up call to each
Non-executive Director was introduced, to maintain the twice a year
strategy sessions and that further time on the agendas was given to
covering legislative and regulatory changes. The review noted that
Management communicated well, and that the Board had a
collaborative, constructive and effective relationship.
Appointment of Directors
The Articles provide that Directors may be appointed by the Board
orby the Company by ordinary resolution. A Director appointed by
theBoard may only hold office until the next Annual General Meeting
of the Company following their appointment and is then eligible for
election bythe shareholders. The Board, through the Nomination
&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 2023, all
ofthe Directors stood for election or re-election at the Annual General
Meeting and were successful in their appointment or re-appointment.
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 81 to 91)
andtheir service contracts and terms of appointment are available for
inspection inaccordance with the Code at the Company’soffice and
atthe Company’s Annual General Meeting.
Conicts of interest
All Directors have a duty to avoid conflicts of interest and must
declareany conflict of interest that could interfere with their ability
toact in the best interests of Sabre. The Board has established a
procedure to deal with Directors’ conflicts of interest which complies
with the Company’s Articles andthe provisions in section 175 of the
Companies Act 2006. Schedules of a Director’s 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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
59
Accountability
The Board, through the Audit Committee, reviews the Group’s financial
and business reporting and maintains the Group’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 and theeffectiveness
ofthese. Further details 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 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 and the consequences of any breaches ofthe policy.
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 2023
financial year.
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 Company’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.
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 81 to 91. 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, Karen Geary, who is appointed
torepresent employee opinions at the Board. Karen leads on ensuring
effective engagement with employees 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 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 Company’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 Chair also met with
theCompany’s shareholders and the Remuneration Committee
Chairliaised with shareholders regarding the Group’s proposed new
Remuneration Policy. In addition to these meetings, the Company
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 Company’s website www.sabreplc.co.uk/investors/
regulatory-news
Major shareholders
The holdings of our major shareholders can be found on page 93
ofthis Annual Report.
Share register
The share register is managed on the Company’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 Company’s AGM for the 2024 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 Company’s website, post the
conclusion of the meeting. Further information on the Company’s
AGM can be found on page 94.
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
60
Statement of Corporate Governance
Compliance with Code provisions
The Board is committed to 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 Group wascompliant
with most of the principles and provisions of the Code during the
financial year ended 31 December 2023. It notes that during the year,
prior to the Regulator’s approval of the appointment of Bryan Joseph
as Chair of the Risk Committee, Ian Clark sat on the Audit Committee
and chaired the Risk Committee, which is non-compliant with
Provision 24 of the Code, as Ian was no longer seen as independent
with effect from May 2023. Ian’s attendance at Audit Committee
andhim remaining as the Risk Committee Chair allowed there to be
sufficient skills and experience on both the Audit Committee and Risk
Committee. Ian left the Audit Committee and Risk Committee in
September 2023 when Bryan’s appointment as Risk Committee
Chairwas approved, ensuring that the Committees were compliant
with the Code for the remainder of the year. It is noted that Ian left
theNomination Committee with effect from May 2023 and was not a
member of the Remuneration Committee, therefore the membership
of these committees remained in compliance with the Code. 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 Group would use to seek
engagement with employees regarding executive remuneration pay
levels. Upon the untimely death of the Chair, Andy Pomfret, Rebecca
Shelley stepped up to be Interim Chair, and during this time the
Company did not have a Senior Independent Director as required
byProvision 12 of the Code.
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 2023 completed an internal Board
Effectiveness Review, which evaluated the performance of the Board,
its Committees and the Group Chair. Further information on the Board
Effectiveness Report for the financial year ended 31 December 2023
can be found on page 58.
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
(Page 06)
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 74 to 80)
Principal Risks and
Uncertainties
(Pages 16 to 24)
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35 to 48)
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)
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 &
Governance
Committee Report
(Pages 67 to 69)
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 16 to 24)
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 Company’s
long-term strategy.
Remuneration
Committee Report
(Pages 70 to 73)
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 70 to 73)
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 70 to 73)
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
61
The Audit Committee (the “Committee”)
The Committee comprises at least two Non-executive Directors ofthe
Company, who are to be 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
&Governance Committee andthe Chair of the Committee. The
Committee is to be chaired by an individual who has significant, recent
and relevant financial experience.
The Chair, 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 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 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
three times 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.
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
auditor (including approving the remuneration and terms of
appointment) as well as reviewing the external auditor’s annual audit
plan and the results therefrom, reviewing the quality and effectiveness
ALISON MORRIS
Audit Committee Chair
Audit
Committee
Report
Committee meetings in 2023
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
2
Committee Members Date of Appointment Attendance
Alison Morris (Chair) May 2022 8/8
Ian Clark* April 2020 7/7
Bryan Joseph** June 2023 3/4
Michael Koller*** September 2020 7/8
* Left the Committee with effect from September 2023
** Joined the Committee with effect from June 2023
*** Left the Board and therefore Committee, with effect from 31 December 2023
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 2023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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
62
2023 and the Committee
The Committee was in place throughout the financial year ended
31December 2023, and met eight times through the period. The Audit
Committee was chaired by Alison Morris and in June 2023 Bryan
Joseph joined the Committee. It is noted that due to the tenure of his
appointment on the Board, Ian Clark, a member of the Committee,
was not independent from May 2023, however Ian left the Committee
with effect from September 2023. The Board felt it was appropriate
that Ian remain on the Committee until September 2023, as up until
then, he was the Risk Committee Chair, and his attendance at the
Committee ensured good communication and governance between
the two Committees. It is noted that Michael Koller left the Board and
therefore the Committee with effect from 31 December 2023. There
were no further changes to the make-up of the Committee during the
year and the Board is comfortable that the make-up of the Committee
ensures that it is fully able to fulfil its duties.
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’s
experience. Michael Koller and Bryan Joseph each missed one of the
meetings, Ian Clark attended all the meetings until he left the Committee
in September 2023 and Alison Morris attended all eight meetings.
The Chief Executive Officer and the Chief Financial Officer both
attended all 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.
During the financial year ended 31 December 2023, the Committee
reviewed:
– The accounting issues and significant judgements related to the
financial statements 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 Company’s Annual Report
andAccounts
– The external audit plan, which included key areas of scope,
significantrisks in the financial statements, confirmation of the
external auditor’s independence and the proposed audit fee
– The effectiveness of the external auditor
– The Group’s system of controls and its effectiveness using
information drawn from a number of different sources including
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. The
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.
During the year, the Committee outsourced the Internal Audit function
to BDO. The Committee reviews and approves the Internal Audit plan
and receives updates on the Internal Audit activity. Internal Audit
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.
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
(ii) The adequacy of these systems of control to manage business risk
and safeguard the Group’s assets and resources.
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
reports.
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. During 2023 the Group engaged Mazars to provide
an external review of key risk elements within the reserves, in line with
the Group’s policy to commission such a review every three years.
Whistleblowing – reviewing arrangements bywhich employees may
in confidence raise concerns about possible improprieties regarding
financial reporting and other matters. The Committee receives an annual
whistleblowing report and reports matters to the Board as appropriate.
Management, and independent assurance provided by Internal Audit
and the external auditor
– Reports from the Group’s outsourced Internal Audit function and
reviewing and approving their fees and
– The Committee’s 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
conducted by the Group’s external auditor
– Recommended to the Board, whichagreed to recommend
toshareholders there-appointment of PwC as the Group’s
externalauditor. It is noted that the shareholders of the Group
approved the re-appointment of PwC at the Annual General Meeting
held in May 2023
– 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.
In addition, the Committee completed a tender process for the
Group’s outsourced Internal Audit function. Following the tender
process, the Committee appointed Deloitte to run the Group’s Internal
Audit programme with effect from January 2024.
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 Company’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 in relation to the Group’s
financial statements for the year ended 31 December 2023 were:
1. Valuation of insurance liabilities
The Committee reviewed the Chief Actuary’s 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 Management’s
rationale for the level of risk adjustment recorded within the claims
reserves. The Committee also discussed such matters with the
Group’s external auditor. The Committee Chair met with the Chief
Actuary without other members of Management present.
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4. Going concern and viability
The Committee considered the going concern assumptions and viability
statement in the 2023 Annual Report and Accounts. In assessing the
viability of the Group, the Committee considered the liquidity and
capital position of the Group over the period to 31 December 2026
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 25. 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.
5. 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.
6.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.
7. Valuation of owner-occupied properties
The Committee reviewed the revaluation of owner-occupied
properties during the year following the external valuation exercise
which is carried out every three years. The Committee agreed
withManagement’s decision to revalue the estate downwards
inaccordance with the external valuation exercise, noting that the
impact was not material to the financial position of the Group.
External auditor’s appointment
PwC were appointed as external auditor, following a competitive tender
process, with effect from the year ended 31 December 2022. The
financial year ended 31 December 2023 is the second year reported
onby PwC and there is therefore no requirement to undertake an audit
tender process. Philip Watson is the PwC Audit Partner, and this is his
second year as engagement partner. Resolutions regarding the
re-appointment of PwC and their pay were contained in the Notice of
Meeting for the 2023 Annual General Meeting and both resolutions were
approved by 99.5% and 100% shareholders respectively. Resolutions to
re-appoint PwC and to approve their remuneration will also be contained
in the Notice of Meeting for the 2024 Annual General Meeting.
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. This includes
all key judgements in respect of IFRS 17, including disclosure within
the financial statements, application of discounting to reserves and
thecalculation of the risk adjustment.
The Committee agreed with Management’s 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 adjustment
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.
2. Implementation of accounting standards
The Committee reviewed the implementation and key judgements
associated with the 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 2023 Interim Report and Annual Report
and Accounts related to the implementation of the new standard.
3. 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 financial and
solvency capital information to the Board on a monthly basis; reporting
on specific matters including updated key risks, investments and
taxation; and liquidity monitoring. The Committee 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.
External audit effectiveness
The Committee has considered the effectiveness of the external
auditor and conducted a formal review by use of a questionnaire sent
to senior management and Audit Committee members. The results
ofthis questionnaire were discussed at the Audit Committee without
the external auditor present. The evaluation was also discussed with
the external auditor as appropriate. As a result of this review, it was
concluded that the external audit was independent and objective, and
that the process was effective. The Audit Committee noted that the
external auditors appeared to demonstrate appropriate professional
skepticism with respect to key risk areas, for example by providing
challenge on the estimates and judgements applied in calculating
theGroup’s insurance liabilities.
Non-audit work conducted by external auditor
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 auditor 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
non-audit fee cap for the year ended 31 December 2023 was £337k
(2022: £308k, being 70% of the average audit fees billed to the Group
by the external auditor in the past three years, or fewer if appointed
within the past three years. During the financial year ended on 31
December 2023 PwC charged the Group £636,000 (2022: £440,000)
for audit services and £105,000 (2022: £79,000) for audit related
non-audit assurance services. A summary of fees paid to the external
auditor is set out inNote 8 to the Consolidated Financial Statements.
On behalf of the Audit Committee
ALISON MORRIS
Chair of the Audit Committee
18 March 2024
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The Risk Committee (the “Committee”)
The Committee comprises at least two Non-executive Directors ofthe
Company, who 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 Company’s Chair
considered independent on appointment. Members of the Committee
are appointed by the Board, on the recommendation ofthe Nomination
& Governance Committee and the Chair of theCommittee.
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 the
meeting, providing there is no conflict of interest. Other people from
the Group may also be invited to attend all or part of a meeting to
provide deeper insight into the Group and the issues within the
Committee’s scope.
Either immediately prior to the meeting or immediately after the
meeting, the Committee meets with either the Chief Risk Officer
ortheHead of Compliance. These private meetings alternate at each
meeting and give the Chief Risk Officer and the Head of Compliance
access to Committee members. The Committee Chair also meets
regularly with these individuals and the Data Protection Officer outside
of the Committee meetings, and is available to shareholders at the
Company’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.
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 Company’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 monitoring and
reviewing the Group’s risk management and compliance framework,
and ensuring that there are adequate processes for the identification,
evaluation and mitigation of the risks faced by the Group.
BRYAN JOSEPH
Risk Committee Chair
Risk Committee
Report
Committee meetings in 2023
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members Date of Appointment Attendance
Bryan Joseph (Chair)* June 2023 1/1**
Ian Clark*** April 2020 3/3****
Alison Morris May 2022 4/4
Karen Geary January 2022 4/4
Rebecca Shelley***** April 2020 4/4
* Joined the Committee with effect from 1 June 2023 and became Chair of the Committee
with effect from 12 September 2023
** One as Committee Chair
*** Left the Committee with effect from 12 September 2023
**** Three as Committee Chair
***** Left the Committee with effect from 23 November 2023
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 2023 are set outbelow:
Meeting occurred
No meeting took place
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2023 and the Committee
The Committee was in place throughout the financial year ended
31December 2023, and met four times through the period. Ian Clark
chaired the Committee up to September 2023, and was replaced by
Bryan Joseph. Ian was not independent from May 2023, due to his
tenure on the Board, however it was deemed by the Board appropriate
for Ian to continue to chair the Committee, until the regulators had
approved the appointment of Bryan as Committee Chair. It is noted
that Rebecca Shelley left the Committee in November 2023, following
her appointment as Interim Chair of the Company.
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,
the Data Protection Officer and the Head of Compliance. 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
– 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 Confirming that
theCommittee had sufficient resources to enable itto complete
itsresponsibilities
TheCommittee reviews the effectiveness of the Group’s 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.
Principal risks and uncertainties – details of the Group’s principal
risks and uncertainties are set out on pages 16 to 24 together with
information about the management and mitigation of such risks.
Compliance – reviewing 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 Management’s responses to the findings and
recommendations.
Risk and remuneration alignment – 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.
Specific discussions were had by the Committee on:
– Monitoring and reviewing the Group’s top risks across its risk
universe, emerging risks, issues and breaches
– Cyber security
– Inflation and interest rates including the impact of cost of living
oncustomers and employees
– Business projects implementation
– Operational resilience
– Business specific projects including the move to CDL and MCE
becoming insolvent
– PRA and FCA Discussion papers, consultation papers and policy
statements
– FCA Consumer Duty – for further information on this, please see
page 49
– Complaints
– Climate change and its impact on Sabre’s business and operations
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. All employees are
trained, at least annually, on data protection legislationand the Group’s
requirements when handling data. This training includes online 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
issues are initially reported to the Data Protection Officer who reports
them to the Risk Committee.
On behalf of the Risk Committee
BRYAN JOSEPH
Chair of the Risk Committee
18 March 2024
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The Nomination & Governance Committee
(the“Committee”)
The Committee comprises at least three Non-executive Directors
ofthe Company, all of whom are to be 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”). For the financial
year ended 31 December 2023 all the Independent Non-executive
Directors of the Company sat on the Committee. The Committee is
chaired by the Company Chair, 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 Company’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 Company’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, considering 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
– Identifying, evaluating and recommending candidates to join the Board
– Making recommendations to the Board regarding the make-up of
the Company’s Committees and the appointment of the Senior
Independent Director
– Making recommendations regarding the election and re-election of
the Directors by shareholders
REBECCA SHELLEY
Chair of the
Nomination and
Governance
Committee
Nomination &
Governance
Committee Report
Committee meetings in 2023
JAN FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members Date of Appointment Attendance
Andy Pomfret (Chair)* February 2018 3/4
Rebecca Shelley (Chair)** October 2017 4/4
Karen Geary (Chair)*** December 2020 5/5
Ian Clark**** September 2017 3/3
Bryan Joseph***** September 2023 1/1
Alison Morris October 2022 5/5
Michael Koller****** September 2020 4/5
* Committee Chair until November 2023
** Committee Chair with effect November 2023, and Chair of the meeting Andy Pomfret was
not able to attend
*** Chaired the December Committee meeting
**** Left the Committee with effect from May 2023, when he ceased to be independent
***** Joined the Committee with effect from September 2023
****** Left the Board and therefore Committee, with effect from 31 December 2023
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 2023 are set outbelow:
Meeting occurred
No meeting took place
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2023 and the Committee
The Committee was in place throughout the financial year ended
31December 2023, and met five times. All Committee members
attended all the meetings they were eligible to attend that were held
during their period of appointment tothe Committee, apart from Andy
Pomfret and Michael Koller, who were unable to attend one meeting
each. Rebecca Shelley chaired the meeting which Andy Pomfret was
unable to attend, and Karen Geary chaired the meetings regarding the
appointment of a new Chair. The Chief Executive Officer attended
partially or fully, all the Committee’s meetings, the Company Secretary
attended and minuted each meeting, and the Head of HR presented at
one of the meetings. After the death of Andy Pomfret, Rebecca
Shelley was appointed Chair of the Committee.
In May 2023, Ian Clark left the Committee as he was no longer
independent, due to his tenure on the Board, and in September
BryanJoseph joined the Committee. It is noted that Michael Koller
leftthe Board and therefore the Committee, with effect from
31December 2023. There were no further changes to the make-up
ofthe Committee during the year and the Board is comfortable that the
make-up of the Committee ensures that it is fully able to fulfil its duties.
Diversity and Inclusion
The Committee recognises the benefits of, and values the importance
of, an inclusive and diverse Board and maintains an Inclusivity and
Diversity Policy to support this. This Policy is reviewed at least annually
by the Committee, and further information on the Policy can be found
on page 39. Sabre believes that this is not only fair, but that it ensures
optimal decision making and successful execution of the Group’s
strategy. Therefore, inclusivity and diversity of its Board and its
employees is a priority of the Group. In addition to this, the Group is fully
committed to the elimination of unlawful and unfair discrimination.
Sabre believes that membership of its Boards and Committees should
reflect diversity in its greatest sense, and seeks diversity relating to age,
gender, ethnicity, sexual orientation, disability, education, professional
and socio-economic backgrounds. Appointment of individuals to the
Board is based on merit, and consideration is given to a combination
ofthese diversity factors, but also the needs and requirements of the
Board, to ensure a sufficient skillset and knowledge base. The Board
believes that a range of views, experience, and background supports
good decision making, which is of benefit to the Group’s shareholders,
customers and other stakeholders. In support of this, when the Board
seeks to appoint a new position to the Board or the Leadership Team, it
expects to be provided with a diverse range of candidates, notably long
lists which are gender and ethnically diverse by at least 40%.
During the financial year which ended on 31 December 2023
theCommittee:
– Approved the Nomination & Governance Committee Report in the
Annual Report for the year ended 31 December 2022
– Reviewed and recommended to the Board, the election and
re-election of Directors at the Company’s 2023 Annual General
Meeting
– Discussed the balance of skills and experience on the Board and its
committees, their structure, and considered if any changes were
necessary, and made recommendations to the Board for their
implementation
– 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, and the Group’s Diversity and Inclusion Policy
– Reviewed the annual Committee’s evaluation responses and
concluded that the Committee was effective
– 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
– Agreed that an additional Non-executive Director should be
appointed to the Board (see box).
Note, due to the unexpected death of Andy Pomfret, the subsequent
changes to the Board structure with the interim appoint of Rebecca
Shelley as Company Chair and Karen Geary’s appointment as
Remuneration Committee Chair were agreed by the Board, and
noindividual was involved in the discussions relating to their
ownappointment.
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Appointment of an additional Non-executive Director
During the year, the Committee agreed to appoint an additional Non-executive Director to the Board.
Following the process detailed below, the Committee recommended to the Board that Bryan Joseph beappointed as Non-executive Director
with effect 1 June 2023. Bryan will stand for election to the Board at the Annual General Meeting in 2024.
Process of appointment
The search process for the new Non-executive Director was led by Andy Pomfret, with the Committee reviewing the potential candidates and
several Board Directors interviewing the final shortlist of potential candidates.
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, provide good corporate governance and strengthen knowledge on the Board. From
this a list of skills criteria for the role was completed.
Appointment of an external search agency
Several external search agencies were considered, and the Committee appointed Sainty Hird and Partners, an independent external search
agency, with no other connection to the Group, to find the suitable candidates. It was felt Sainty Hird and Partners’ experience of the industry
was very strong and therefore they were the most appropriate agency to use for the appointment.
Search process
Sainty Hird and Partners produced a long list of candidates, which was 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 the Chief Executive Officer.
Appointment of 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 Bryan be appointed to the Board, noting his significant insurance
and risk experience. Following Bryan’s acceptance of the appointment, the Committee reviewed which committees it would be appropriate
for him to join, and subsequently appointed Bryan to theRisk and Audit Committees with immediate effect from his appointment, and the
Nomination & Governance Committee later on in September 2023. Following his appointment and subject to him receiving regulatory
approval, the Committee agreed that Bryan Joseph would be appointed as Risk Committee Chair. Regulatory approval was received in
September 2023, and upon which, Bryan was appointed asRisk Committee Chair.
On behalf of the Nomination & Governance Committee
REBECCA SHELLEY
Chair of the Nomination & Governance Committee
18 March 2024
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On behalf of the Board, I am pleased to present to you the
Remuneration Committee’s Report for the year ended 31 December
2023. The results for 2023 show the effectiveness of the Sabre
Executive Team’s swift response to the challenging economic
conditions in 2023 and thorough application of the long-term strategy.
This resulted in very strong premium growth in 2023, a significant
year-on-year growth in profit and foundation maintained for the further
growth in both premium and profit in 2024.
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
– Company’s Directors’ Remuneration Policy (the “Policy”)
– Annual Report on Remuneration
The Remuneration Committee (the “Committee”)
The Committee comprises of at least two 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 &
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.
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.
KAREN GEARY
Chair of the
Remuneration
Committee
Remuneration
Committee Report
Committee meetings in 2023
Jan FEB MAR APR MAY JUN
JUL AUG SEP OCT NOV DEC
Committee Members Date of Appointment Attendance
Karen Geary (Chair)* December 2020 5/5
Rebecca Shelley** October 2017 5/5
Michael Koller*** September 2020 5/5
* Became Chair in November 2023, and chaired the November Committee meeting
** Resigned as Chair of the Committee in November 2023, upon appointment as Interim Chair
ofthe Company
*** Left the Board and therefore the Committee, with effect from 31 December 2023
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 2023are set out below:
Meeting occurred
No meeting took place
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70
2023 and the Committee
The Committee was in place throughout the financial year ended
31December 2023, and met five times through the period. The
Committee was chaired by Rebecca Shelley, up until her appointment
in November 2023 as Interim Chair, at which point Karen Geary was
appointed Committee Chair. It is noted that as allowed under the UK
Corporate Governance Code, Rebecca Shelley remains on the
Committee, whilst in her position as Interim Chair. It is noted that
Michael Koller left the Board and therefore the Committee with effect
from 31 December 2023. There were no further changes to the
make-up of the Committee during the year and the Board is
comfortable that the make-up of the Committee ensures that it is fully
able to fulfil its duties. All Committee members attended each of the
meetings held during the year.
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.
During 2023, 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 2022 Directors’ Remuneration Report
– Reviewing and approving the application of the 2021 Remuneration
Policy to the financial year ended 31 December 2023
– Reviewing and approving that the payment of bonuses under the
2022 Short Term Incentive Plan (“STIP”) would not be made, due
tonot meeting financial performance targets
– Setting the award levels and the financial, non-financial and
individual performance conditions for the awards made under the
2023 STIP
– Setting the grant levels and underpins for the awards under the
2023LTIP
– Reviewing the Remuneration Policy ahead of its renewal at the
2024AGM
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 2023, 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
re-appointed 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.
The total fees paid to Deloitte in relation to the remuneration advice
provided to the Committee during the year were £37,650 excluding
VAT (2022: £17,000). 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.
– 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
– Reviewing and approving the feesof the Chair
– Reviewing the Company’s SAYE and SIP employee contribution levels
– Approving the Company’s SAYE 2023grant
– Reviewing and approving the Committee’s terms of reference
– Reviewing and publishing the Company’s Gender Pay Gap Report
Executive remuneration in 2023
The Group has a well-defined strategy, whereby the profitability of
business written is prioritised under all market conditions. In 2023 the
success of this strategy has been clearly demonstrated, following an
extended period where market-wide premium increases continued to
lag claims costs inflation, and when many competitors re-priced their
portfolio or left the market completely. As a consequence of Sabre’s
consistent approach of pricing for profitability and not volume, during
the recent market correction Sabre has enjoyed very strong premium
growth, and as a result a strong bounce back in profits and laid the
ground for further improvements in 2024.
The Remuneration Committee discussed and approved the
remuneration outcomes in respect of 2023 shortly after the year
endand made no amendments to the pre-determined performance
conditions for the annual bonus award or the outstanding LTIP awards.
The annual bonus for 2023 under the Company’s STIP was based on
abonus pool funding approach, calculated as 1.5% of PBT, subject
tothe achievement of a minimum level of 10% ROTE being achieved.
The PBT for the year ended 31 December 2023 was 23.6m and a
ROTE of 22.7% was achieved, and therefore the aggregate profit pool
potentially available for distribution to the Chief Executive Officer and
Chief Financial Officer for the year was £0.35m. In addition to the
financial performance conditions linked to the bonus, 30% of the
awards were subject to additional Group-wide objectives and individual
performance targets. Strong performance was delivered against these
objectives and the Committee’s full assessment is outlined on page 84.
Following this assessment, resulting bonuses were £228,776 (47.3%
of salary) for the Chief Executive Officer and £120,106 (40.7% of salary)
for the Chief Financial Officer. Full details of the bonus outturn are on
page 82.
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Review of Directors’ Remuneration Policy and
proposed key changes for 2024
Ahead of the renewal of the Directors’ Remuneration Policy at the
Annual General Meeting in 2024, the Committee undertook a full
review of the Policy, including the consideration of simplicity, cost
effectiveness, risk and alignment to the Group’s corporate strategy
andculture. In determining the proposed changes to the Policy, the
Committee assessed the overall performance of the Group and
thepositioning of the Executive Directors’ total remuneration.
The Committee concluded that they were satisfied that the Policy
remained fit for purpose, and that in particular the simpler, more
transparent incentive arrangement of annual bonus and restricted
share awards introduced in 2021 remains fully aligned with our focus
on delivering long-term sustainable returns to our shareholders. The
changes proposed are only minor and are shown in the Remuneration
Policy on pages 74 to 80.
Wider considerations regarding reward
When considering the remuneration arrangements for the Executive
Directors, the Committee continues to consider 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 during 2023.
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.
Awards made under the 2021 Long Term Incentive Plan (”LTIP”) in
2021 were made in the form of restricted shares. These LTIP awards
were 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
As these underpins were met, the Committee approved the vesting
ofthe 2021 LTIP awards at 100% and therefore the Chief Executive
Officer and the Chief Financial Officer received the full number of
shares granted to them in 2021, which was the equivalent of 75%
and60% of salary, respectively. These awards vest post the release
ofthe 2023 Financial Results, when the Executive Directors will be
able to sell shares to cover the tax liability, and the remaining shares
are subject to a further two-year holding period. Further information
onthe 2021 LTIP can be found onpage 85.
Overall, the Committee considered that the outcomes under the 2023
STIP and the 2021 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 is satisfied that the 2021 Policy operated
asintended during the financial year and did not exercise discretion
inrespect of the Policy or its operation during the year.
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 a minimum. As in prior
years, during the year the Company gave employees pay rises during
the year, within arange of 5.2% and 8.2% (excluding special pay rises)
and at an average of 6.04% (excluding specials), paid an employee
performance bonus to all employees, and a Christmas bonus of
£1,050. In addition, the Group continues to provide 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.
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 2024.
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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72
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, Rebecca engaged with a number of the Company’s top
shareholders on the proposed changes to the Directors’ Remuneration
Policy. We were pleased with the level of engagement from
shareholders and their consideration of the proposed amendments
tothe Policy, and thank them for their support.
I look forward to your support on the resolutions relating to
remuneration at the Company’s Annual General Meeting in May 2024.
On behalf of the Remuneration Committee
KAREN GEARY
Chair of the Remuneration Committee
18 March 2024
Statement of shareholder voting
The following table shows the results of shareholder voting relating
to the approval of the Remuneration Policy at the 2021 Annual
General Meeting and the approval of the Remuneration Report at
the 2023 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 7,9 30 ,125 n/a
Total votes cast (including withheld votes) 219,990,991 n/a
2023 Annual General Meeting resolution to approve the
Directors’ Remuneration Report
Total number
of votes
% of votes
cast
For (including discretionary) 215,0 01,108 99.36
Against 1,391,249 0.64
Total votes cast (excluding withheld votes) 216,392,357 100
Votes withheld 4,538 n/a
Total votes cast (including withheld votes) 216,396,895 n/a
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Accordingly, only minor changes are proposed in the new Policy, the most substantive of which are summarised below.
STIP
– A reduced rate of 25% Short Term Incentive Plan (“STIP”) deferral into shares (rather than the current 50%) will
apply if an individual is already compliant with their 200% of salary shareholding guideline.
– The new Policycontains scope for the Committee to set and measure STIP targets other than on an annual
basis. Use of this option will be reserved for unusual circumstances, for example where there is exceptional
economic volatility (as in the recent COVID affected period) and consequent limited visibility to set robust
12-month targets.
– In line with Investment Association guidance, the new Policy provides for appropriate discretion so that the
Committee may ensure STIP outturns properly reflect the performance of the executives and overall corporate
performance.
– Flexibility has been added in the new Policy in relation to the form of an underlying performance hurdle that can
be applied if a bonus pool funding approach is adopted.
Shareholding
guidelines
– Discretion has been added in relation to the Committee’s application and interpretation of shareholding
guidelines. That discretion includes scope for the Committee to, exceptionally, adjust or waive the post-
employment shareholding guideline in circumstances where the Committee believes its application would be
inappropriate (e.g. in the event of death).
Remuneration Policy
for new Executive
Directors
– Consistent with market practice, thenew Policy contains flexibility for the reimbursement of legal or other costs
approved by the Committee incurred by an individual in relation to their appointment.
– The Committee will have the flexibility to determine whether a new Executive Director should be subject to a
different set of criteria for annual and/or long-term incentive performance measures (within the existing
parameters for these plans in this new Policy) during the first 12 months following appointment. It is intended to
use this only in exceptional circumstances, such as if the new Executive Director had been hired to complete a
specific project.
– The new Policy clarifies scope for buy-out awards to be granted in respect of any compensation forfeited by a
newly appointed Executive Director at their previous employer.
Exit payment policy
– The Committee will have the flexibility to determine whether a departing Director’s annual bonus should be
assessed with respect to performance over the full financial year or the period to cessation of employment
based on appropriate performance measures as determined by the Committee.
Any use of the discretions available to the Committee in this new Policy would be fully explained and justified in the relevant Remuneration
Report and, where appropriate, discussed in advance with major shareholders. If approved by shareholders, the new Policy willtake effect
from the date ofthat approval.
The Directors’ Remuneration Policy (the“Policy”)
The current Policy was approved by shareholders at the 2021 Annual
General Meeting (‘AGM’) with a vote of 94.75% in favour. In line with
the requirement to seek approval of the Policy every three years, we
will be seeking shareholder approval of a new Policy at the 2024 AGM.
Ahead of this vote, the Committee has been carefully considering the
current Policy with input from Management, while ensuring that
conflicts of interest are suitably mitigated. We have also consulted
with our major shareholders and taken advice from our independent
advisers, Deloitte.
Following its review, the Committee concluded that the basic structure
of the current Policy remains appropriate as it meets the Committee’s
requirements that it:
– Is simple and transparent
– Rewards performance against a balanced mix of financial and
non-financial performance metrics, which reflect the interests
ofallstakeholders
– Reflects that, although the business is cyclical in nature, the focus
ofthe Executive Team is to protect the profitability of business
underwritten and to deliver attractive returns to shareholders.
Accordingly, a Policy that offers, relative to the broader market,
anarrower, but more predictable, range of performance and
rewardoutcomes is better aligned to Sabre’s positioning as
an‘income stock’
– Closely aligns 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 award levels are appropriate, and that the
Committee has the ability to apply malus and/or clawback if required
– Complies with remuneration regulations under Solvency II and
corporate governance best practice
Directors’ Remuneration Policy
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The following table summarises how, in designing the Group’s Remuneration Policy and its implementation, the Committee has addressed
the principles set out in Provision 40 of the UK Corporate Governance Code.
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, we
consulted 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. 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 Group 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 Group 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.
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 Group’s Long Term Incentive Plan (“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 below.
In designing the Group’s 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 Group’s
Remuneration Policy, the Committee has taken into account the
relevant regulatory and governance principles.
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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 no
greater than 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 Group’s performance.
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 Group 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 Director’s 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 Director’s 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.
The maximum pension contribution for Executive Directors is aligned with the most prevalent rate
available to employees (currently 7.5% of salary).
n/a
Short Term Incentive Plan (“STIP”) including Deferred Bonus Plan (“DBP”)
To incentivise and reward the delivery of short-term 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
STIP outcomes will be determined by the Committee after the end of each financial year.
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 into a share award under the
DBP. Usually this will be 50% of the bonus award reducing to 25% of the bonus award in
the event that an individual’s minimum shareholding requirement has been met under the
shareholding guidelines. 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 78).
The maximum bonus opportunity for Executive
Directors is 150% of base salary.
Usually operated via a bonus pool funding approach with the bonus pool capped at 2% of PBT (in
addition to the maximum individual opportunity), subject to achievement of an appropriate financial
hurdle which may include PBT or ROTE.
Usually 70% of the bonus will be based on financial objectives, with 30% based on non-financial
objectives. Performance assessment will usually be in respect of the full financial year although
the Committee retains discretion, in exceptional circumstances, to assess performance over an
alternative period.
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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 normally released until five years from award grant.
If the Group 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 Committee’s general discretion to adjust vesting levels, depending on performance and
unforeseen circumstances, and any other appropriate reason will also apply.
Malus and clawback provisions will apply (see page 78).
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 normally 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
Shareholding guidelines
To align the interests of the Executive Directors and shareholders to the success of the Group.
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 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 at least 50% of any share awards vesting (after
settling any tax liability) until the 200% requirement is met. The Remuneration Committee will review progress towards the guidelines on
an annual basis and has the discretion to adjust the guidelines in what it feels are appropriate circumstances.
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 vested shares from incentive awards that were granted from the date of the 2021 AGM. The Committee
retains discretion to waive or amend this guideline if it is not considered appropriate in the specific circumstances.
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 Group.
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 will usually be 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.
To the extent permitted by the internal expense policy, a Non-executive Director may be reimbursed for 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.
There is no prescribed maximum
fee or annual increase.
Total fees will not exceed the limit
set out in the Group’s Articles of
Association.
n/a
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Chair's Governance
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Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
77
cumulative basis be settled in cash at the Committee’s discretion be
adjusted in the event of any variation of the Company’s 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
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 Company or its subsidiaries’
auditedaccounts
– A corporate failure
– Material 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 Scenario Charts
The charts below illustrate the potential remuneration for each of the
Executive Directors, using a range of assumptions, for the forthcoming
year. The charts show the potential value of the current Executive
Directors’ remuneration under four scenarios: minimum, on-target,
maximum and maximum plus share price growth (which assumes a
50% increase in share price over the LTIP vesting period).
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 set out above
came into effect provided that the terms of payment were consistent
with the shareholder-approved Policy in force at the time they were
agreed; or (ii) at a time when the relevant individual was not a Director
ofthe Company and, in the opinion of the Committee, the payment
wasnot in consideration for the individual becoming a Director of the
Company. 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, awards of restricted shares 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 Group, 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
– Be settled in shares or, exceptionally, in cash
– Have any performance conditions applicable to them amended or
substituted by the Committee if an event occurs which causes the
Committee to determine that, in respect of the relevant event, 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
The following assumptions have been made in creating the charts below:
Pay scenario Basis of calculation
Minimum Fixed pay only consisting of salary, benefits and pension
On-target Fixed pay, plus the relevant mid performance payout from
the bonus pool and Restricted Share Award
Maximum Fixed pay, plus the maximum performance payout from the
bonus pool (capped at 150%) and Restricted Share Award
Maximum plus
share price growth
Fixed pay, plus the maximum performance payout from
the bonus pool (capped at 150%) and restricted share
awards plus share price growth of 50% over the
Restricted Share Award vesting period
Chief Executive Ofcer’s remuneration package:
2023 2024
509
538
1,332
1,686
1,877
1,102
1,598
1,779
Minimum
On-target
Maximum
Maximum + SP
Minimum
On-target
Maximum
Maximum + SP
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Chief Financial Ofcer’s remuneration package:
2023 2024
Minimum
On-target
Maximum
Maximum + SP
Minimum
On-target
Maximum
Maximum + SP
1,200
1,000
800
600
400
200
0
308
325
728
979
1,072
606
928
1,017
Fixed (inc pension) Short-Term Incentive Plans) Long-term Incentive Plans)
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
78
For internal candidates, incentives 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.
Inthe event that the Chair or a Non-Executive Director is required
totemporarily take on the role of an Executive Director, their
remuneration may include any of the elements listed in the Policy
Table for Executive Directors.
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 Company’s Annual
General Meeting.
Director Date of appointment Notice period
Geoff Carter 21/11/2017 12 months
Adam Westwood 21/11/2017 12 months
Ian Clark 04/10/2017* 3 months
Karen Geary 07/12/2020 3 months
Bryan Joseph 01/06/2023 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 Company’s
registered office, and these contracts and letters of appointment are
also available for shareholders to review at the Company’s Annual
General Meeting. Both Geoff Carter and Adam Westwood have
written service contracts with the Company with no fixed end date,
but which are capable of being terminated by either the Company or
the Executive Director on not less than 12 months’ notice.
Remuneration Policy for new Executive Directors
The Committee intends to set any new Executive Director’s
remuneration package in line with the Policy outlined earlier in this
section. In an individual’s first year, the Committee may set different
performance measures and targets for incentive awards to those of
the other Executive Directors, depending on the timing and scope
ofany appointment.
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. Flexibility is also retained for the Group to pay for legal fees and
other costs incurred by the individual in relation to their appointment.
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 a
percentage of salary. In the event that another Executive Director
roleis created by the Company, the maximum variable opportunities
(expressed as a percentage of salary for the new position) under the
STIP and LTIP would not exceed the percentages shown for the
ChiefExecutive Officer in the Policy.
In the event that Sabre wishes to hire a candidate with unvested
incentives accrued at a previous employer or other compensation
arrangements, which would be forfeited on the candidate leaving
thatcompany, the Committee retains the discretion to make a
one-offbuy-out award. In doing so, the Committee will take account
ofall relevant factors, including any performance conditions attached
toincentive awards, the likelihood of those conditions being met, the
proportion of the vesting /performance period remaining and the form
of the award (e.g., cash or shares). The overriding principle will be that
any buy-out award should be of comparable commercial value to the
compensation which has been forfeited. 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.
In the event notice is given to terminate an Executive Director’s
contract, the Group may make a payment in lieu of notice equal to the
value of the Executive Director’s 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 Company, 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”) including
Deferred Bonus Plan (“DBP”)
Executive Directors will not have any automatic entitlement to a bonus
for the financial year in which they leave the Company. Where an
Executive Director leaves the Company, as a result of their ill-health,
injury, disability or redundancy, or their employing company or
business is sold out of the Group (known as “Good Leaver Reasons”)
or in such other circumstances as the Committee determines (but
excluding gross misconduct), 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. In
determining the level of bonus to be paid, the Committee may, at its
discretion, take into account performance up to the date of cessation
or over the financial year as a whole based on appropriate performance
measures as determined by the Committee. 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 Company. 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.
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Chair's Governance
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Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
79
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 Company 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.
Long Term Incentive Plan (“LTIP”) – Restricted Share
Awards (“RSAs”)
Unvested LTIP awards will normally lapse when an Executive Director
leaves the Company. However, if the Executive Director’s 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 Company 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 Director’s 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 Director’s office or employment. Any such payments
may include but are not limited to paying any fees for outplacement
assistance and/or the Director’s legal and/or professional advice fees in
connection with his cessation of office or employment. In some cases,
they may receive a modest leaving gift.
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 Company, all eligible employees
were offered an award of free shares under the SIP. The Group
operates both a SAYE Plan and a SIP to further facilitate employee
investment in the Company 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 Group’s employees via the
designated Non-executive Director responsible for employee
engagement. Karen Geary was appointed to this position by the Board
during 2022 and 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
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Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
80
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 2023 (the “2023 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 2023
– Share plan awards granted during the financial year ended
31December 2023
– 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.
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 2023.
£’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
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Executive Directors
Geoff Carter 477 454 4 3 31 30 512 487 229 – 187 – 19 9 435 9 947 496
Adam Westwood 292 275 2 2 20 20 314 297 120 – 88 – 10 1 218 1 352 298
Executive Director total 769 729 6 5 51 50 826 784 349 – 275 – 29 10 653 10 1,479 794
Non-executive Directors
Andrew Pomfret
8
149 155 – – – – 149 155 – – – – – – – – 149 155
Ian Clark
9
72 81 – – – – 72 81 – – – – – – – – 72 81
Karen Geary
10
69 64 – – – – 69 64 – – – – – – – – 69 64
Bryan Joseph
11
42 – – – – – 42 – – – – – – – – – 42 –
Michael Koller
12
65 62 – – – – 65 62 – – – – – – – – 65 62
Alison Morris
13
76 45 – – – – 76 45 – – – – – – – – 76 45
Rebecca Shelley
14
95 82 – – – – 95 82 – – – – – – – – 95 82
Non-executive Director total 568 489 – – – – 568 489 – – – – – – – – 568 489
Total 1,337 1,218 6 5 51
50 1,394 1,273 349 0 275 0 29 10 653 10 2,047 1,283
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 Short Term Incentive Plan (“STIP”) are paid for
performance over the relevant financial year. Details of the performance targets
and performance against the targets for the 2023 STIP awards are detailed on
pages 82 to 84. Details of the performance targets and performance against the
targets for the 2022 STIP awards are detailed in the Annual Report and Accounts
for the year ended 31 December 2022. Consistent with the terms of the 2021
Remuneration Policy, 50% of the bonus earned in relation to the financial year
ended 31 December 2023 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 Long Term Incentive Plan (“LTIP”) are restricted share
awards subject to underpin performance conditions assessed over the period
1January 2021 to 31 December 2023. The underpins were satisfied as detailed
on page 85 and the awards fully vest. Awards are valued in the single figure table
at £1.48 per share being the average share price in the final quarter of 2023
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 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. In 2023,
Geoff Carter 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 2023 of £1.514
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 Note 6
8 Andy Pomfret served as Chair until his death in November 2023
9 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. During the 2023 financial
year Ian Clark stopped being the Chair of the Risk Committee and his fee is
prorated in line with the time served in the position during the 2023 financial year
10 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, and with effect from
23 November 2023 she became the Remuneration Committee Chair on an
interim basis, and her fee was prorated in line with the time served in the
position during the 2023 financial year
11 Bryan Joseph joined the Board with effect from 1 June 2023 and became Risk
Committee Chair with effect from 12 September 2023. His fee was prorated in
line with the time served in the positions during the 2023 financial year
12 Michael Koller left the Board on 31 December 2023
13 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
14 Up until her appointment as Interim Chair, Rebecca Shelley received fees as a
Non-executive Director, Chair of the Remuneration Committee and the Senior
Independent Director. When she was appointed Interim Chair, these fees were
replaced with the Chair’s fee
Annual Report on Directors’ Remuneration
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Chair's Governance
Letter
Board of Directors Governance Report Committee Reports Directors’ Remuneration
Policy
Annual Report on
Directors’ Remuneration
Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
81
Short Term Incentive Plan (“STIP”)
Framework and outcomes for the nancial year ended
31December 2023
For the financial year ended 31 December 2023 the Executive
Directors were eligible to participate in the Company’s STIP, which
was based on a bonus pool funding approach, calculated as 1.5% of
PBT, subject to a minimum hurdle of 10% ROTE being achieved. For
2023 the maximum annual bonus opportunity within this structure
was capped at 150% of salary for Geoff Carter and 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, development of the business and 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 and
risk and compliance
15%
Non-financial objectives relating to the individual 15%
ROTE performance for the 2023 financial year was 22.7% meaning
that the hurdle was satisfied. PBT performance was £23.6m, and
therefore the profit pool available for distribution to the Executive
Directors was £0.35m (being 1.5% of PBT). Based on the allocation
formula, the Chief Executive Officer is entitled to a maximum of
65.6% of the pool (£0.232m), and the Chief Financial Officer is
entitledto a maximum of 34.4% of the pool (£0.122m). Each
Director’sshare of the bonus pool is agreed provisionally at the start
ofthe performance year, based primarily on that individual’s base
salary and maximum bonus potential.
As noted above, 30% of each individual’s share of the bonus pool
issubject to an additional adjustment for personal and Company
performance. 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 95%, 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 95% and
91%respectively.
Following this assessment, resulting bonuses were £0.229m (47% of
salary) for the Chief Executive Officer and £0.120m (40% of salary) for
the Chief Financial Officer.
Base salary
The annual salary paid to the Executive Directors with effect from
1April 2023, is shown in the tablebelow.
In late 2022, the Committee reviewed Executive Director salaries
forthe 2023 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 and Adam Westwood’s
2023 salaries by 5.5%, which was below the average increase of
6.04% given to employees across the Group. Details of the salaries
that will apply in 2024 are provided on page 90.
Base salary Annual salary (£) with effect 1 April 2023
Geoff Carter £483,713
Adam Westwood £295,400
Pension
During the 2023 financial year, Geoff Carter and Adam Westwood
received cash in lieu of pension contributions of 7.5% of their base
salaries respectively, which is below the average employee rate.
Details of the pension contributions that will apply in 2024 are provided
onpage 90.
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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 95% 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
Counter ongoing inflationary pressure and achieve
optimal COR/volume position.
15% 95% Whilst navigating the recent challenging market conditions the Executive Team have also put in place new initiatives
tounderpin success in future years. The new direct system was launched on time, including the migration of all direct
customers. The Insurer Hosted Prices (“IHP”) system also had its successful initial launch and will be rolled out across
thedistribution partners in 2024, allowing more sophisticated rating to be deployed, at pace.
Critically the Executive Team have successfully maintained focus on the core ’profitability over volume’ strategy.
The results announced, showing increased profit and premium are testament to the success of the Team in this area.
14.25%
Customer and Partners
Maintain a high-quality service in direct and outsourced
processes, ensuring customers are dealt with fairly.
Ensure customers are treated fairly, and in line with
regulatory expectations, as the anticipated cost-of-living
crisis bites.
Services levels have been closely monitored, and corrective actions taken where necessary. Overall service levels have been
positive. Consumer Duty requirements have been successfully implemented, including the creation of employee groups to
review documentation and the appointment of a Non-executive Director Consumer Duty Champion. Vulnerable customers
have been identified wherever possible and normal processes amended appropriately.
Environmental, Social and Governance
Continue to enhance our approach to ESG requirements,
with an increased focus on environmental impacts and
stakeholder expectations.
There has been a climate impact assessment for the insured estate introduced, and enhanced climate reporting is part of the
business reporting, including a Carbon Disclosure Project (“CDP”) submission. The Company has refreshed and relaunched
the Sustainability Forum and the Charity Committee remained active throughout the year.
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.
The Company has increased the diversity of the Board and its employees and has held employee health and wellbeing
sessions during the year.
Turnover is still at low levels, with positive employee engagement scores evident in surveys.
Development of the Business
Ensure that the new material product areas (Motorcycle
and Taxi) are positioned to deliver target profitability.
Effectively manage the risks inherent with these new
partnerships.
Motorcycle is now performing in line with expectations, with the Executive Team also absorbing the work generated by the
MCE brokers administration. Recent taxi performance also suggests this is now coming in line with targets.
The new direct system was rolled out on time and to budget, with the initial delivery new insurer hosted pricing technology
also being delivered during the year.
Risk and Compliance
Comply with existing and emerging regulatory
requirements, and successfully manage risk and
compliance across the Group, including Consumer Duty.
Risk processes have continued to evolve with no major incidents and more minor issues dealt with well. There have been no
material compliance breaches and enhancements have also been rolled out – for example consumer duty requirements.
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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 the IT transitions
including the launch of IHP and the new
direct platform. Continue to ensure the
business maintains strong underwriting
foundations alongside medium-term
growth opportunities and review
emerging opportunities and progress
those which meet business
requirements. Ensure new
developments do not distract from
maximising the opportunity from the
existing portfolio and that strategic
projects are successfully implemented.
60% Whilst navigating the challenging market conditions Geoff Carter led the
Executive Team in putting in place new initiatives to underpin success in
future years. The new direct system was launched on time, including the
migration of all direct customers. The Insurer Hosted Prices (“IHP”) system
also had its successful initial launch and will be rolled out across the
distribution partners in 2024, allowing more sophisticated rating to be
deployed.
In addition, the team effectively managed the implications of the administration of
one of the major motorcycle partners (MCE) including taking the run-off policy
administration in house. Throughout maintained regular dialogue with the
regulator in a proactive manner and took all steps possible to maintain a service to
customers.
Several development initiatives with external partners were reviewed during
the year. Ultimately the conclusion was that, at this stage, there a stronger
payback potential from focusing on internal developments.
95%
Ensure Executive Team continued
effectiveness and positive engagement
with the Board.
20% The relationship with the Board has continued to be highly constructive as
new NEDs have joined in the last year. Effective strategy review sessions
have been held, and the Executive Team have responded positively to Board
challenge throughout the year.
Ensure positive relationships are
maintained with key stakeholders,
specifically including the PRA, covering
analysts and key investors.
20% Positive relations have been maintained with analysts – evidenced by positive
feedback obtained independently by the Company’s brokers and financial PR
adviser. Extensive interaction was held with the FCA to ensure a customer centric
solution was delivered following the MCE administration process, and regular
communications with the PRA occurs.
Total % of personal/strategic objectives 100% 95%
Adam Westwood
Weighting as a % of
personal/strategic
bonus opportunity
Actual
performance
Objectives
Successfully implement IFRS 17
implementation within required
timescales.
25% IFRS 17 was successfully rolled out, primarily by the in-house team with
limited external support required.
95%
Maintain strong relationships with
analysts and investors, ensuring that
guidance is clear and well understood.
25% Analysts’ relationships are very strong, as evidenced by feedback obtained
from brokers and PR advisers. Where individual analysts assessments
appeared to be factually inaccurate this has been well managed to ensure
consensus represents a realistic view of the Company’s potential.
Continue the development of a fully
effective ESG roadmap for the Company,
which includes a staged transition and
ambitious yet achievable targets.
25% ESG initiatives have continued to be rolled out throughout the period. Fuller
details are contained within the ESG section of this report.
Ensure successful implementation of
agreed strategic projects.
25% The finance team have played a full and effective part in the strategic projects
rolled out during this year – particularly the new direct system.
Total % of personal/strategic objectives 100% 95%
Committee Chair’s commentary on Executive
Directors’ personal performance
Sabre is predominantly a technical underwriting and claims
management business. The Company strategy is therefore centred on
seeking to achieve a long-term Combined Operating Ratio (“COR”) of
around 80% throughout all market conditions, treating volume as an
output not a target. The strategy does not currently envisage material
merger and acquisition activity or territorial expansion, although it does
allow for organic product development and the formation of attractive
distribution partnerships. 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, 2023 was a challenging year for motor
insurers, with market COR expected to be significantly in excess of
100%. This was driven by the unexpected rapid increase in inflation
having increased the costs associated with policies already written
andtherefore impacted the Group’s and market COR.
Sabre was early to call out the implications of this increase in inflation
and adjusted reserves and prices appropriately. This has resulted in
Sabre being able to take advantage of growth opportunities as others
in the market belatedly corrected prices, alongside delivering an
increase in year-on-year profits and laying the ground for a further
stepup in earnings in 2024.
The Committee considers the 2023 results to be a strong refection
ofthe application of a successful long-term strategy, and to be highly
creditable. 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.
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Long Term Incentive Plan (“LTIP”)
Vesting of awards under the LTIP in the nancial year ended 31 December 2023
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 2021. The awards were granted in the form of restricted shares awards (as conditional awards) and, in line with the
Remuneration Policy, the awards vested after three years from the date ofgrant, and are subject to an additional holding period of two years from
the date of vesting.
The awards were 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 – relating to the Executive Director’s time in office
– Overall Committee discretion
The Committee reviewed the application of the underpins and agreed that they had been met (including average return of tangible equity of
22.7% and solvency ratio in excess of 140% throughout the period), discussed the underlying performance of the Company and the broader
stakeholder experience, and agreed that the LTIP awards vesting in relation to the financial year ended 31 December 2023 should vest at 100%
of the maximum opportunity. It is noted that the vested awards are subject to an additional holding period of two years from the date of vesting.
Granting of awards under the LTIP in the nancial year ended 31 December 2023 (audited)
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 2023. 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 – 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 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 6 April 2023:
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 362,785 314,371 Subject to the underpins
detailed above
1 January 2023 to
31 December 2025
Adam Westwood 60% of salary 177, 24 0 153,587 Subject to the underpins
detailed above
1 January 2023 to
31 December 2025
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 £1.154 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)
No 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 2023 Sabre
was operating within these limits.
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Vested share awards and outstanding share awards granted during the 2023 financial year (audited)
Details of awards granted during the year are detailed below.
Long Term Incentive Plan (“LTIP”)
Director
Holding on
1January
2023
Granted
during the
year
Option price
(£)
Exercised
during the
year Lapsed
Market
price at
exercise
date (£)
Holding on
31 December
2023 Date of grant
Share price
on date of
grant (£) Vesting date
Gain on
vesting (£)
Geoff Carter 2020 193,819 0 n/a n/a 193,819 n/a 0 23 April
2020
2.894 n/a 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 145,802 0 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
2023 0 314,371 n/a n/a 0 n/a 314,371 06 April
2023
1.15 4 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2025 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 466,160 314,371 n/a n/a 193,819 n/a 586,172
Adam
Westwood
2020 91,208 0 n/a n/a 91,208 n/a 0 23 April
2020
2.894 n/a 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 71,216
0 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
2023 0 153,587 n/a n/a 0 n/a 153,587 06 April
2023
1.15 4 At a date agreed by the Committee, which is after the release of the results for
the year ended 31 December 2025 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 221,972 153,587 n/a n/a 91,208 n/a 284,351
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Deferred Bonus Plan (“DBP”)
Director
Holding on
1January
2023
Granted during
the
year
Option price
(£)
Exercised
during the
year Lapsed
Market
price at
exercise date
(£)
Holding as at
31 December
2023 Date of grant
Share price on
date of grant
(£) Vesting date
Gain on exercise
(£)
Geoff Carter 2022 47,5 57 0 n/a 0 0 n/a 47,55 7 7 April 2022 £2.359 8 April 2024 n/a
Adam Westwood 2022 24,008 0 n/a 0 0 n/a 24,008 7 April 2022 £2.359 8 April 2024 n/a
Save As You Earn (“SAYE”) Plan
Director
Holding on
1January
2023
Granted during
the
year
Option price
(£)
Exercised
during the
year Lapsed
Market
price at
exercise date
(£)
Holding as at
31 December
2023 Date of grant
Share price on
date of grant
(£)
Exercisable
period
Gain on
exercise (£)
Geoff Carter
2022 3,970 0 1.813 0 3,970 n/a 0 26 April 2022 2.11 1 July 2025 to 31 December 2025 n/a
2023 0 21,151 0.851 0 0 n/a 21,151 18 April 2023 0.85 1 July 2026 to 31 December 2026 n/a
Total 3,970 21,151 0 3,970 21,151
Adam Westwood
2023 0 21,151 0.851 0 0 n/a 21,151 18 April 2023 0.85 1 July 2026 to 31 December 2026 n/a
Total 0 21,151 0 0 21,151
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
2023 Vesting date
Gain on
exercise
(£’000)
Geoff Carter 1,970 566 2,536 n/a n/a 3,960 6,496 Shares can be exercised with effect from the third anniversary of their grant n/a
Adam Westwood 0 38 38 n/a n/a 2,16 4 2,202 Shares can be exercised with effect from the third anniversary of their grant n/a
During the period between 31 December 2023 and 18 March 2024, 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 286 shares under the Share Incentive Plan (‘SIP’) and was awarded an additional 95 shares in the form of matching shares, taking the number of unvested shares not subject
toperformance as at 18 March 2024 to 6,877.
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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 2023 are set out in the table below:
Director
Number of
unvested shares
subject to
performance/
underpins as at
31December 2023
Number of
unvested shares
not subject to
performance as at
31 December 2023
1
Number of shares
held under the
Deferred Bonus
Plan as at
31 December 2023
Number of shares
held as at
31 December 2023
Number of shares
held as at
31 December 2022
Shareholding
requirement as a %
of salary
Shareholding as a
% of salary
achieved at
31 December 2023
2
Current Directors
Geoff Carter 586,712 27,6 47 47,5 57 1,645,340 1,609,317 200% 515%
Adam Westwood 284,351 23,353 24,008 686,267 686,267 200% 352%
Andy Pomfret n/a n/a n/a n/a 174,278 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
Bryan Joseph n/a n/a n/a 6,10 5 n/a n/a n/a
Alison Morris n/a n/a n/a 9,282 9,282 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 17, 271 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 £1.514 (as at 31 December 2023)
During the period between 31 December 2023 and 18 March 2024, 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 286 shares under the Share Incentive Plan (‘SIP’) and was awarded an additional 95 shares in the form
ofmatching shares, taking the number of unvested shares not subject to performance as at 18 March 2024 to 28,028.
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Company performance – relative total shareholder return (“TSR”)
The graph below shows Sabre’s relative TSR performance from Admission to 31 December 2023 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
31 Mar
2022
29 Dec
2022
29 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 2023.
2022 to 2023 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 Salary/fees
Taxable
benets Annual bonus
Geoff Carter 5.1% 41.9% n/a 3.3% 11. 8% 100.0% 1.6% 34.2% -63.2% 3.2% 0% 0%
Adam Westwood 6.1% 38.2% n/a 6.4% 25.1% 100.0% 1.6% 59.9% -71.0% 4.2% 0% 10 3.1%
Andy Pomfret
1
n/a n/a n/a 3.3% n/a n/a 55.2% n/a n/a 38 .1% n/a n/a
Ian Clark
2
-10.9% n/a n/a 11.0% n/a n/a 3.2% n/a n/a -11.6% n/a n/a
Karen Geary
3
8.1% n/a n/a 6.7% n/a n/a 1,371.7% n/a n/a n/a n/a n/a
Bryan Joseph
4
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Alison Morris
5
12.9% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Michael Koller
6
5.1% n/a n/a 3.3% n/a n/a 200% n/a n/a n/a n/a n/a
Rebecca Shelley
7
14.9% n/a n/a 2.5% n/a n/a 9.1% n/a n/a 4.8% n/a n/a
Average of all employees 6.9% 2.5% 126.3% 0.3% 102.4% 0.3% 2.1% 8.1% -27.6% 2.2% -1.4% 15.4%
1 The increase in Andy Pomfret’s 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 in 2021 to 2022 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 Bryan Joseph was appointed to the Board during the 2023 financial year, and therefore no figures for 2021 to 2022, 2020 to 2021, and 2019 to 2020 are included
5 Alison Morris was appointed to the Board during the 2022 financial year, and therefore no figures for 2020 to 2021 and 2019 to 2020 are included. On an annualised basis, Alison Morris’ salary changed by 0% between 2022 and 2023
6 Michael Koller was appointed to the Board during the 2020 financial year, and therefore no figures for 2019 to 2020 are included
7 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
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
89
the single total figure of remuneration for 2023, as disclosed earlier in
this report. Employee full-time equivalent salaries have been calculated
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cer’s 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 0 5 40,306 57,552
2023
Pay ratio
947
36.0:1 23.7:1 15.7:1
Remuneration values 26,309 39,896 60,459
Salary
Chief Executive
Ofcer’s salary
(£’000)
25th
percentile
50th
percentile
75th
percentile
2023
Pay ratio
477
32.4:1 23.3:1 15.3:1
Remuneration values 22,721 31,614 48,192
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. The year-on-year
movement in the total remuneration ratio reflects the varying level of
payout under the incentive plans as the value of the Chief Executive
Officer’s remuneration arrangements is significantly determined by
theGroup’s performance.
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 2023, all employees received
asalary at or above the Real 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 £1,050. Further, to support employees in the current
difficult external environment, all employees, apart from the Executive
Team, received a Cost-of-Living Allowance of £800, which was paid
over a period of five months up to February 2023.
Chief Executive Officer’s single figure
ofremuneration
The following table shows the Chief Executive Officer’s remuneration
for current and prior years:
2023
(£)
2022
(£)
2021
(£)
2020
(£)
2019
(£)
2018
(£)
2017
(£)
Single figure of
remuneration 947k 496k 733k 1,110 k 821k 760k 251k
Annual bonus payout
(as a % of maximum
opportunity) 31.5% 0% 33.9% 62.2% 6 3.1% 73.0% n/a
LTIP vesting –
performance share
awards (as a % of
maximum opportunity) n/a 0% 0% 50% n/a n/a n/a
LTIP vesting – RSA
awards (as a % of
maximum opportunity)
100%
n/a n/a n/a n/a n/a n/a
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 are calculated using the Option A
methodology, which uses the pay and benefits of all UK FTE
employees. This method is consistent with the historical approach
taken by the Company since 2019. 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 of 31 December 2023. The Chief Executive Officer’s pay is as per
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 2023 2022 Change
Total employee remuneration
1
£14.4m £12.5m £1.9m
Shareholder distributions
2
£6.5m £30.1m (£23.6m)
1 Total employee cost
2 Includes dividends paid during the financial year which ended on 31 December
2022 and 31 December 2023
Implementation of the Policy in 2024
The below sets out how the Committee intends to operate the
Remuneration Policy for the year ending 31 December 2024.
Salaries
The Executive Directors’ salaries were reviewed during the year. The
Committee decided to increase Geoff Carter and Adam Westwood’s
2024 salaries by 5.5%, which was less than the average employee
increase. The average salary increase for employees (excluding
individual one-off salary enhancements) was 6.7%, with a range
between 5.0% and 8.9%, ensuring the lowest paid employees
received the greatest increase.
The revised salaries, with effect from 1 April 2024, are £510,317 for
Geoff Carter, and £311,647 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 2024
Salary as at
31 December 2023 Increase
Geoff Carter £ 510,317 £483,713 5.5%
Adam Westwood £311,6 47 £295,400 5.5%
Benets
The Executive Directors will continue to receive life insurance and
private medical care.
Pension
As of 1 January 2024, the Executive Directors’ pension contributions
will be 7.5%, which is below the average employee rate of 7.68%.
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Board of Directors Governance Report Committee Reports Directors’ Remuneration
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Annual Report on
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Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
90
Awards granted in 2024 will be subject to the following strategically
relevant 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 5.0% and
8.7%, and the average salary increase was 6.5%. The Committee
reviewed the Chair’s 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 2024. 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 2024.
The fees which will apply in 2024 are as follows:
Role
Fee (£)
2024
Fee (£)
2023
Chair fee (all-inclusive fee) 173,6 32 164,580
Non-executive Director base fee 69,453 65,832
Senior Independent Director fee 11,575 10,972
Committee Chair fee 11,5 75 10,972
Designated Employee Representative
Non-executive Director 3,472 3,291
Short Term Incentive Plan (“STIP”)
As in prior years, the Committee will use a bonus pool funding and
allocation approach for awards in 2024 for the STIP.
The pool will continue to be calculated as a percentage of PBT, subject
to a minimum level of ROTE being achieved. For 2024, if 10% Return
On Tangible Equity (“ROTE”) is achieved, a pool of 1.5% of PBT will be
available for the Executive Directors subject to a cap of 150% of salary.
There will be a second pool for Senior Managers separate to the pool
available to Executive Directors.
Awards will be subject to the following performance measures which
will provide alignment with key strategic goals:
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 year’s Annual Report on Directors’ Remuneration.
Long Term Incentive Plan (”LTIP”)
LTIP awards in 2024 will be made under the Company’s 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.
The Chair and Non-executive Directors’ fees for the financial year
ended 31 December 2024 are therefore:
Director Reason for fee
Total annual
fee (£)
Rebecca Shelley Interim Company Chair 173,632
Ian Clark* Non-executive Director 69,453
Karen Geary
Non-executive Director
Remuneration Committee Chair
Designated Non-executive Director for
Employee Engagement
84,500
Bryan Joseph
Non-executive Director
Risk Committee Chair
81,028
Alison Morris
Non-executive Director
Audit Committee Chair
81,028
* Leaving the Board with effect from 22 May 2024 and therefore fee will be
prorated in line with service during the year
KAREN GEARY
Chair of the Remuneration Committee on behalf of the Board
18 March 2024
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Sabre Insurance Group plc Annual Report and Accounts 2023
91
out in Note 3 of the Parent Company Financial Statements contained in
this Annual Report. The Company’s principal and only trading
subsidiary is a motor insurance underwriter – Sabre Insurance
Company Limited.
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 until 18 November 2023
Rebecca Shelley – Interim Chair with effect from 18 November 2023
Ian Clark – leaving the Board with effect from 22 May 2024
Karen Geary
Bryan Joseph – appointed with effect from 1 June 2023
Michael Koller – left the Board with effect from 31 December 2023
Alison Morris
The members of the Board of Directors, their biographical details
andthe dates of their appointment are set out on pages 52 to 55 of
this AnnualReport.
Directors’ interests in shares
The Directors who held office during the 2023 financial year had the
following interests (including family interests) in the Ordinary Shares
ofthe Company:
Name of Director
31 December
2023
31 December
2022
Geoff Carter 1,645,340 1,609,317
Ian Clark 303,006 303,006
Karen Geary 0 0
Bryan Joseph 6,105 n/a
Michael Koller 0 0
Alison Morris 9,282 9,282
Rebecca Shelley 17, 271 17,271
Adam Westwood 686,267 686,267
Andy Pomfret n/a 174,278
The Directors’ Report for the period ended 31 December 2023 (the
“2023 financial year”) comprises the report set out on pages 92 to 94
and the Directors’ andOfficers’ Responsibility Statement on page 95
together with thefollowing sections of this Annual Report:
The Strategic Report
Pages 2 to 49 which comprise:
– The Chief Executive Officer’s Review on pages 10 to 12
– The Principal Risks and Uncertainties on pages 16 to 24
– The Viability Statement on pages 25 to 26
– The Chief Financial Officer’s Review on pages 31 to 34
– The Responsibility and Sustainability Report on pages 35 to 48
The Governance Report
Pages 50 to 95 which comprise:
– The Chair’s Governance Letter on page 51
– The Governance Report on pages 56 to 61
– The Committee Reports on pages 62 to 73
– The Directors’ Report on pages 92 to 94
The Board takes the view that some of the matters required to be
disclosed in the Directors’ Report are of strategic importance and that
these are included in the Strategic Report. These matters, and the
matters listed below, are incorporated into the Directors’ Report.
Subject Page
Business developments 11
Greenhouse gas emissions, energy consumption and energy efficiency
action
46
Engagement with employees 37
Engagement with stakeholders 35
Corporate structure and principal activity
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.
Sabre Insurance Group plc is the holding company of the Sabre group
of companies (the “Group”). Details of the Group’s subsidiaries are set
The Executive Directors, as employees and potential beneficiaries,
have an interest in 942,088 shares held by the Sabre Insurance Group
Employee Benefit Trust (offshore) and the Company’s SIP Trust
(onshore) as at 31December 2023. As at 31 December 2023, the
Sabre Insurance Group Employee Benefit Trust held 1,589,250
Ordinary Shares and the Company’s SIP Trust held 326,761 Ordinary
Shares. It is anticipated that these shares, which have not already been
allocated, will be used to satisfy awards made under the Company’s
employee incentive plans. Further details regarding the Company’s
employee incentive plans can be found in the Annual Report on
Directors’ Remuneration on pages 81 to 91. There were no changes
inthe interests of Directors between 31December 2023 and
18March 2024 (the latest practical date, prior to the release of
thisAnnual Report).
Appointment and replacement of Directors
The appointment and replacement of Directors is governed by the
Company’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 election or re-election at each
Annual General Meeting. It is noted that Michael Koller left the Board
with effect 31 December 2023, and that Ian Clark will leave the Board
with effect from 22 May 2024, and therefore they will not be standing
for re-election at the Annual General Meeting in 2024. All of the other
serving Directors will be submitting themselves for election or
re-election. Further information on this can be found on page 94. In
addition to any powers of removal conferred by the Companies Act,
the Company may by special resolution remove any Director before
the expiration of their period of office.
The Nomination & 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 &
Governance Committee Report on pages 67 to 69.
Directors’ Report
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Board of Directors Governance Report Committee Reports Directors’ Remuneration
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Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
92
Articles of Association
The Company may alter its Articles by special resolution of the
shareholders at a general meeting. The Articles are available on
theCompany’s website at www.sabreplc.co.uk
Shares
Share capital
The Company has one class of ordinary voting shares in issue.
As at 31 December 2023, the issued share capital of the Company
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 Company’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 Company and there are no
specific restrictions on voting rights, save where the Company is
legally entitled to impose such restrictions (for example, where the
shareholder is in default of an obligation to the Company). 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 Company on 25 May 2023, the Company 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 Company’s
Ordinary Share capital. At the Meeting, the Company 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 Company’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)).
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 81
to91 and the contracts are available for inspection by shareholders
atthe Company’s registered office and at the Company’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 Company 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 81 to 91 of the Annual Report and the terms of appointment are
available for inspection by shareholders at the Company’s registered
office and at the Company’s Annual General Meeting.
Powers of the Directors
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 Company shall be managed by the
Board, which may exercise all the powers of the Company including
the Company’s powers to borrow money and to issue new shares.
Directors’ and Ofcers’ liability insurance and Directors’
indemnities
Directors’ and Officers’ liability insurance is provided for all Directors
ofthe Company.
Each of the Company’s Directors has been granted a qualifying
third-party indemnity pursuant to which the Company 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.
Compensation for loss of ofce
The Company 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 Company’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 81 to 91 of this Annual Report.
Nosuch payments were made during the financial year ended
31December 2023.
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 £25,500 and (ii) 10% of the Company’s Ordinary Share capital. As at
the date of this report, no shares have been issued under these
authorities. These authorities will expire at the conclusion of the 2024
Annual General Meeting and, accordingly, the Board is proposing to
renew these authorities at thatAnnual General Meeting.
The Company 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 2024 Annual General Meeting. During 2023, no
shares were bought under this authority. The Board is proposing to
renew this authority at the 2024 Annual General Meeting, however the
Company does not have any current intention to purchase any of its
own Ordinary Shares.
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 Company’s website www.sabreplc.co.uk/investors/regulatory-news
At 31 December 2023, 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 12,915,737 5 .17
Aviva Investors 18,144,473 7.26
AXA Framlington Investment Managers 12,291,762 4.92
Companies owned by Old Mutal plc 12,870,464 5.14
Fidelity Management & Research 12,546,431 5.01
Gresham House Asset Management 12,704,600 5.08
M&G Investments 11,867,810 4.74
Mawer Investment Management 12,793,280 5.11
Ninety One UK Limited 12,493,014 5.00
Unicorn Asset Management 12,050,000 4.82
Wellington Management 11, 9 8 3, 3 5 0 4.79
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Directors’ Report Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
93
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 4.2 to 4.6 of the Consolidated Financial Statements
on pages 142 to 150 of this Annual Report.
Events after the balance sheet date
Refer to Note 20 of the Consolidated Financial Statements on
page167 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 41
of this Annual Report amounted, in aggregate, to £32,476 (2022:
£23,713). The Group made no political donations during the year
(2022:£0).
Annual General Meeting
The Annual General Meeting is the Company’s principal forum for
communication with shareholders and the Directors will be available to
answer shareholders’ questions at the meeting.
The 2024 Annual General Meeting will be held at 9:30am on Thursday
23 May 2024. Full details about the 2024 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 Company’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 2024 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
Company’s 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.
During the period between 31 December 2023 and 18 March 2024,
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
15 February 2024 Aviva Investors 15,522,050 6.21 1.05%
Results and dividends
The audited accounts for the year ended 31 December 2023 are set
out on pages 96 to 175. The Company profit after tax for the year was
£18.1m (2022 restated: £11.1m).
The Directors recommend a final dividend of 4.2 pence (2022:
0pence) and a special dividend of 3.9 pence (2022: 1.7 pence).
The total dividend for the 2023 financial year, including the proposed special
dividend and interim dividend paid in 2023 is 9 pence (2022:
4.5pence). Further information on the Company’s dividend policy
canbe found on page 30.
Significant agreements and change of control
The Company 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 35
to48 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 35 to 48 of this
Annual Report. Adam Westwood is the Executive Director responsible
for Environmental, Social and Governance issues.
Research and development
The Group has carried out some activities in the field of Research
&Development (“R&D”) during the year. This R&D has included
innovative developments in insurance risk analysis and insurer-hosted
pricing, as discussed in the CEO Review on pages 10 to 12.
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 (1) R Interest capitalised by the Group Not applicable
9.8.4 (2) R Unaudited financial information previously published Not applicable
9.8.4 (4) R Details of long-term incentive schemes 85
9.8.4 (5) R Directors’ waivers of emoluments Not applicable
9.8.4 (6) R Directors’ waivers of future emoluments Not applicable
9.8.4 (7) R Non pro-rata allotments for cash (issuer) Not applicable
9.8.4 (8) R Non pro-rata allotments for cash (major subsidiaries) Not applicable
9.8.4 (9) R Listed company is a subsidiary of another company Not applicable
9.8.4 (10) R Contracts of significance involving a Director Not applicable
9.8.4 (11) R Contracts of significance involving a controlling
shareholder
Not applicable
9.8.4 (12) R
9.8.4 (13) R
Details of shareholder dividend waivers Not applicable
9.8.4 (14) R Controlling shareholder agreements Not applicable
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 2023 were 14
days (2022: 6 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 25 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
12 months from the date the Directors approved these Financial
statements and that 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
18 March 2024
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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
94
Directors’ confirmations
Each of the Directors, whose names and functions are listed on
pages52 to 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
– 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 18 March 2024 and is signed on its behalf by:
GEOFF CARTER
Chief Executive Officer
ADAM WESTWOOD
Chief Financial Officer
The Directors are responsible for preparing the Annual Report and
Accounts 2023 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
– 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 Statement of Directors’
responsibilities
Sabre Insurance Group plc Annual Report and Accounts 2023
95
97 Independent Auditor’s Report
105 Consolidated Profit or Loss Account
106 Consolidated Statement of Comprehensive Income
107 Consolidated Statement of Financial Position
108 Consolidated Statement of Changes in Equity
109 Consolidated Statement of Cash Flows
110 Notes to the Consolidated Financial Statements
169 Parent Company Statement of Financial Position
170 Parent Company Statement of Changes in Equity
171 Parent Company Statement of Cash Flows
172 Notes to the Parent Company Financial Statements
176 Financial Reconciliations
179 Glossary
181 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.
Strategic Report Governance Financials
Sabre Insurance Group plc Annual Report and Accounts 2023
96
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2023 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 2023 (the “Annual Report”), which comprise: the Consolidated and
Parent Company Statements of Financial Position as at 31December2023; the Consolidated Profit or Loss Account, the 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, comprising material accounting policy information and other explanatory information.
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 FRC’s 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
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 insurance contract liabilities (group)
– Transition to IFRS 17 and associated restatement of comparatives (group)
– Valuation of investment in Subsidiaries (parent)
Materiality
– Overall group materiality: £1.88m based on 1% of insurance revenue.
– Overall company materiality: £4.51m based on 1% of net assets.
– Performance materiality: £1.41m (group) and £3.38m (company).
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
Sabre Insurance Group plc Annual Report and Accounts 2023
97
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.
The transition to IFRS 17 and associated restatement of comparatives is a new key audit matter this year. The key audit matter “Valuation of insurance contract
liabilities (group)” (previously “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)) has been updated this year to reflect the impact from the adoption of IFRS 17. Otherwise, the key audit matters
below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation of insurance contract liabilities (group)
Refer to Note 3 Insurance Liabilities and Reinsurance Assets of the financial
statements, specifically the Liability for incurred claims, Discount rates and
Riskadjustment for non-financial risk sections within Significant Judgements
andEstimates.
The valuation of insurance contract liabilities, specifically the liability for incurred
claims, involves a significant degree of judgement. These liabilities are based on
the estimated ultimate cost of all claims incurred but not settled at 31 December
2023, whether reported or not, together with the related claims handling costs
(together the ‘best estimate cashflows’), along with a discounting credit and risk
adjustment for non-financial risk. A range of methods may be used to determine
these provisions. Underlying these methods are a number of explicit and implicit
assumptions relating to the expected settlement amount and settlement patterns
of claims, including those relating to the settlement of personal injury lump sum
compensation amounts.
In performing our audit work over the valuation of insurance contract liabilities
we have used actuarial specialists to assist us in conducting elements of the
testing. Our procedures included:
– Understood management's process and controls related to insurance contract
liabilities;
– Tested the underlying source data to source documentation on a sample basis
as at 30 September 2023 and 31 December 2023;
– Developed independent point estimates of best estimate cashflows as at
30September 2023 and performed roll-forward testing to 31 December 2023;
– Performed a methodology and assumptions review of the Periodic Payment
Order ('PPO') reserves;
– Developed an independent estimate of the discounted best estimate liabilities
in order to compare to management’s estimate; and
– Performed methodology and key assumptions testing over the risk adjustment.
Based on the work performed and evidence obtained, we consider the
methodology and assumptions used to calculate the insurance contract
liabilities to be appropriate.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
Sabre Insurance Group plc Annual Report and Accounts 2023
98
Transition to IFRS 17 “insurance contracts” and associated restatement of comparatives (group)
Refer to Note 1.3.1 IFRS 17 "Insurance Contracts", specifically Notes 1.3.1.1,
1.3.1.2 and 1.3.1.3 and the restated comparatives of the financial statements.
The implementation of IFRS 17 has resulted in significant changes to the
measurement of balances across the financial statements. New processes
andmodels have been developed and introduced as part of the implementation.
Those related to insurance contract liabilities have been considered in the
abovekey audit matter. Further, new disclosures have been produced in the
financial statements.
In performing our audit work over the transition and restatement of
comparatives we have used actuarial specialists as part of our team to conduct
elements of the testing. Our procedures included:
– Understood management's process and controls related to the
implementation of IFRS 17;
– Assessed the appropriateness of the accounting policy applied to determine
the risk adjustment and testing of the derivation of the risk adjustment
– Tested the underlying data to source documentation on a sample basis;
– Reviewed the assumptions and timings of cash flows, and independently
development a point estimate; and
– Assessed the disclosures in the financial statements for compliance with the
requirements of IAS 8.
Based on the work performed and evidence obtained, we consider the
restatement of the comparatives to be appropriate.
Valuation of investment in Subsidiaries (parent)
Refer to Note 3.1 Investment in subsidiary undertakings of the Parent Company
financial statements.
In the Company's statement of financial position, investment in subsidiary
undertakings is 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:
– Assessed investment in subsidiary undertakings for indication of impairment
considering our understanding of the business;
– Challenged and tested management's valuation of the subsidiary
undertakings including reviewing the appropriateness of the assumptions,
performing sensitivity analysis, and testing the underlying source data used in
management's valuation; and
– Assessed 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.
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, taking into
account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.
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 and Sabre Insurance Group plc.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
Sabre Insurance Group plc Annual Report and Accounts 2023
99
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 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 2023, the main audit risks are related to consistency of disclosure 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 £1.88m £4.51m
How we determined it 1% of insurance revenue 1% of net assets
Rationale for benchmark
applied
In determining our materiality, we considered financial metrics which we
believed to be relevant. Following the transition to IFRS 17, we
concluded that insurance revenue was a more appropriate benchmark to
use to determine overall materiality, when compared to profit before tax,
as it provides a more stable measure of the size and performance of the
business.
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. In addition to the parent company, the
group consists primarily of one component, Sabre Insurance Company Limited to which we allocated materiality of £1.79m.
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 £1.41m
for the group financial statements and £3.38m 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 £94,120 (group audit) and £225,000 (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
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
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100
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;
– Considering management's assessment of the regulatory Solvency coverage and liquidity position; and
– Considering 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. 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2023 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.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
Sabre Insurance Group plc Annual Report and Accounts 2023
101
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 company’s 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 company’s 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.
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.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
Directors, Advisers and
other information
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102
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 Companies 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', and posting of inappropriate journals. 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;
– Understanding management's 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 liability
for incurred claims, 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.
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.
Independent Auditor’s Report tothe members of Sabre Insurance Group plc continued
Strategic Report Governance Financials
Independent
Auditor's report
Group statements Notes to the Consolidated
Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
reconciliations
Glossary Shareholder
information
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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. The period of total uninterrupted engagement is 2 years, covering the years ended 31December2022 to
31December2023.
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
18 March 2024
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2023 2022
£’k £’k
Notes Restated
(1)
Insurance revenue 3.2 188,246 181,476
Insurance service expense 3.2 (139,497) (126,607)
Insurance service result before reinsurance contracts held 48,749 54,869
Reinsurance expense 3.2 (28,506) (24,958)
Change in amounts recoverable from reinsurers for incurred claims 3.2 31,532 6,304
Net income/(expense) from reinsurance contracts held 3,026 (18,654)
Insurance service result 51,775 36,215
Interest income on financial assets using effective interest rate method 4.5 3,775 1,667
Net gains on derecognition of debt securities measured at FVOCI 4.5 – 22
Total investment income 3,775 1,689
Insurance finance expenses from insurance contracts issued 3.8 (10,170) (6,043)
Reinsurance finance income from reinsurance contracts held 3.8 3,588 3,195
Net insurance financial result (6,582) (2,848)
Net insurance and investment result 48,968 35,056
Other income 7 1,232 1,784
Other finance costs – (5)
Other operating expenses 8 (26,587) (22,815)
Profit before tax 23,613 14,020
Income tax expense 10 (5,548) (2,942)
Profit for the year attributable to ordinary shareholders 18,065 11,078
Basic earnings per share (pence per share) 19 7.27 4.45
Diluted earnings per share (pence per share) 19 7.20 4.42
The attached notes on pages 110 to 168 form an integral part of these financial statements.
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
Consolidated Profit or Loss Account
For the year ended 31 December 2023
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2023 2022
£’k £’k
Notes Restated
(1)
Profit for the year attributable to ordinary shareholders 18,065 11,078
Items that are or may be reclassified subsequently to Profit or Loss
Unrealised fair value gains/(losses) on debt securities 4.5 9,284 (14,207)
Realised gains on derecognition of debt securities reclassified to Profit of Loss – (22)
Tax (charge)/credit (2,149) 3,563
Debt securities at fair value through Other Comprehensive Income 7,135 (10,666)
Insurance finance (expense)/income from insurance contracts issued 3.8 (12,436) 23,602
Reinsurance finance income/(expense) from reinsurance contracts held 3.8 5,432 (12,924)
Tax credit/(charge) 1,550 (2,509)
Net insurance financial (expense)/income (5,454) 8,169
Items which will not be reclassified to Profit or Loss
Revaluation losses on owner-occupied properties 9 (800) –
Income tax relating to items that will not be reclassified (31) –
(831) –
Total other comprehensive income/(loss) for the year, net of tax 850 (2,497)
Total comprehensive income for the year attributable to the owners of the Company 18,915 8,581
The attached notes on pages 110 to 168 form an integral part of these financial statements.
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
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31 December 31 December 1 January
2023 2022 2022
£’k £’k £’k
Notes Restated
(1)
Restated
(1)
Assets
Cash and cash equivalents 4.1 35,079 18,502 3 0,611
Financial investments 4.2 264,679 229,158 234,667
Receivables
(2)
4.3 87 7 74
Current tax assets 1,438 1,255 –
Reinsurance contract assets
(1)
3.1 166,726 136,954 147,8 9 6
Property, plant and equipment 9 4,388 3,996 4,066
Right-of-use asset – – 187
Deferred tax assets 11 688 2,391 1,634
Other assets
(2)
13 774 1,278 821
Goodwill 14 156,279 156,279 156,279
Total assets 630,138 549,820 576,235
Liabilities
Payables
(2)
5 9,700 5,108 5,872
Current tax liabilities – – 580
Insurance contract liabilities
(1)
3.1 374,839 314,341 317,621
Lease liability – – 193
Other liabilities
(2)
3,187 1,383 1,893
Total liabilities 387,726 320,832 326,159
Equity
Issued share capital 15 250 250 250
Own shares 16 (3,121) (2,810) (2,257)
Merger reserve 48,525 48,525 48,525
FVOCI reserve (5,894) (13,029) (2,363)
Revaluation reserve – 831 831
Insurance/Reinsurance finance reserve
(1)
4,790 10,244 2,075
Share-based payments reserve 2,686 2,407 1,8 41
Retained earnings
(1)
195,176 182,570 201,174
Total equity 242,412 228,988 250,076
Total liabilities and equity 630,138 549,820 576,235
The attached notes on pages 110 to 168 form an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2023
The financial statements were approved by the
Board of Directors and authorised for issue on
18March 2024.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
(2) The description of the line item has been updated. The
change in description has had no impact on the
components of the balances.
– Receivables (31 December 2022: Loans and other
receivables)
– Other assets (31 December 2022: Prepayments,
accrued income and other assets)
– Payables (31 December 2022: Trade and other
payables)
– Other liabilities (31 December 2022: Accruals)
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Share capital Own shares Merger reserve FVOCI reserve
Revaluation
reserve
Insurance/
Reinsurance
finance reserve Other reserves
Retained
earnings Total equity
£’k £’k £’k £’k £’k £’k £’k £’k £’k
Balance as at 31 December 2021, as previously reported 250 (2,257) 48,525 (2,363) 831 – 1,841 205,900 252,727
Impact of initial application of IFRS 17 – – – – – 2,075 – (4,726) (2,651)
Restated balance as at 1 January 2022 250 (2,257) 48,525 (2,363) 831 2,075 1,841 201,174 250,076
Profit for the year attributable to the owners of the Company – – – – – – – 11,078 11,078
Total other comprehensive (loss)/income for the year, net of tax: Items that are or
may be reclassified subsequently to Profit or Loss – – – (10,666) – 8,169 – – (2,497)
Share-based payment expense – – – – – – 566 450 1,016
Net movement in own shares – (553) – – – – – – (553)
Dividends paid – – – – – – – (30,132) (30,132)
Restated balance as at 31 December 2022 250 (2,810) 48,525 (13,029) 831 10,244 2,407 182,570 228,988
Profit for the year attributable to the owners of the Company – – – – – – – 18,065 18,065
Total other comprehensive income/(loss) for the year, net of tax: Items that are or
may be reclassified subsequently to Profit or Loss – – – 7,135 – (5,454)
– – 1,681
Total other comprehensive loss for the year, net of tax: Items which will not be
reclassified to Profit or Loss – – – – (831) – – – (831)
Share-based payment expense – – – – – – 279 1,007 1,286
Net movement in own shares – (311) – – – – – – (311)
Dividends paid – – – – – – – (6,466) (6,466)
Balance as at 31 December 2023 250 (3,121) 48,525 (5,894) – 4,790 2,686 195,176 242,412
The attached notes on pages 110 to 168 form an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
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2023 2022
Notes £’k £’k
Restated
(1)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 23,613 14,020
Adjustments for:
Depreciation of property, plant and equipment 9 140 108
Depreciation of right-of-use assets – 187
Share-based payment – equity-settled schemes 16 1,606 1,603
Investment return (3,131) (1,590)
Interest on lease liability – 5
Expected credit loss 4.4 6 (34)
Impairment loss on owner-occupied buildings 333 –
Operating cash flows before movements in working capital 22,567 14,299
Movements in working capital:
Change in receivables (80) 69
Change in reinsurance contract assets (24,340) (1,982)
Change in other assets 504 (457)
Change in payables 4,592 (764)
Change in insurance contract liabilities 48,062 20,322
Change in other liabilities 1,804 (510)
Cash generated from operating activities before investment of insurance assets 53,109 30,977
Taxes paid (4,658) (4,479)
Net cash generated from operating activities before investment of insurance assets 48,451 26,498
Interest and investment income received 3,818 3,383
Proceeds from the sale and maturity of invested assets 24,089 37,734
Purchases of invested assets (51,018) (48,214)
Net cash generated from operating activities 25,340 19,401
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 9 (1,665) (38)
Net cash used by investing activities (1,665) (38)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of principal portion of lease liabilities – (198)
Net cash used in acquiring and disposing of own shares (632) (1,142)
Dividends paid 12 (6,466) (30,132)
Net cash used by financing activities (7,098) (31,472)
Net increase/(decrease) in cash and cash equivalents 16,577 (12,109)
Cash and cash equivalents at the beginning of the year 18,502 30,611
Cash and cash equivalents at the end of the year 35,079 18,502
The attached notes on pages 110 to 168 form an integral part of these financial statements.
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
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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, including
taxis and motorcycles. The Company’s 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 Profit or Loss Account and Statement of 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.
1.2. Going concern
The Consolidated 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 12 months from the date the Directors approved these Financial Statements 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 Own Risk and Solvency Assessment (“ORSA”), 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 what the Group considers its principal risks which are set out in the Principal Risks and Uncertainties section on pages 16 to 24 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 2023
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Notes to the Consolidated Financial Statements continued
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.
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 2023:
– Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
– Definition of Accounting Estimates (Amendments to IAS 8)
– Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
– IFRS 17 “Insurance Contracts”
– Amendments to IFRS 17
– Initial Application of IFRS 17 and IFRS 9 – Comparative Information
In these financial statements, the Group has applied IFRS 17 “Insurance Contracts” for the first time from 1 January 2023. The Group had not elected to defer the
implementation of IFRS 9 and has implemented IFRS 9 from 1 January 2020.
Other than IFRS 17 “Insurance Contracts” which is discussed below, none of the amendments have had a material impact to the Group.
1. ACCOUNTING POLICIES continued
1.2. Going concern continued
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Notes to the Consolidated Financial Statements continued
1.3.1. IFRS 17 “Insurance Contracts”
IFRS 17 “Insurance Contracts” replaced IFRS 4 “Insurance Contracts” for annual periods starting on 1 January 2023.
The Group has restated comparative information for 2022 applying the transitional provision in Appendix C to IFRS 17. The nature of the changes in accounting
policies can be summarised, as follows:
1.3.1.1. Changes to classication and measurement
The adoption of IFRS 17 did not change the classification of the Group’s insurance contracts as insurance contracts.
Under IFRS 4, the Group was permitted to account for insurance contracts using its previous accounting policies under ‘old’ UK GAAP. However, IFRS 17
establishes specific principles for the recognition and measurement of insurance contracts issued and reinsurance contracts held by the Group.
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.
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 IFRS 4 premium reserve profile recognised
over time. The principles of the general model remain applicable to the liability for incurred claims.
Under IFRS 17, the Group’s insurance contracts issued and reinsurance contracts held are all eligible to be measured applying the Premium Allocation Approach.
The PAA simplifies the measurement of insurance contracts in comparison with the general model in IFRS 17.
The measurement principles of the PAA differ from the ‘earned premium approach’ used by the Group under IFRS 4 in the following key areas:
– The liability for remaining coverage reflects premiums received less deferred insurance acquisition cash flows less amounts recognised in revenue for insurance
services provided
– Measurement of the liability for remaining coverage involves an explicit evaluation of risk adjustment for non-financial risk when a group of contracts is onerous in
order to calculate a loss component (previously these may have formed part of the unexpired risk reserve provision)
– Measurement of the liability for incurred claims (previously claims outstanding and incurred-but-not-reported (“IBNR”) claims) is determined on a discounted
probability-weighted expected value basis, and includes an explicit risk adjustment for non-financial risk. The liability includes the Group’s obligation to pay other
incurred insurance expenses
– Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held) is adjusted to include a loss-recovery component to
reflect the expected recovery of onerous contract losses where such contracts reinsure onerous direct contracts
The Group allocates the acquisition cash flows to groups of insurance contracts issued or expected to be issued using a systematic and rational basis. Insurance
acquisition cash flows include those that are directly attributable to a group and to future groups that are expected to arise from renewals of contracts in that group.
Where such insurance acquisition cash flows are paid (or where a liability has been recognised applying another IFRS standard) before the related group of
insurance contracts is recognised, an asset for insurance acquisition cash flows is recognised. When insurance contracts are recognised, the related portion of the
asset for insurance acquisition cash flows is derecognised and subsumed into the measurement at initial recognition of the insurance liability for remaining coverage
of the related group.
For an explanation of how the Group accounts for insurance and reinsurance contracts under IFRS 17, see Note 3.
There has been no change in the Group’s segments or how the Group reports on these segments internally.
1. ACCOUNTING POLICIES continued
1.3. New and amended standards and interpretations adopted by the Group continued
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Notes to the Consolidated Financial Statements continued
1.3.1.2. Changes to presentation and disclosure
For presentation in the Statement of Financial Position, the Group aggregates insurance and reinsurance contracts issued and reinsurance contracts held,
respectively and presents separately:
– Portfolios of insurance contracts issued that are assets
– Portfolios of insurance contracts issued that are liabilities
– Portfolios of reinsurance contracts held that are assets
– Portfolios of reinsurance contracts held that are liabilities
The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements.
The line item descriptions in the Profit or Loss Account and Statement of Comprehensive Income have been changed significantly compared with the previous
accounting basis. Previously, the Group reported the following line items:
– Gross written premium
– Net written premium
– Changes in unearned premium reserves
– Gross insurance claims
– Net insurance claims
Instead, IFRS 17 requires separate presentation of:
– Insurance revenue
– Insurance service expense
– Reinsurance expense
– Amounts recoverable from reinsurers for incurred claims
– Insurance finance income/(expense) from insurance contracts issued
– Reinsurance finance income/(expense) from reinsurance contracts held
The Group provides disaggregated qualitative and quantitative information about:
– Amounts recognised in its financial statements from insurance contracts
– Critical judgements, and changes in those judgements, when applying the standard
1. ACCOUNTING POLICIES continued
1.3. New and amended standards and interpretations adopted by the Group continued
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Notes to the Consolidated Financial Statements continued
1.3.1.3. Transition
Changes in accounting policies resulting from the adoption of IFRS 17 have been applied using a full retrospective approach. Under the full retrospective approach,
at 1 January 2022, the Group:
– Has identified, recognised and measured each group of insurance and reinsurance contracts as if IFRS 17 had always applied
– Has identified, recognised and measured assets for insurance acquisition cash flows as if IFRS 17 has always applied. However no recoverability assessment
was performed before the transition date. At transition date, a recoverability assessment was performed and no impairment loss was identified
– Derecognised any existing balances that would not exist had IFRS 17 always applied
– Recognised any resulting net difference in equity (see Statement of Changes in Equity)
1.4. New and amended standards and interpretations not yet effective in 2023
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 10 and IAS 28: Amendment: “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” (IASB effective date: optional)
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 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 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 3.6 for detail on these risks and the way the Group manages them. Note 3.6 also includes the considerations of climate change. Further discussion on
climate change can be found in the Principal Risks and Uncertainties section on pages 16 to 24 of the Strategic Report and the Responsibility and Sustainability
section on pages 35 to 48.
1. ACCOUNTING POLICIES continued
1.3. New and amended standards and interpretations adopted by the Group continued
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Notes to the Consolidated Financial Statements continued
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 4.4)
– Reinsurers default on their share of the Group’s insurance liabilities (Note 3.7)
– Default on amounts due from insurance contract intermediaries or policyholders (Note 3.7)
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 a 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 3.7 and 4.4 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 4.2.1 for further information on investment concentration risk.
2. RISK AND CAPITAL MANAGEMENT continued
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Notes to the Consolidated Financial Statements continued
2.6. Operational risk
Operational risk is the risk of loss arising from system failure, cyber attack, 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.
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 2023, the Group holds significant excess
Solvency II capital.
The Group’s IFRS capital comprised:
As at 31 December
2023 2022
£’k £’k
Restated
(1)
Equity
Share capital 250 250
Own shares (3,121) (2,810)
Merger reserve 48,525 48,525
FVOCI reserve (5,894) (13,029)
Revaluation reserve – 831
Insurance/Reinsurance finance reserve 4,790 10,244
Share-based payments reserve 2,686 2,407
Retained earnings 195,176 182,570
Total 242,412 228,988
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
2. RISK AND CAPITAL MANAGEMENT continued
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The Solvency II position of the Group both before and after proposed final dividend is given below:
As at 31 December
2023 2022
£’k £’k
Pre-dividend Not restated
(1)
Total tier 1 capital 121,099 91,191
SCR 58,998 56,516
Excess capital 62,101 34,675
Solvency coverage ratio (%) 205% 161%
As at 31 December
2023 2022
£’k £’k
Post-dividend Not restated
(1)
Total tier 1 capital 100,849 86,941
SCR 58,998 56,516
Excess capital 41,851 30,425
Solvency coverage ratio (%) 171% 154%
(1) The 2022 IFRS net assets figure is as reported at 31 December 2022 and have not been restated here
The following table sets out a reconciliation between IFRS net assets and Solvency II net assets before proposed final dividend:
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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Notes to the Consolidated Financial Statements continued
As at 31 December
2023 2022
£’k £’k
Not restated
(1)
IFRS net assets 242,412 222,496
Less: Goodwill (156,279) (156,279)
Adjusted IFRS net assets 86,133 66,217
Add: Liability for remaining coverage (Unearned Premium element) 124,448 83,858
Remove: Insurance acquisition cash flow asset (8,733) (13,354)
Remove: IFRS risk adjustment 12,255 10,764
Add: Solvency II risk margin (5,904) (7,752)
Add: Solvency II premium provision (76,441) (53,581)
Changes in valuation differences of technical reserves 996 12,710
Change in deferred tax (11,655) (7,671)
Solvency II net assets 121,099 91,191
(1) The 2022 IFRS net assets figure is as reported at 31 December 2022 and have not been restated here
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 liability for remaining coverage and insurance acquisition cash flow asset: Liability for remaining coverage is not treated as a liability under
Solvency II.
– Removal of insurance acquisition cash flow asset: Insurance acquisition cash flow asset is not deferred under Solvency II.
– Removal of IFRS risk adjustment: Solvency II risk margin replaces IFRS risk adjustment.
– Addition of 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.
– Addition of 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.
– Changes in valuation differences: Valuation differences of technical differences between IFRS 17 and Solvency II, including discounting.
– 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.
Sabre Insurance Group plc’s SCR, expressed on a risk module basis, is set out in the following table:
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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as at 31 December 2023 as at 31 December 2022
£’k £’k £’k £’k £’k £’k
Interest rate risk 4,655 5,548
Equity risk – –
Property risk 900 956
Spread risk 2,739 3,264
Currency risk 1,058 1,112
Concentration risk – –
Correlation impact (3,192) (3,660)
Market risk 6,160 7,2 20
Counterparty risk 3,098 2,333
Underwriting risk 63,720 52,421
Correlation impact (6,219) (6,129)
Basic SCR 66,759 55,845
Operating risk 7,6 50 6,372
Loss absorbing effect of deferred taxes (15,411) (5,701)
Total SCR 58,998 56,516
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 a going concern
– To maximise the income and capital return to its equity
The Board monitors and reviews 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.
2. RISK AND CAPITAL MANAGEMENT continued
2.7. Capital management continued
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS
ACCOUNTING POLICY
For the purpose of this accounting policy, the term ‘motor insurance’ covers all the Group’s products, which includes Motor Vehicle, Motorcycle and
Taxiinsurance.
A. Insurance and reinsurance contracts classication
The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from a policyholder by agreeing to
compensate the policyholder if a specified uncertain future insured event adversely affects the policyholder.
As a general guideline, the Group determines whether it has significant insurance risk, by comparing benefits payable after an insured event with benefits
payable if the insured event did not occur.
The Group issues only non-life insurance to individuals and businesses. Non-life insurance products offered by the Group are Motor Vehicle, Motorcycle and Taxi
insurance. These products offer protection of a policyholder’s assets and indemnification of other parties that have suffered damage as a result of a
policyholder’s accident.
In the normal course of business, the Group uses reinsurance to mitigate its risk exposures. A reinsurance contract transfers significant risks if it transfers
substantially all of the insurance risk resulting from the insured portion of the underlying insurance contacts, even if it does not expose the reinsurer to the
possibility of a significant loss.
B. Insurance and reinsurance contracts accounting treatment
(i) Separating components from insurance and reinsurance contracts
The Group assesses its non-life insurance and reinsurance products to determine whether they contain distinct components which must be accounted for under
another IFRS instead of under IFRS 17. After separating any distinct components, the Group applies IFRS 17 to all remaining components of the (host) insurance
contract. Currently, the Group’s products do not include any distinct components that require separation.
(ii) Aggregation and recognition of insurance and reinsurance contracts
Insurance contracts
Insurance contracts are aggregated into groups for measurement purposes. Groups of insurance contracts are determined by identifying portfolios of insurance
contracts, each comprising contracts subject to similar risks and managed together, and dividing each portfolio into annual cohorts (i.e. by year of issue) and
each annual cohort into three groups based on the expected profitability ofcontracts:
– Any contracts that are onerous on initial recognition
– Any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently
– Any remaining contracts in the annual cohort
The Group recognises groups of insurance contracts it issues from the earliest of:
– The beginning of the coverage period of the group of contracts
– When the first payment from a policyholder in the group becomes due or when the first payment is received if there is no due date
– When facts and circumstances indicate that the contract is onerous
The Group adds new contracts to the group in the reporting period in which that contract meets one of the criteria set out above.
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Notes to the Consolidated Financial Statements continued
The profitability of groups of contracts is assessed by actuarial valuation models that take into consideration existing and new business. The Company assumes
that no contracts in the portfolio are onerous at initial recognition unless facts and circumstances indicate otherwise. For contracts that are not onerous, the
Company assesses, at initial recognition, that there is no significant possibility of becoming onerous subsequently by assessing the likelihood of changes in
applicable facts and circumstances. The Company considers facts and circumstances to identify whether a group of contracts are onerous based on:
– Pricing information
– Results of similar contracts it has recognised
– Environmental factors, e.g. a change in market experience or regulations
Reinsurance contracts
Some reinsurance contracts provide cover for underlying contracts that are included in different groups. However, the Group concludes that the reinsurance
contract’s legal form of a single contract reflects the substance of the Group’s contractual rights and obligations, considering that the different covers lapse together
and are not sold separately. As a result, the reinsurance contract is not separated into multiple insurance components that relate to different underlying groups.
The Group recognises a group of reinsurance contracts held at the earlier of the following:
– The beginning of the coverage period of the group of reinsurance contracts held
– The date the Group recognises an onerous group of underlying insurance contracts if the Group entered into the related reinsurance contract held in the group
of reinsurance contracts held at or before that date
The Group adds new contracts to the group in the reporting period in which that contract meets one of the criteria set out above.
(iii) Measurement
Summary of measurement approaches
The Group uses the following measurement approaches to its insurance and reinsurance contacts.
Product classification Measurement model
Insurance contracts issued
Motor insurance Insurance contracts issued Premium Allocation Approach (“PAA”)
Reinsurance contracts held
Motor insurance – excess of loss reinsurance Reinsurance contracts held Premium Allocation Approach (“PAA”)
The Group applies the premium allocation approach to all the insurance contracts that it issues and reinsurance contracts that it holds, as the coverage period of
each contract in the group is one year or less, including insurance contract services arising from all premiums within the contract boundary. The Group does not
expect significant variability in the fulfilment cash flows that would affect the measurement of the liability for remaining coverage during the period before a
claim is incurred.
All the Group’s insurance contracts have a coverage period of one year or less. The Group’s reinsurance contracts held are excess of loss contracts and are loss
occurring. The Group does not issue any reinsurance contracts.
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
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3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
Insurance contracts issued
On initial recognition of each group of contracts, the carrying amount of the liability for remaining coverage (“LRC”) is measured at:
– The premiums received on initial recognition
– Minus any insurance acquisition cash flows allocated to the group at that date
– Adjusted for any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the group (including assets for
insurance acquisition cash flows)
The Group has chosen not to expense insurance acquisition cash flows when they are incurred.
Subsequently, the Group measures the carrying amount of the LRC at the end of each reporting period as the LRC at the beginning of the period:
– Plus premiums received in the period
– Minus insurance acquisition cash flows
– Plus any amounts relating to the amortisation of insurance acquisition cash flows recognised as an expense in the reporting period
– Minus the amount recognised as insurance revenue for the services provided in the period
On initial recognition of each group of contracts, the Group expects that the time between providing each part of the services and the related premium due date
is no more than a year. Accordingly, the Group has chosen not to adjust the liability for remaining coverage to reflect the time value of money and the effect of
financial risk.
If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then the Group recognises a loss in Profit or Loss
and increases the liability for remaining coverage to the extent that the current estimates of the fulfilment cash flows that relate to remaining coverage exceed the
carrying amount of the liability for remaining coverage. The fulfilment cash flows are discounted (at current rates) if the liability for incurred claims is also discounted.
The Group recognises the liability for incurred claims (“LIC”) of a group of insurance contracts at the amount of the fulfilment cash flows (“FCF”) relating to
incurred claims. The fulfilment cash flows are discounted (at current rates) unless they are expected to be paid in one year or less from the date the claims are
incurred.
– The carrying amount of a group of insurance contracts issued at the end of each reporting period is the sum of:
– The LRC
– The LIC
Risk adjustment for non-nancial risk
An explicit risk adjustment for non-financial risk is estimated separate from the other estimates. Unless contracts are onerous, the explicit risk adjustment for
non-financial risk is only estimated for the measurement of the LIC.
This risk adjustment represents the compensation that the Group 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.
The risk adjustment for non-financial risk for insurance contracts measures the compensation that the Group would require to make it indifferent between:
– Fulfilling a liability that has a range of possible outcomes arising from non-financial risk
– Fulfilling a liability that will generate fixed cash flows with the same expected present value as the insurance contracts
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
Reinsurance contracts held
The excess of loss reinsurance contracts held provide coverage on the motor insurance contracts originated for claims incurred during an accident year and are
accounted for under the PAA. The Group measures its reinsurance assets for a group of reinsurance contracts that it holds on the same basis as insurance
contracts that it issues. For reinsurance contracts held, on initial recognition, the Group measures the remaining coverage at the amount of ceding premiums
paid. For reinsurance contracts held, at each of the subsequent reporting dates, the remaining coverage is:
– Increased for ceding premiums paid in the period
– Decreased for the amounts of ceding premiums recognised as reinsurance expenses for the services received in the period
Assets for reinsurance contracts consist of the asset for remaining coverage (“ARC”) and the asset for incurred claims (“AIC”) being the reinsurers’ share of
claims that have already been incurred.
For reinsurance contracts held, the risk adjustment for non-financial risk presents the amount of risk being transferred by the Group to the reinsurer.
Asset for insurance acquisition cash ows
The Group includes the following acquisition cash flows within the insurance contract boundary that arise from selling, underwriting and starting a group of
insurance contracts and that are:
a. Costs directly attributable to individual contracts and groups of contracts
b. Costs directly attributable to the portfolio of insurance contracts to which the group belongs, which are allocated on a reasonable and consistent basis to
measure the group of insurance contracts
Insurance acquisition cash flows arising before the recognition of the related group of contracts are recognised as an asset. Insurance acquisition cash flows
arise when they are paid or when a liability is required to be recognised under a standard other than IFRS 17. Such an asset is recognised for each group of
contracts to which the insurance acquisition cash flows are allocated. The asset is derecognised, fully or partially, when the insurance acquisition cash flows are
included in the measurement of the group of contracts.
Recoverability assessment
At each reporting date, if facts and circumstances indicate that an asset for insurance acquisition cash flows may be impaired, then the Group:
a. Recognises an impairment loss in Profit or Loss so that the carrying amount of the asset does not exceed the expected net cash inflow for the related group
b. If the asset relates to future renewals, recognises an impairment loss in Profit or Loss to the extent that it expects those insurance acquisition cash flows to
exceed the net cash inflow for the expected renewals and this excess has not already been recognised as an impairment loss under (a)
The Group reverses any impairment losses in Profit or Loss and increases the carrying amount of the asset to the extent that the impairment conditions have
improved.
Modication and derecognition
The Group derecognises insurance contracts when:
– The contract is extinguished (i.e. when the obligation specified in the insurance contract expires or is discharged or cancelled)
– The contract is modified and certain additional criteria are met
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
When an insurance contract is modified by the Group as a result of an agreement with the counterparties or due to a change in regulations, the Group treats
changes in cash flows caused by the modification as changes in estimates of the FCF, unless the conditions for the derecognition of the original contract are
met. The Group derecognises the original contract and recognises the modified contract as a new contract if any of the following conditions are present:
a. If the modified terms had been included at contract inception and the Group would have concluded that the modified contract:
i. Is not in scope of IFRS 17
ii. Results in different separable components
iii. Results in a different contract boundary
iv. Belongs to a different group of contracts
b. The original contract was accounted for under the PAA, but the modification means that the contract no longer meets the eligibility criteria for that approach
When an insurance contract accounted for under the PAA is derecognised, adjustments to the FCF to remove relating rights and obligations and account for the
effect of the derecognition result in the following amounts being charged immediately to Profit or Loss:
a. If the contract is extinguished, any net difference between the derecognised part of the LRC of the original contract and any other cash flows arising from
extinguishment
b. If the contract is transferred to the third party, any net difference between the derecognised part of the LRC of the original contract and the premium charged
by the third party
c. If the original contract is modified resulting in its derecognition, any net difference between the derecognised part of the LRC and the hypothetical premium
the entity would have charged had it entered into a contract with equivalent terms as the new contract at the date of the contract modification, less any
additional premium charged for the modification
(iv) Presentation
The Group has presented separately, in the Statement of Financial Position, the carrying amount of portfolios of insurance contracts issued and portfolios of
reinsurance contracts held.
The Group has elected to disaggregate part of the movement in LIC resulting from the changes in discount rates and present this in the Statement of
Comprehensive Income. The Group disaggregates the total amount recognised in the Profit or Loss Account and the Statement of Comprehensive Income into
an insurance service result, comprising insurance revenue and insurance service expense, and insurance finance income or expenses.
The Group does not disaggregate the change in risk adjustment for non-financial risk between a financial and non-financial portion and includes the entire
change as part of the insurance service result.
The Group separately presents income or expenses from reinsurance contracts held from the expenses or income from insurance contracts issued.
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS
Insurance service result from insurance contracts issued
Insurance revenue
As the Group provides insurance contract services under the group of insurance contracts, it reduces the LRC and recognises insurance revenue. The amount of
insurance revenue recognised in the reporting period depicts the transfer of promised services at an amount that reflects the portion of consideration that the
Group expects to be entitled to in exchange for those services.
The Group measures all insurance contracts under the PAA and recognises insurance revenue based on the passage of time over the coverage period of a group
of contracts.
Insurance service expenses
Insurance service expenses include the following:
– Incurred claims and benefits
– Other incurred directly attributable expenses
– Amortisation of insurance acquisition cash flows
– Changes that relate to past service – changes in the FCF relating to the LIC
– Changes that relate to future service – changes in the FCF that result in onerous contract losses or reversals of those losses
Amortisation of insurance acquisition cash flows is based on the passage of time.
Other expenses not meeting the above categories are included in other operating expenses in the Profit or Loss Account.
Insurance service result from reinsurance contracts held
Net income/(expense) from reinsurance contracts held
The Group presents separately on the face of the Profit or Loss Account and the Statement of Comprehensive Income, the amounts expected to be recovered
from reinsurers, and an allocation of the reinsurance premiums paid. The net income/(expense) from reinsurance contract held comprise:
– Reinsurance expenses
– For groups of reinsurance contracts measured under the PAA, broker fees are included within reinsurance expenses
– Incurred claims recovery
– Other incurred directly attributable expenses
– Changes that relate to past service – changes in the FCF relating to incurred claims recovery
– Effect of changes in the risk of reinsurers’ non-performance
– Amounts relating to accounting for onerous groups of underlying insurance contracts issued
Reinsurance expenses are recognised similarly to insurance revenue. The amount of reinsurance expenses recognised in the reporting period depicts the
transfer of received insurance contract services at an amount that reflects the portion of ceding premiums that the Group expects to pay in exchange for those
services. Broker fees are included in reinsurance expenses.
All groups of reinsurance contracts held are measured under the PAA and reinsurance expenses are recognised based on the passage of time over the coverage
period of a group of contracts.
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3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
ACCOUNTING POLICY CONTINUED
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Insurance nance income or expenses
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from:
– The effect of the time value of money and changes in the time value of money
– The effect of financial risk and changes in financial risk
For contracts measured under the PAA, the main amounts within insurance finance income or expenses are:
a. Interest accreted on the LIC
b. The effect of changes in interest rates and other financial assumptions
The Group disaggregates insurance finance income or expenses on motor insurance contracts issued between Profit or Loss and OCI. The impact of changes in
market interest rates on the value of the insurance assets and liabilities are reflected in OCI in order to minimise accounting mismatches between the accounting
for financial assets and insurance assets and liabilities. The Group’s financial assets backing the motor insurance portfolios are predominantly measured at FVOCI.
RISK MANAGEMENT
Refer to Notes 3.6 and 3.7 for detail on risks relating to insurance liabilities and reinsurance assets, and the management thereof.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Management considers that their use of estimates, assumptions and judgements in application of the Group’s accounting policies are inter-related and therefore
discuss them together with the major sources of estimation uncertainty and critical judgements separately identified.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The Group based its assumptions and
estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however,
may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when
they occur. The Group disaggregates information to disclose major product lines namely, Motor Vehicle, Motorcycle and Taxi.
The Group applies the PAA to simplify the measurement of insurance contracts. When measuring liabilities for remaining coverage, the PAA is broadly similar to
the Group’s previous accounting treatment under IFRS 4. However, when measuring liabilities for incurred claims, the Group now discounts cash flows that are
expected to occur more than one year after the date on which the claims are incurred and includes an explicit risk adjustment for non-financial risk.
A. Liability for remaining coverage (“LRC”)
Insurance acquisition cash ows
The Group applies judgement in determining the inputs used in the methodology to systematically and rationally allocate insurance acquisition cash flows to
groups of insurance contracts. This includes judgements about the amounts allocated to insurance contracts expected to arise from renewals of existing
insurance contracts in a group and the volume of expected renewals from new contracts issued in the period.
At the end of each reporting period, the Group revisits the assumptions made to allocate insurance acquisition cash flows to groups and where necessary
revises the amounts of assets for insurance acquisition cash flows accordingly.
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS CONTINUED
Critical estimates
In determining the liability for remaining coverage, the Group considers the term over which insurance policies apply, the distribution of expected claims
occurrence during the life of those policies and, in determining whether or not a group of contracts is onerous, the expected profitability of each group of
contracts written. The profitability of each group of contracts is estimated with reference to:
– Underwriting performance to date for each group of contracts
– The strategic goals assigned to each group of contracts, including target underwriting performance
– Projections of changes to underwriting performance resulting from pricing decisions taken during the life of each group of contracts
B. Liability for incurred claims (“LIC”)
The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and Bornheutter-
Ferguson methods.
The main assumption underlying these techniques is that a Group’s past claims development experience can be used to project future claims development and
hence ultimate claims costs. These methods extrapolate the development of paid and incurred losses, average costs per claim (including claims handling costs),
and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident
years, but can also be further analysed by geographical area, as well as by significant business lines and claim types. Large claims are usually separately
addressed, either by being reserved at the face value of loss adjuster estimates or separately projected in order to reflect their future development. 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 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, 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 probability weighted expected value outcome from the range of possible outcomes, taking account of all the
uncertainties involved.
The Group has the right to pursue third parties for payment of some or all costs. Estimates of salvage recoveries and subrogation reimbursements are
considered as an allowance in the measurement of ultimate claims costs. Other key circumstances affecting the reliability of assumptions include variation in
interest rates and delays in settlement.
Critical estimates
The key estimates in calculating the LIC are the amount and timing of future claims payments in relation to claims already incurred. This is primarily assessed
with reference to past performance, including past settlement patterns, as per the actuarial methodology outlined above. This includes estimating the likely
changes in inflation as relates to claims already incurred, as well as the expected frequency of claims which have occurred but which have not yet been
reported. The ongoing cost of handling claims already incurred is estimated with reference to the historical cost-per-claim calculated over the past 12 months.
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS CONTINUED
C. Discount rates
Insurance contract liabilities are calculated by discounting expected future cash flows at a risk-free rate, plus an illiquidity premium where applicable. Risk-free
rates are determined by reference to the yields of highly liquid AAA-rated sovereign securities in the currency of the insurance contract liabilities. The illiquidity
premium is determined by reference to observable market rates.
Discount rates applied for discounting of future cash flows are listed below:
31 December 2023 31 December 2022
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
Motor insurance 5.05% 3.98% 3.67% 3.59% 4.75% 4.62% 4.35% 4.00%
Critical estimates
The discount rate is determined as the risk-free rate adjusted for an illiquidity premium. The risk-free rate is determined using the Solvency II risk-free rate
sourced from the Bank of England. The illiquidity premium represents the differences in liquidity characteristics between the financial assets used to derive the
risk-free rate and the relevant liability cash flows.
D. Risk adjustment for non-nancial risk
The risk adjustment for non-financial risk is the compensation that the Group requires for bearing the uncertainty about the amount and timing of the cash flows
of groups of insurance contracts. The risk adjustment reflects an amount that an insurer would rationally pay to remove the uncertainty that future cash flows
could vary from the expected value amount.
Critical estimates
The Company has estimated the risk adjustment using a methodology which targets a confidence level (probability of sufficiency) approach between the 80th
and 85th percentile. At 31 December 2023, the risk margin applied equates to an approximate confidence interval of 81.3% (31 December 2022: 82.0%) That is,
the Company has assessed its indifference to uncertainty for all product lines (as an indication of the compensation that it requires for bearing non-financial risk)
as being equivalent to the 80th to 85th percentile confidence level less the mean of an estimated probability distribution of the future cash flows. The Company
has estimated the probability distribution of the future cash flows, and the additional amount above the expected present value of future cash flows required to
meet the target percentiles.
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Notes to the Consolidated Financial Statements continued
3.1. Composition of the Statement of Financial Position
An analysis of the amounts presented on the Statement of Financial Position for insurance contacts is included in the table below.
2023
2022
Restated
(1)
Notes £’k £’k
Insurance contract liabilities
Insurance contract liabilities
Motor Vehicle insurance 321,720 276,171
Motorcycle insurance 32,370 26,928
Taxi insurance 29,482 17, 20 4
Asset for insurance acquisition cash flows
Motor Vehicle insurance 3.3 (6,933) (4,324)
Motorcycle insurance 3.3 (867) (629)
Taxi insurance 3.3 (933) (1,009)
Total insurance contract liabilities 374,839 314,341
Reinsurance contracts assets
Motor Vehicle insurance 143,364 123,991
Motorcycle insurance 13,502 8,526
Taxi insurance 9,860 4,437
Total reinsurance contract assets 166,726 136,954
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
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Notes to the Consolidated Financial Statements continued
3.2. Movements in insurance and reinsurance contract balances
3.2.1. Insurance contracts issued
Reconciliation of liability for remaining coverage and the liability for incurred claims
2023 2022 Restated
(1)
Liabilities for
Remaining
Coverage
(“LRC”)
Liabilities for Incurred Claims
(“LIC”) TOTAL
Liabilities for
Remaining
Coverage
(“LRC”)
Liabilities for Incurred Claims
(“LIC”) TOTAL
In £’k
Estimates
of present value
of future cash
ows
Risk adjustment
for non-nancial
risk
Estimates
of present value
of future cash
flows
Risk adjustment
for non-financial
risk
Opening insurance contract liabilities 47, 8 36 221,651 44,854 314,341 47,65 6 229,734 40,231 317,621
Changes in the Profit or Loss Account
Insurance revenue (188,246) – – (188,246) (181,476) – – (181,476)
Insurance service expenses
Incurred claims and other directly attributable expenses – 110,057 13,605 123,662 – 112,659 14,292 126,951
Changes that relate to past service – changes in the FCF relating to the LIC – 6,764 (4,986) 1,778 – (3,618) (9,669) (13,287)
Amortisation of insurance acquisition cash flows 14,057 – – 14,057 12,943 – – 12,943
14,057 116,821 8,619 139,497 12,943 109,041 4,623 126,607
Insurance service result (174,189) 116,821 8,619 (48,749) (168,533) 109,041 4,623 (54,869)
Net finance income from insurance contracts issued – 10,170 – 10,170 – 6,043 – 6,043
Total changes in the Profit or Loss Account (174,189) 126,991 8,619 (38,579) (168,533) 115,0 8 4 4,623 (48,826)
Changes in the Statement of Comprehensive Income
Net finance income/(expense) from insurance contracts issued – 12,436 – 12,436 – (23,602) – (23,602)
Total changes in Statement of Comprehensive Income – 12,436
– 12,436 – (23,602) – (23,602)
Cash flows
Premiums received 206,189 – – 206,189 181,301 – – 181,301
Claims and other insurance services expenses paid – (102,720) – (102,720) – (99,565) – (99,565)
Insurance acquisition cash flows (16,828) – – (16,828) (12,588) – – (12,588)
Total cash flows 189,361 (102,720) – 86,641 168,713 (99,565) – 69,14 8
Closing insurance contract liabilities 63,008 258,358 53,473 374,839 47,8 3 6 221,651 44,854 314,341
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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Notes to the Consolidated Financial Statements continued
3.2. Movements in insurance and reinsurance contract balances
3.2.2. Reinsurance contracts held
Reconciliation of assets for remaining coverage and the assets for incurred claims
In £’k
2023 2022 Restated
(1)
Assets for
remaining
coverage Assets for incurred claims TOTAL
Assets for
remaining
coverage Assets for incurred claims TOTAL
Estimates
of present value
of future cash
ows
Risk adjustment
for non-nancial
risk
Estimates
of present value
of future cash
flows
Risk adjustment
for non-financial
risk
Opening reinsurance contract assets 5,675 97, 9 9 6 33,283 136,954 2,812 114,510 30,574 147,89 6
Changes in the Profit or Loss Account
Net income/(expense) from reinsurance contracts held
Reinsurance expense (28,506) – – (28,506) (24,958) – – (24,958)
Incurred claims recovery – 16,738 9,103 25,841 – 16,409 9,423 25,832
Changes that relate to past service – changes in the FCF relating to incurred
claims recovery – 6,859 (1,168) 5,691 – (12,814) (6,714) (19,528)
(28,506) 23,597 7, 935 3,026 (24,958) 3,595 2,709 (18,654)
Net finance income for reinsurance contracts held – 3,588 – 3,588 – 3,19 5 – 3,19 5
Total changes in the Profit or Loss Account (28,506) 27,185 7,935 6,614 (24,958) 6,790 2,709 (15,459)
Changes in the Statement of Comprehensive Income
Net finance income/(expense) for reinsurance contracts held – 5,432 – 5,432 – (12,924) – (12,924)
Total changes in Statement of Comprehensive Income – 5,432 – 5,432 – (12,924) – (12,924)
Cash flows
Premiums paid 24,906 – – 24,906 27,821 – – 27,821
Recoveries received – (7,180) – (7,180) – (10,380) – (10,380)
Total cash flows 24,906 (7,180) – 17,726 27,821 (10,380) – 17,4 41
Closing reinsurance contract assets 2,075 123,433 41,218 166,726 5,675 97,99 6 33,283 136,954
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
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Notes to the Consolidated Financial Statements continued
3.3. Assets for insurance acquisition cash flows
£’k
Restated balance as at 1 January 2022 6,317
Amounts incurred during the year 12,588
Amounts derecognised and included in measurement of insurance contracts (12,943)
Restated balance as at 31 December 2022 5,962
Amounts incurred during the year 16,828
Amounts derecognised and included in measurement of insurance contracts (14,057)
Balance as at 31 December 2023 8,733
The following table sets out when the Group expects to derecognise assets for insurance acquisition cash flows after the reporting date:
£’k
31 December 2023
Less than one year 8,032
More than one year 701
8,733
31 December 2022
Less than one year 5,437
More than one year 525
5,962
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Notes to the Consolidated Financial Statements continued
3.4. Claims development
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). These triangles present estimated costs including any risk adjustment
and associated liability related to the future cost of handling claims.
Gross of reinsurance
Accident year
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total
£’k £’k £’k £’k £’k £’k £’k £’k £’k £’k £’k
Estimates of undiscounted gross cumulative claims
At the end of the accident year 75,649 103,599 111,518 165,707 120,077 126,981 101,965 89,233 136,811 133,334
– One year later 65,639 90,133 100,935 131,803 108,089 122,663 97,95 3 93,309 131,433
– Two years later 62,039 82,537 94,294 123,651 107,98 8 127,225 93,390 90,941
– Three years later 60,301 79,845 91,336 122,674 113,257 131,254 8 8 ,19 2
– Four years later 5 9,149 77,09 5 90,789 124,128 118 ,6 00 135,173
– Five years later 58,367 7 7,0 3 8 92,629 137,472 125,038
– Six years later 58,718 77,4 6 9 101,655 137,660
– Seven years later 58,438 77,729 101,124
– Eight years later 58,380 77,04 0
– Nine years later 58,341
Current estimate of cumulative claims 58,341 77,0 40 101,124 137,660 125,038 13 5,173 8 8,19 2 90,941 131,4 33 133,334
Cumulative gross claims paid (58,238) (76,024) (93,623) (89,583) (99,233) (106,817) (67,881) (59,366) (65,812) (4 3,10 2)
Undiscounted gross liabilities – accident years from 2014 to 2023 103 1,016 7, 501 48,077 25,805 28,356 20,311 31,575 65,621 90,232 318,597
Undiscounted gross liabilities – accident years from 2013 and before 43,435
Effect of discounting (50,201)
Total gross liabilities for incurred claims (“LIC”) 311,831
Liabilities for remaining coverage (“LRC”) 63,008
Total gross liabilities included in the Statement of Financial Position 374,839
The unshaded numbers are undiscounted, but otherwise presented on an IFRS 17 basis. The shaded numbers have not been restated under IFRS 17 and reflect the numbers as previously reported under IFRS 4. The
primary difference between the IFRS 17 and IFRS 4 numbers presented here relates to the risk adjustment.
The gross liabilities for incurred claims and gross liabilities for remaining coverage per product is given below:
LIC LRC Total
Motor vehicle 261,946 52,841 314,787
Motorcycle 27,765 3,738 31,503
Taxi 22,120 6,429 28,549
Total 311,831 63,008 374,839
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.4. Claims development continued
Net of reinsurance
Accident year
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total
£’k £’k £’k £’k £’k £’k £’k £’k £’k £’k £’k
Estimates of undiscounted net cumulative claims
At the end of the accident year 74,609 97, 28 8 104,808 106,478 111, 4 33 115 ,011 85,723 81,161 106,049 102,185
– One year later 65,639 85,814 93,664 96,446 99,649 111,5 50 81,882 82,487 102,066
– Two years later 60,953 81,16 4 87,824 91,806 98,641 111, 3 47 80,990 8 0,146
– Three years later 59,741 77,8 6 9 85,243 91,179 99,071 111, 342 78,353
– Four years later 59,008 76,409 84,995 88,545 100,893 112,156
– Five years later 58,259 76,254 84,891 92,002 103,254
– Six years later 58,481 76 ,011 86,784 92,375
– Seven years later 58,19 8 76,581 86,536
– Eight years later 58,147 76,425
– Nine years later 5 8,115
Current estimate of cumulative claims 58,115 76,425 86,536 92,375 103,254 112,156 78,353 80,146 102,066 102,185
Cumulative net claims paid (58,020) (75,741) (83,819) (8 5,158) (95,501) (101,061) (65,577) (59,366) (65,812) (4 3,102)
Undiscounted net liabilities – accident years from 2014 to 2023 95 684 2,717 7, 217 7,753 11,095 12,776 20,780 36,254 59,083 158,454
Undiscounted net liabilities – accident years from 2013 and before 8,061
Effect of discounting (19,335)
Total net liabilities for incurred claims (“LIC”) 147,180
Net liabilities for remaining coverage (“LRC”) 60,933
Total net liabilities included in the Statement of Financial Position 208,113
The unshaded numbers are undiscounted, but otherwise presented on an IFRS 17 basis. The shaded numbers have not been restated under IFRS 17 and reflect the numbers as previously reported under IFRS 4. The
primary difference between the IFRS 17 and IFRS 4 numbers presented here relates to the risk adjustment.
The net liabilities for incurred claims and net liabilities for remaining coverage per product is given below:
LIC LRC Total
Motor vehicle 120,13 6 51,287 171,423
Motorcycle 14,391 3,610 18,001
Taxi 12,653 6,036 18,689
Total 147,180 60,933 208,113
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Notes to the Consolidated Financial Statements continued
3.5. Insurance revenue and expenses – Segmental disclosure
An analysis of insurance revenue, insurance service expenses and net expenses from reinsurance contracts held is included in the tables below. Additional information on amounts recognised in Profit or Loss and OCI is
included in the movements in insurance and reinsurance contract balances in Note 3.2.
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 brokerage 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.
2023 2022 Restated
(1)
Motor vehicles Motorcycle Taxi Total Motor vehicles Motorcycle Taxi Total
£’k £’k £’k £’k £’k £’k £’k £’k
Insurance revenue
Insurance revenue from contracts measured under the PAA 158,054 15,363 14,829 188,246 157,4 64 17, 8 26 6,18 6 181,476
Total insurance revenue 158,054 15,363 14,829 188,246 157,46 4 17,826 6,186 181,476
Insurance service expense
Incurred claims and other directly attributable expenses (91,688) (16,087) (15,887) (123,662) (94,492) (26,185) (6,274) (126,951)
Changes that relate to past service – changes in the FCF relating to the LIC (861) 1,796 (2,713) (1,778) 13,257 (358) 388 13,287
Amortisation of insurance acquisition cash flows (10,206) (1,953) (1,898) (14,057) (11,371) (879) (693) (12,943)
Total insurance service expense (102,755) (16,244) (20,498) (139,497) (92,606) (27, 4 22) (6,579) (126,607)
Net income/(expenses) from reinsurance contracts held
Reinsurance expenses – contracts measured under the PAA (23,800) (2,444) (2,262) (28,506) (21,257) (2,734) (967) (24,958)
Incurred claims recovery 17,367 5,947 2,527 25,841 17, 8 62 7,611 359 25,832
Changes that relate to past service – changes in the FCF relating to incurred claims
recovery 4,758 (1,184) 2,117 5,691 (19,337) 30 (221) (19,528)
Total net income/(expenses) from reinsurance contracts held (1,675) 2,319 2,382 3,026 (22,732) 4,907 (829) (18,654)
Total insurance service result 53,624 1,438 (3,287) 51,775 4 2,126 (4,689) (1,222) 36,215
Other than reinsurance assets and insurance liabilities (see Note 3.1), 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.
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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Notes to the Consolidated Financial Statements continued
3.6. 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 within the UK, which usually cover a 12-month duration. For these contracts, the most significant risks arise from
severe weather conditions or single catastrophic events. For longer-tail claims that take some years to settle, there is also inflation risk.
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.
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. 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.
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 has not been possible to quantify the sensitivity of individual, specific
assumptions such as legislative changes.
The following analysis is performed for reasonably possible movements in key assumptions 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.
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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Notes to the Consolidated Financial Statements continued
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. The impact of a 10% decrease will have a similar but opposite impact.
Decrease
in profit aer tax
Decrease
in total equity
2023
2022
Restated
(1)
2023
2022
Restated
(1)
At 31 December £’k £’k £’k £’k
Insurance risk
Impact of a 10% increase in gross loss ratio (8,573) (8,864) (8,573) (8,864)
Impact of a 10% increase in gross outstanding claims (9,430) (9,737) (9,430) (9,737)
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
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. The impact of a 10% decrease will have a similar but opposite impact.
Decrease
in profit aer tax
Decrease
in total equity
2023
2022
Restated
(1)
2023
2022
Restated
(1)
At 31 December £’k £’k £’k £’k
Insurance risk
Impact of a 10% increase in net loss ratio (11,353) (11,579) (11,353) (11,579)
Impact of a 10% increase in net outstanding claims (12,738) (11,920) (12,738) (11,920)
(1) See Note 1.3.1 IFRS 17 “Insurance Contracts”
The impact of a 1% increase in the discount rates will increase the 2023 total equity by £2,259k. The impact of a 1% decrease in the discount rate will decrease the
2023 total equity by £2,763k.
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 financial
position, including its assessment of the liability for incurred claims. 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.
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.6. Underwriting risk continued
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Notes to the Consolidated Financial Statements continued
3.7. Insurance related credit risk
Key insurance related areas where the Group is exposed to credit default risk are:
– 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. 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.
The following tables demonstrate the Group’s exposure to credit risk in respect of overdue insurance debt and counterparty creditworthiness.
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 2023 £’k £’k £’k £’k £’k
Reinsurance contracts assets
(1)
197,591 – – – 197, 591
Insurance receivables
(2)
54,650 62 – – 54,712
Total 252,241 62 – – 252,303
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 Restated
(3)
£’k £’k £’k £’k £’k
Reinsurance contracts assets
(1)
166,996 – – – 166,996
Insurance receivables
(2)
31,364 63 – – 31,427
Total 198,360 63 – – 198,423
(1) Undiscounted
(2) Included within ‘Insurance contract liabilities’
(3) See Note 1.3.1 IFRS 17 “Insurance Contracts”
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £’k £’k £’k £’k £’k £’k £’k
Reinsurance contracts assets
(1)
– 128,942 68,649 – – – 197,591
Insurance receivables
(2)
– – – – – 54,712 54,712
Total – 128,942 68,649 – – 54,712 252,303
AAA AA+ to AA- A+ to A- BBB+ to BBB-
BB+ and
below Not rated Total
At 31 December 2022 Restated
(3)
£’k £’k £’k £’k £’k £’k £’k
Reinsurance contracts assets
(1)
– 111, 9 95 55,001 – – – 166,996
Insurance receivables
(2)
– – – – – 31,427 31,427
Total – 111,9 95 55,001 – – 31,427 198,423
(1) Undiscounted
(2) Included within ‘Insurance contract liabilities’
(3) See Note 1.3.1 IFRS 17 “Insurance Contracts”
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
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Notes to the Consolidated Financial Statements continued
3.8. Net financial result
2023
Insurance
related
Non-insurance
related Total
Notes £’k £’k £’k
Investment income
Interest income on financial assets using effective interest rate method 4.5 3,506 269 3,775
Amounts recognised in OCI 4.6 9,284 – 9,284
Total investment income 12,790 269 13,059
Insurance finance expenses from insurance contracts issued
Interest accreted (10,170) – (10,170)
Effect of changes in interest rates and other financial assumptions (12,436) – (12,436)
(22,606) – (22,606)
Reinsurance finance income from reinsurance contracts held
Interest accreted 3,588 – 3,588
Effect of changes in interest rates and other financial assumptions 5,432 – 5,432
9,020 – 9,020
Net insurance finance expense (13,586) – (13,586)
Net financial results (796) 269 (527)
Represented by:
Amounts recognised in Profit or Loss (3,076) 269 (2,807)
Amounts recognised in OCI 2,280 – 2,280
Total (796) 269 (527)
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Notes to the Consolidated Financial Statements continued
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS continued
3.8. Net financial result continued
2022
Insurance related
Non-insurance
related Total
Notes £’k £’k £’k
Investment income
Interest income on financial assets using effective interest rate method 4.5 1,627 40 1,667
Realised fair value gains on debt securities 4.5 22 – 22
Amounts recognised in OCI 4.6 (14,207) – (14,207)
Total investment income (12,558) 40 (12,518)
Insurance finance expenses from insurance contracts issued
Interest accreted (6,043) – (6,043)
Effect of changes in interest rates and other financial assumptions 23,602 – 23,602
17, 5 5 9 – 17,559
Reinsurance finance income from reinsurance contracts held
Interest accreted 3,19 5 – 3,19 5
Effect of changes in interest rates and other financial assumptions (12,924) – (12,924)
(9,729) – (9,729)
Net insurance finance expense 7,8 30 – 7,8 3 0
Net financial results (4,728) 40 (4,688)
Represented by:
Amounts recognised in Profit or Loss (1,19 9) 40 (1,15 9)
Amounts recognised in OCI (3,529) – (3,529)
Total (4,728) 40 (4,688)
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Notes to the Consolidated Financial Statements continued
RISK MANAGEMENT
Refer to the following notes for detail on risks relating to financial assets:
Investment concentration risk – Note 4.2.1
Interest rate risk – Note 4.2.2
Credit risk – Note 4.4
Liquidity risk – Note 6
4. FINANCIAL ASSETS
The Group’s financial assets are summarised below:
2023 2022
Notes £’k £’k
Cash and cash equivalents 4.1 35,079 18,502
Debt securities held at fair value through other comprehensive income 4.2 264,679 229,15 8
Receivables 4.3 87 7
Total 299,845 247,6 6 7
4.1. 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.
2023 2022
£’k £’k
Cash at bank and on hand 12,890 13,16 2
Money market funds 22,189 5,340
Total 35,079 18,502
Cash held in money market funds has 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.
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Notes to the Consolidated Financial Statements continued
4.2. 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 4.4.
The Group’s debt securities held at fair value through other comprehensive income are summarised below:
2023 2022
£’k % holdings £’k % holdings
Government bonds 107,0 40 40.4% 87,151 3 8.1%
Government-backed securities 81,942 31.0% 80,753 35.2%
Corporate bonds 75,697 28.6% 61,254 26.7%
Total 264,679 100.0% 229,158 100.0%
4. FINANCIAL ASSETS continued
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Notes to the Consolidated Financial Statements continued
4.2.1. 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 2023 £’k £’k £’k £’k % holdings
United Kingdom 107,0 4 0 – 32,364 139,404 52.7%
Europe – 50,982 28,736 79,718 30.1%
North America – 28,284 12,643 40,927 15.5%
Australasia – – 1,954 1,954 0.7%
Asia – 2,676 – 2,676 1.0%
Total 107,0 4 0 81,942 75,697 264,679 100.0%
Government
bonds
Government-
backed securities Corporate bonds Total
At 31 December 2022 £’k £’k £’k £’k % holdings
United Kingdom 87,151 101 25,942 113,19 4 49.4%
Europe – 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 2 29,15 8 100.0%
4. FINANCIAL ASSETS continued
4.2. Debt securities held at fair value through other comprehensive income continued
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Notes to the Consolidated Financial Statements continued
The Group’s exposure by investment type for government-backed securities and corporate bonds is outlined below:
Agency Supranational Total
At 31 December 2023 £’k £’k £’k
Government-backed securities 40,310 41,632 81,942
% of holdings 49.2% 50.8% 100.0%
Financial Industrial Utilities Total
At 31 December 2023 £’k £’k £’k £’k
Corporate bonds 40,973 31,117 3,607 75,697
% of holdings 54.1% 41.1% 4.8% 100.0%
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%
4. FINANCIAL ASSETS continued
4.2. Debt securities held at fair value through other comprehensive income continued
4.2.1. Investment concentration risk continued
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Notes to the Consolidated Financial Statements continued
4.2.2. Interest rate risk
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.
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.
At 31 December
Decrease
in profit aer tax
Decrease
in total equity
2023 2022 2023 2022
£’k £’k £’k £’k
Interest rate
Impact of a 100-basis point increase in interest rates on debt securities at FVOCI – – (2,758) (1,940)
Impact of a 200-basis point increase in interest rates on debt securities at FVOCI – – (5,516) (3,881)
4.2.3. 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.
4. FINANCIAL ASSETS continued
4.2. Debt securities held at fair value through other comprehensive income continued
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Notes to the Consolidated Financial Statements continued
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 2023 £’k £’k £’k £’k
Assets held at fair value
Debt securities held at FVOCI 264,679 – – 264,679
Total 264,679 – – 264,679
Level 1 Level 2 Level 3 Total
As at 31 December 2022 £’k £’k £’k £’k
Assets held at fair value
Debt securities held at FVOCI 229,15 8 – – 229,158
Total 229,15 8 – – 229,158
Transfers between levels
There have been no transfers between levels during the year (2022: no transfers).
4. FINANCIAL ASSETS continued
4.2. Debt securities held at fair value through other comprehensive income continued
4.2.3. Fair value continued
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Notes to the Consolidated Financial Statements continued
4.3. Receivables
ACCOUNTING POLICY
Classication
The Group classifies its 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 principal and interest
Recognition and measurement
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, 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
Receivables 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 receivables comprise of:
2023 2022
£’k £’k
Other debtors 87 7
Total 87 7
The estimated fair values of receivables are the discounted amounts of the estimated future cash flows expected to be received.
The carrying value of receivables approximates fair value. The provision for expected credit losses is based on the recoverability of the individual receivables.
The Group calculated ECL on receivables and has concluded that it is wholly immaterial and such further disclosure has not been included.
4. FINANCIAL ASSETS continued
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Notes to the Consolidated Financial Statements continued
4.4. 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 calculating 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 counterparty’s 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.
4. FINANCIAL ASSETS continued
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Notes to the Consolidated Financial Statements continued
Exposure by credit rating
AAA AA+ to AA- A+ to A- BBB+ to BBB- BB+ and below Not rated Total
At 31 December 2023 £’k £’k £’k £’k £’k £’k £’k
UK government bonds – 107,0 4 0 – – – – 107,040
Government-backed securities 81,942 – – – – – 81,942
Corporate bonds – 4,153 51,020 20,524 – – 75,697
Receivables – – – – – 87 87
Cash and cash equivalents 22,189 51 12,839 – – – 35,079
Total 104,131 111,244 63,859 20,524 – 87 299,845
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 – 87,151 – – – – 87,151
Government-backed securities 80,031 722 – – – – 80,753
Corporate bonds – 2,839 41,235 17,18 0 – – 61,254
Receivables – – – – – 7 7
Cash and cash equivalents 5,340 52 13,110 – – – 18,502
Total 85,371 90,764 54,345 17,18 0 – 7 247,6 6 7
With exception of receivables, all the Group’s financial assets are investment grade (AAA to BBB).
Analysis of credit risk and allowance for ECL
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 2023 £’k £’k £’k
Government bonds 107,0 4 0 (3) 107,037
Government-backed securities 81,942 (4) 81,938
Corporate bonds 75,697 (30) 75,667
Receivables 87 – 87
Cash and cash equivalents 35,079 – 35,079
Total 299,845 (37) 299,808
Gross carrying
amount Allowance for ECL Net amount
At 31 December 2022 £’k £’k £’k
Government bonds 87,151 (3) 87,14 8
Government-backed securities 80,753 (2) 80,751
Corporate bonds 61,254 (27) 61,227
Receivables 7 – 7
Cash and cash equivalents 18,502 – 18,502
Total 247,6 67 (32) 247,6 3 5
4. FINANCIAL ASSETS continued
4.4. Credit risk continued
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149
Notes to the Consolidated Financial Statements continued
4.5. 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.
2023 2022
£’k £’k
Interest income on financial assets using effective interest rate method
Interest income from debt securities 3,131 1,567
Interest income from cash and cash equivalents 644 100
Total 3,775 1,667
4.6. 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.
2023 2022
£’k £’k
Profit or loss
Realised fair value gains on debt securities – 22
Realised fair value gains on debt securities reclassified to Profit or Loss – 22
Other comprehensive income
Unrealised fair value gains/(losses) on debt securities 9,278 (14,175)
Expected credit loss 6 (32)
Unrealised fair value gains/(losses) on debt securities through Other Comprehensive Income 9,284 (14,207)
Net gains/(losses) from fair value adjustments on financial assets 9,284 (14,185)
4. FINANCIAL ASSETS continued
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Sabre Insurance Group plc Annual Report and Accounts 2023
150
Notes to the Consolidated Financial Statements continued
5. PAYABLES
ACCOUNTING POLICY
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. Payables are carried at
amortised cost.
2023 2022
£’k £’k
Trade and other creditors 2,149 760
Other taxes 7,551 4,348
Total 9,700 5,10 8
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 outflows.
The liquidity of the Group’s insurance and financial liabilities and supporting assets is given in the tables below:
Total Up to 1 year 1–2 years 3–4 years 5–10 years Over 10 years
At 31 December 2023 £’k £’k £’k £’k £’k £’k
Cash and cash equivalents
(1)
35,079 35,079 – – – –
UK government bonds 107,0 4 0 22,008 40,649 44,383 – –
Government-backed securities 81,942 57,72 2 17, 241 6,979 – –
Corporate bonds 75,697 8,987 49,953 16,757 – –
Receivables 87 87 – – – –
Reinsurance contract assets 197, 592 68,215 53,543 26,409 18,452 30,973
Total 497,437 192,098 161,386 94,528 18,452 30,973
Total Up to 1 year 1–2 years 3–4 years 5–10 years Over 10 years
At 31 December 2023 £’k £’k £’k £’k £’k £’k
Payables 9,700 9,700 – – – –
Insurance contract liabilities
(2)
300,593 83,152 110,871 46,344 24,978 35,248
Total 310,293 92,852 110,871 46,344 24,978 35,248
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) Includes money market funds with no notice period for withdrawal
(2) Excludes the liability for remaining coverage and effect of discounting
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Notes to the Consolidated Financial Statements continued
Total Up to 1 year 1–2 years 3–4 years 5–10 years Over 10 years
At 31 December 2022 Restated
(3)
£’k £’k £’k £’k £’k £’k
Cash and cash equivalents
(1)
18,502 18,502 – – – –
UK government bonds 87,151 14,463 26,470 38,992 7,2 26 –
Government-backed securities 80,753 5 ,119 69,693 5,941 – –
Corporate bonds 61,254 4,426 44,514 12,314 – –
Receivables 7 7 – – – –
Reinsurance contract assets 166,997 40,816 36,280 32,672 30,986 26,243
Total 414,664 83,333 176,957 89,919 38,212 26,243
Total Up to 1 year 1–2 years 3–4 years 5–10 years Over 10 years
At 31 December 2022 Restated
(3)
£’k £’k £’k £’k £’k £’k
Payables 5,10 8 5,108 – – – –
Insurance contract liabilities 28 3,118 75,141 88,842 51,935 37,759 29,441
Total 288,226 80,249 88,842 51,935 37,759 29,441
(1) Includes money market funds with no notice period for withdrawal
(2) Excludes the liability for remaining coverage and effect of discounting
(3) See Note 1.3.1 IFRS 17 ‘Insurance Contracts’
6. LIQUIDITY RISK continued
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Notes to the Consolidated Financial Statements continued
7. OTHER INCOME
ACCOUNTING POLICY
Other income consists of brokerage fees 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.
2023 2022
£’k £’k
Administration fees 495 1,042
Brokerage and other fee income
(1)
737 742
Total 1,232 1,784
Other income relates to auxiliary products and services, including brokerage and administration fees, all relating to the Motor Vehicle product.
(1) Restated from previous reporting periods. This line now combines both ‘Marketing’ and ‘Fee income from the sale of auxiliary products and services’ disclosed separately in previous
reporting period.
8. OTHER OPERATING EXPENSES
2023 2022
Notes £’k £’k
Employee expenses 13,869 12,536
Property expenses 689 428
IT expense including IT depreciation 5,961 5,043
Other depreciation 59 17
Industry levies 5,936 5,913
Policy servicing costs 2,491 2,164
Other operating expenses 3,328 2,958
Movement in expected credit loss on debt securities 6 (34)
Impairment loss on owner occupied properties 333 –
Before adjustment for directly attributable claims expenses 32,672 29,025
Adjusted for:
Reclassification of directly attributable claims expenses (6,085) (6,210)
Total operating expenses 26,587 22,815
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Notes to the Consolidated Financial Statements continued
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.
The aggregate remuneration of those employed by the Group’s operations comprised:
2023 2022
£’k £’k
Wages and salaries 10,079 8,988
Social security expenses 1,276 1,213
Contributions to defined contribution plans 557 508
Equity-settled share-based payment 1,606 1,603
Other employee expenses 351 224
Before adjustment for directly attributable claims expenses 13,869 12,536
Adjusted for:
Reclassification of directly attributable claims expenses (4,146) (4,783)
Employee expenses 9,723 7,75 3
8. OPERATING EXPENSES continued
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154
Notes to the Consolidated Financial Statements continued
8.2. Number of employees
The table below analyses the average monthly number of persons employed by the Group’s operations.
2023 2022
Operations 129 123
Support 28 28
Total 157 151
8.3. Directors’ remuneration
Amounts paid to Directors are disclosed within the Annual Report on Directors’ Remuneration on pages 81 to 91.
8.4. Auditor’s remuneration
The table below analyses the Auditor’s remuneration in respect of the Group’s operations.
2023 2022
£’k £’k
Audit of these financial statements 195 180
Audit of financial statements of subsidiaries of the Group 251 175
Audit fees in relation to IFRS 17 transition 190 85
Total audit fees 636 440
Fees for non-audit services – Audit-related assurance services 105 79
Fees for non-audit services – Other non-audit services – –
Total non-audit fees 105 79
Total auditor remuneration 741 519
The above fees exclude irrecoverable VAT of 20%.
8. OPERATING EXPENSES continued
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Notes to the Consolidated Financial Statements continued
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of owned and leased assets that do not meet the definition of investment property.
2023 2022
£’k £’k
Owner-occupied property 3,600 3,825
Office equipment 652 32
IT equipment 136 139
Total 4,388 3,996
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. Ofce and IT equipment
Office and IT 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.
Change in accounting estimate – useful lives
The Group previously estimated the useful lives of Office and IT equipment to be five years. From 1 January 2023 the Group changed the estimate for assets
purchased from 2023 onwards. The new estimate useful lives are disclosed below. All assets purchased in prior years will continue to be depreciated over five
years and the change will have no impact on the depreciation charge in future years of these assets.
Estimate useful lives are as follows:
Office equipment 3 to 10 years (Assets purchased prior to 2023: 5 years)
Computer equipment 3 to 5 years (Assets purchased prior to 2023: 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 asset’s 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.
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156
Notes to the Consolidated Financial Statements continued
Owner-
occupied
Ofce
equipment
IT
equipment Total
£’k £’k £’k £’k
Cost/Valuation
At 1 January 2023 4,250 41 409 4,700
Additions/Improvements 908 679 78 1,665
Disposals – – – –
Revaluation (800) – – (800)
At 31 December 2023 4,358 720 487 5,565
Accumulated depreciation and impairment
At 1 January 2023 425 9 270 704
Depreciation charge for the year – 59 81 140
Disposals – – – –
Impairment losses on revaluation 333 – – 333
At 31 December 2023 758 68 351 1,177
Carrying amount
As at 31 December 2023 3,600 652 136 4,388
Owner-
occupied
Oce
equipment
IT
equipment Total
£’k £’k £’k £’k
Cost/Valuation
At 1 January 2022 4,250 240 848 5,338
Additions/Improvements – 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 were either donated to charity or recycled at £NIL.
9. PROPERTY, PLANT AND EQUIPMENT continued
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157
Notes to the Consolidated Financial Statements continued
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 16 October 2023 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).
The fair value measurement of owner-occupied properties of £3,600k (2022: £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:
2023 2022
Owner-occupied £’k £’k
At 1 January 3,825 3,825
Additions/Improvements 908 –
Revaluation losses (800) –
Impairment losses (333) –
At 31 December 3,600 3,825
The fair value of owner-occupied includes a revaluation reserve of £NIL (2022: £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 Group’s profit after tax and equity:
Decrease
in profit aer tax
Decrease
In total equity
2023
£'k
2022
£'k
2023
£'k
2022
£'k
Owner-occupied property
Impact of a 15% decrease in property markets (309) (131) (309) (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 £3,349k (2022: £2,816k).
9. PROPERTY, PLANT AND EQUIPMENT continued
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Notes to the Consolidated Financial Statements continued
10. INCOME TAX EXPENSE
ACCOUNTING POLICY
The income tax expense 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.
2023 2022
£’k £’k
Current taxation
Charge for the year 4,444 2,645
4,444 2,645
Deferred taxation (Note 11)
Origination and reversal of temporary differences 1,104 297
1,104 297
Current taxation 4,444 2,645
Deferred taxation (Note 11) 1,104 297
Income tax expense for the year 5,548 2,942
Tax recorded in Other Comprehensive Income is as follows:
2023 2022
£’k £’k
Current taxation 31 –
Deferred taxation 599 (1,054)
630 (1,054)
The actual income tax expense differs from the expected income tax expense computed by applying the standard rate of UK corporation tax of 23.50% (2022:
19.00%) as follows:
2023 2022
£’k £’k
Profit before tax 23,613 14,020
Expected income tax expense 5,548 2,664
Effect of:
Expenses not deductible for tax purposes 12 9
Adjustment of deferred tax to average rate of 25% (1) 56
Adjustment in respect of prior periods – 9
Income/loss not subject to UK taxation – 6
Other Income Tax Adjustments (11) 198
Income tax expense for the year 5,548 2,942
Effective income tax rate 23.50% 20.98%
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Notes to the Consolidated Financial Statements continued
11. DEFERRED TAX
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
Movement in
insurance
finance reserve Total
£’k £’k £’k £’k £’k
At 1 January 2022 19 (26) 233 594 814 1,634
(Debit)/Credit to the Profit or Loss (19) 6 20 (6) (298) (297)
(Debit)/Credit to Other Comprehensive Income – – – 3,563 (2,509) 1,054
At 31 December 2022 – (20) 253 4,151 (1,993) 2,391
(Debit)/Credit to the Profit or Loss – (160) 215 (6) (1,153) (1,104)
(Debit)/Credit to Other Comprehensive Income – – – (2,149) 1,550 (599)
At 31 December 2023 – (180) 468 1,996 (1,596) 688
2023 2022
£’k £’k
Per Statement of Financial Position:
Deferred tax assets 2,464 4,404
Deferred tax liabilities (1,776) (2,013)
688 2,391
From 1 April 2023, The Finance Act 2021 increased the UK corporation tax rate 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 net impact of this
adjustment on the deferred tax balances is not material.
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Sabre Insurance Group plc Annual Report and Accounts 2023
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Notes to the Consolidated Financial Statements continued
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.
2023 2022
pence per share £’k pence per share £’k
Amounts recognised as distributions to equity holders in the period
Interim dividend for the current year 0.9 2,238 2.8 6,960
Final dividend for the prior year 1.7 4,228 9.3 23,172
2.6 6,466 12.1 3 0,132
Proposed dividends
Final dividend
(1)
8.1 20,250 1.7 4,250
(1) Subsequent to 31 December 2023, the Directors declared a final dividend for 2023 of 8.1p per ordinary share subject to approval at Annual General Meeting. This dividend will be accounted
for as an appropriation of retained earnings in the year ended 31 December 2023 and is not included as a liability in the Statement of Financial Position as at 31 December 2023.
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 2023 by £34k (2022: £118k).
13. OTHER ASSETS
2023 2022
£’k £’k
Prepayments and accrued income 774 1,278
Total 774 1,278
The carrying value of other assets approximates to fair value. There are no amounts expected to be recovered more than 12 months after the reporting date.
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Sabre Insurance Group plc Annual Report and Accounts 2023
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Notes to the Consolidated Financial Statements continued
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.
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 2023 and 31 December 2022. The Group 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 valuation uses fair value less cost to sell. The key assumption on which the Group has based this value is:
The market capitalisation of the Group as at 31 December 2023 of £378,500k (31 December 2022: £266,000k).
The Directors concluded that the recoverable amount of the business unit would remain in excess of its carrying value even after reasonably possible changes in
the key inputs and assumptions affecting its market value, such as a significant fall in demand for its products or a significant adverse change in the volume of
claims and increase in other expenses, before the recoverable amount of the business unit would reduce to less than its carrying value. Therefore, the Directors are
of the opinion that there are no indicators of impairment as at 31 December 2023.
15. SHARE CAPITAL
2023 2022
£’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 2023, The Sabre Insurance Group Employee Benefit Trust held 1,589,250 (2022: 1,431,576) of the 250,000,000 issued Ordinary Shares with a
nominal value of £1,589.25 (2022: £1,431.58) in connection with the operation of the Group’s share plans. Refer to Notes 16 and 17 for additional information on
own shares held.
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Notes to the Consolidated Financial Statements continued
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.
Shares bought/(sold) on open market
Number of shares
Average
price
(pence) £
As at 31 December 2021 843,725 267.4 6 3 2,256,652
Shares purchased 807, 9 81 141.293 1,141,621
Shares disposed – – –
Shares vested (220,130) 267.46 3 (588,766)
As at 31 December 2022 1,431,576 196.253 2,809,507
Shares purchased 435,758 145.021 631,940
Shares disposed – – –
Shares vested (278,084) 115.401 (320,912)
As at 31 December 2023 1,589,250 196.353 3,120,534
In thousands £’k
31 December 2022 2,810
31 December 2023 3,121
The Group recognised a total expense in the Profit or Loss for the year ended 31 December 2023 of £1,606k (2022: £1,603k), relating to equity-settled share-based
plans.
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
From 2021 the Group no longer issues awards under the LTIP Awards with performance conditions, but instead issues RSAs. Shares granted under the 2020 LTIP
did not meet the required performance measures and shares granted under the plan were forfeited in 2023.
LTIP Awards – Restricted Share Awards (“RSAs”)
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 1,244,964 (2022: 540,574) with an estimated fair value at grant date of £1,484k (2022: £1,238k) The
fair value is based on the closing share price on the grant date.
Future dividends are accrued separately and are not reflected in the fair value of the grant.
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Notes to the Consolidated Financial Statements continued
The table below details the movement in the RSA:
Number of shares
Weighted
Average Exercise
Price
Outstanding at 1 January 2022 4 41,684 NIL
Granted 540,574 NIL
Forfeited – NIL
Vested – NIL
Outstanding at 31 December 2022 982,258 NIL
Granted 1,244,964 NIL
Forfeited – NIL
Vested – NIL
Outstanding at 31 December 2023 2,227,222 NIL
The average unexpired life of RSAs is 1.4 years (2022: 1.4).
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 number of shares awarded under the scheme was NIL (2022: 171,234) with
an estimate fair value of £NIL (2022: £404k). Of this award, the number of shares awarded to Directors and Persons Discharging Managerial Responsibilities
(“PDMRs”) was NIL (2022: 144,659) with an estimated fair value of £NIL (2022: £341k). 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 SIPs 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 2023, 16,017 (2022: 12,317) matching shares were granted to employees with an estimated fair value of £24k (2022: £13k).
As at 31 December 2023, 40,940 (2022: 28,826) matching shares were held on behalf of employees with an estimated fair value of £62k (2022: £31k). The average
unexpired life of Matching Share awards is 1.8 years (2022: 1.5 years).
16. SHARE-BASED PAYMENTS continued
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Notes to the Consolidated Financial Statements continued
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 2021: 55 pence
SAYE 2022: 40 pence
SAYE 2023: 49 pence
The following table lists the inputs to the Black-Scholes model used to value the awards granted in respect of the 2023 SAYE scheme.
2023 SAYE
Share price at grant date 124.2 pence
Expected term 3 years
Expected volatility
(1)
59.4%
Continuously compounded risk-free rate 1.5%
Continuously compounded dividend yield 6%
Strike price at grant date 85.1 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.
The table below details the movement in the SAYE scheme:
Number of shares
Weighted
Average Exercise
Price
Outstanding at 1 January 2022 347,177 2.08
Granted 16 6,14 6 1.81
Forfeited (163,092) NIL
Vested – NIL
Outstanding at 31 December 2022 350,231 2.00
Granted 768,616 0.85
Forfeited (260,442) NIL
Vested – NIL
Outstanding at 31 December 2023 858,405 1.33
The average unexpired life of SAYE scheme is 1.5 years (2022: 1.5)
16. SHARE-BASED PAYMENTS continued
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Notes to the Consolidated Financial Statements continued
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 2023 was £3,121k (2022: £2,810k). The market value of the shares in the EBT as at 31 December 2023 was £2,422k (£1,523k).
Merger reserve
Sabre Insurance Group plc was incorporated as a limited company on 21 September 2017. On 11 December 2017, immediately prior to the Group’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.
Insurance/Reinsurance nance reserve
The insurance finance reserve comprises the cumulative insurance finance income and expenses recognised in Other Comprehensive Income.
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.
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Notes to the Consolidated Financial Statements continued
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 Principal 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
Other controlled entities
EBT – UK SIP Trust Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA
The Sabre Insurance Group EBT Trust Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
During the year ended 31 December 2023, the following related party companies have been dissolved/liquidated:
– Barbados TopCo Limited
– Barb IntermediateCo Limited
– Bard MidCo Limited
– Bard BidCo Limited
– Barb HoldCo Limited
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 2023, the Group donated no shares to the EBTs (2022: 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 81 to 91.
The aggregate amount paid to Directors during the year was as follows.
2023 2022
Remuneration 2,660 1,894
Contributions to defined contribution pension scheme 9 7
Shares granted under LTIP 912 864
Total 3,581 2,765
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Notes to the Consolidated Financial Statements continued
19. EARNINGS PER SHARE
Basic earnings per share
2023 2022
After tax
£’k
Per share
pence
Aer tax
£’k
Per share
pence
Profit for the year attributable to equity holders 18,065 7.27 11,078 4.45
Diluted earnings per share
2023
After tax
£’k
Weighted
average number
of shares (000s)
Per share
pence
Profit for the year attributable to equity holders 18,065 248,636 7.27
Net share awards allocable for no further consideration 2,201 (0.07)
Total diluted earnings 250,837 7.20
2022
Aer tax
£’k
Weighted
average number
of shares (000s)
Per share
pence
Profit for the year attributable to equity holders 11,078 248,865 4.45
Net share awards allocable for no further consideration 1,880 (0.03)
Total diluted earnings 250,745 4.42
20. 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 Group and its
subsidiaries since the Statement of Financial Position date.
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2023 2022
Notes £’k £’k
Assets
Cash and cash equivalents 23 861
Receivables
(1)
2 41 3
Other assets
(1)
32 211
Investments 3 451,606 450,000
Total assets 451,702 451,075
Liabilities
Payables
(1)
4 – 1,607
Other liabilities
(1)
380 91
Total liabilities 380 1,698
Equity
Share capital 250 250
Own shares (3,121) (2,810)
Merger reserve 236,949 236,949
Share-based payments reserve 2,686 2,407
Retained earnings 214,558 212,581
Total equity 451,322 449,377
Total equity and liabilities 451,702 451,075
No income statement is presented for Sabre Insurance Group plc as permitted by section 408 of the Companies Act 2006. The profit after tax of the Parent
Company for the period was £7,437k (2022: £103,094k loss after tax).
The attached notes on pages 172 to 175 form an integral part of these financial statements.
Parent Company Statement of Financial Position
As at 31 December 2023
The financial statements were approved by the
Board of Directors and authorised for issue on
18March 2024.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
(1) The description of the line item has been updated. The
change in description has had no impact on the
components of the balances.
– Receivables (31 December 2022: Debtors)
– Other assets (31 December 2022: Prepayments)
– Payables (31 December 2022: Creditors: Amounts
falling due within one year)
– Other liabilities (31 December 2022: Accruals)
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Ordinary
shareholders’
equity Own shares Merger reserve
Share-based
payments
reserve
Retained
earnings Total equity
£’k £’k £’k £’k £’k £’k
Balance as at 31 December 2021 250 (2,257) 369,515 1,841 212,794 582,143
Profit for the period attributable to the owners of the Company – – – – (103,094) (103,094)
Merger reserve transfer – – (132,566) – 132,566 –
Share-based payment expense – – – 566 447 1,013
Net movement in own shares – (553) – – – (553)
Dividends paid – – – – (30,132) (30,132)
Balance as at 31 December 2022 250 (2,810) 236,949 2,407 212,581 449,377
Profit for the period attributable to the owners of the Company – – – – 7,437 7,437
Share-based payment expense – – – 279 1,006 1,285
Net movement in own shares – (311) – – – (311)
Dividends paid – – – – (6,466) (6,466)
Balance as at 31 December 2023 250 (3,121) 236,949 2,686 214,558 451,322
Parent Company Statement of Changes in Equity
For the year ended 31 December 2023
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2023 2022
Notes £’k £’k
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year 7,437 (103,094)
Adjustments for:
Impairment of subsidiary – 132,566
Operating cash flows before movements in working capital 7,437 29,472
Movements in working capital:
Change in receivables (38) 124
Change in other assets 179 (7)
Change in payables (1,607) 1,607
Change in other liabilities 289 24
Net cash generated from operating activities 6,260 31,220
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in acquiring and disposing of own shares (632) (1,142)
Dividends paid (6,466) ( 3 0,132)
Net cash used by financing activities (7,098) (31,274)
Net decrease in cash and cash equivalents (838) (54)
Cash and cash equivalents at the beginning of the year 861 915
Cash and cash equivalents at the end of the year 23 861
Parent Company Statement of Cash Flows
For the year ended 31 December 2023
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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 2023, 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 Profit or Loss Account 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.
Notes To The Parent Company Financial Statements
For the year ended 31 December 2023
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Notes to the Parent Company Financial Statements continued
2. RECEIVABLES
2023 2022
£’k £’k
Due within one year
Amounts due from Group undertakings 14 –
Other debtors 27 3
As at 31 December 41 3
3. INVESTMENTS
The Company’s financial assets are summarised below:
2023 2022
£’k £’k
Investment in subsidiary undertakings 451,606 450,000
Total 451,606 450,000
3.1. Investment in subsidiary undertakings
ACCOUNTING POLICY – INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investment in subsidiaries is stated at cost less any impairment.
2023 2022
£’k £’k
As at 1 January 450,000 580,963
Additions 1,606 1,603
Impairment – (132,566)
As at 31 December 451,606 450,000
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 2023 and 31 December 2022. 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 2023 and 31 December 2022, the Company’s securities were traded on a liquid market, therefore market
capitalisation could be used as an indicator of value.
Having carried out this assessment the Board concluded, on the basis of the cautious assumptions outlined below, that the value in use is higher than the current
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Notes to the Parent Company Financial Statements continued
carrying value of the investment in subsidiary and no impairment is necessary.
Key assumptions
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.
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 8.4%, 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 16% 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 8% 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 23% around the central scenario.
In all these scenarios there is material headroom over the carrying value of the investment in subsidiary.
Name of subsidiary Place of incorporation Principal activity
Directly held by the Company
Binomial Group Limited United Kingdom Intermediate holding company
Indirectly held by the Company
Sabre Insurance Company Limited United Kingdom Motor insurance underwriter
3. INVESTMENTS continued
3.1. Investment in subsidiary undertakings continued
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Notes to the Parent Company Financial Statements continued
The registered office of each subsidiary is disclosed within Note 18 of the consolidated Group accounts.
4. PAYABLES
2023 2022
£’k £’k
Due within one year
Amounts due to Group undertakings – 1,607
As at 31 December – 1,607
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:
2023 2022
£’k £’k
Due from
Sabre Insurance Company Limited 14 (1,607)
Total 14 (1,607)
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 2 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.
Strategic Report Governance Financials
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Auditor's report
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Financial Statements
Parent Company
statements
Notes to the Parent Company
Financial Statements
Financial
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Sabre Insurance Group plc Annual Report and Accounts 2023
175
Financial Reconciliations
As at 31 December 2023
GROSS WRITTEN PREMIUM
2023
£’k
2022
£’k
Insurance revenue 188,246 181,476
Less: Instalment income (3,738) (3,300)
Less: Movement in unearned premium 40,590 (6,919)
Gross written premium 225,098 171,257
NET LOSS RATIO
2023
£’k
2022
£’k
Insurance service expense 139,497 126,607
Less: Amortisation of insurance acquisition cash flows (14,057) (12,942)
Less: Amounts recoverable from reinsurers for incurred claims (31,532) (6,304)
Less: Directly attributable claims expenses (6,085) (6,210)
Net claims incurred 87, 8 23 101,151
Insurance revenue 188,246 181,476
Less: Instalment income (3,738) (3,300)
Less: Reinsurance expense (28,506) (24,958)
Net earned premium 156,002 153,218
Net claims incurred 87, 8 23 101,151
Net earned premium 156,002 153,218
Net loss ratio 56.3% 66.0%
Strategic Report Governance Financials
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Financial Statements
Parent Company
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Notes to the Parent Company
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Sabre Insurance Group plc Annual Report and Accounts 2023
176
EXPENSE RATIO
2023
£’k
2022
£’k
Other operating expenses 26,587 22,815
Add: Amortisation of insurance acquisition cash flows 14,057 12,942
Add: Directly attributable claims expenses 6,085 6,210
Total operating expenses 46,729 41,967
Insurance revenue 188,246 181,476
Less: Instalment income (3,738) (3,300)
Less: Reinsurance expense (28,506) (24,958)
Net earned premium 156,002 153,218
Total operating expenses 46,729 41,967
Net earned premium 156,002 153,218
Expense ratio 30.0% 27. 4%
COMBINED OPERATING RATIO
2023
£’k
2022
£’k
Net loss ratio 56.3% 66.0%
Expense ratio 30.0% 27. 4%
Combined operating ratio 86.3% 93.4%
UNDISCOUNTED NET LOSS RATIO
2023
£’k
2022
£’k
Net claims incurred 87, 8 23 101,151
Add: Net impact of discounting 8,201 7,59 3
Undiscounted net claims incurred 96,024 108,744
Net earned premium 156,002 153,218
Undiscounted net loss ratio 61.6% 71.0%
UNDISCOUNTED COMBINED OPERATING RATIO
2023
£’k
2022
£’k
Undiscounted net loss ratio 61.6% 71.0%
Expense ratio 30.0% 27. 4%
Undiscounted combined operating ratio 91.6% 98.4%
Financial Reconciliations continued
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Financial Statements
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Sabre Insurance Group plc Annual Report and Accounts 2023
177
NET PROFIT MARGIN
2023
£’k
2022
£’k
Net claims incurred 87, 8 23 101,151
Total operating expenses 46,729 41,967
Total insurance expense 134,552 14 3,118
Insurance revenue 188,246 181,476
Less: Reinsurance expense (28,506) (24,958)
Net insurance revenue 159,740 156,518
Net profit margin 15.8% 8.6%
RETURN ON TANGIBLE EQUITY
2023
£’k
2022
£’k
IFRS net assets at year end 242,412 228,988
Less:
Goodwill at year end (156,279) (156,279)
Closing tangible equity 86,133 72,709
Opening tangible equity 72,709 93,797
Average tangible equity 79,421 83,253
Profit after tax 18,065 11,078
Return on tangible equity 22.7% 13.3%
SOLVENCY COVERAGE RATIO – PRE-DIVIDEND
2023
£’k
2022
£’k
2021
£’k
Solvency II net assets 121,099 91,191 110,114
Solvency capital requirement 58,998 56,516 52,955
Solvency coverage ratio – pre-dividend 205.3% 161.4% 207. 9%
SOLVENCY COVERAGE RATIO – POST-DIVIDEND
2023
£’k
2022
£’k
2021
£’k
Solvency II net assets 121,099 91,191 110,114
Less: Interim/Final dividend (20,250) (4,250) (23,250)
Solvency II net assets – post-dividend 100,849 86,941 86,864
Solvency capital requirement 58,998 56,516 52,955
Solvency coverage ratio – post-dividend 170.9% 153.8% 164.0%
Financial Reconciliations continued
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Sabre Insurance Group plc Annual Report and Accounts 2023
178
Acquisition cash ows
Cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts
(issued or expected to be issued) that are directly attributable to the portfolio of insurance contracts to
which the group belongs. Such cash flows include cash flows that are not directly attributable to individual
contracts or groups of insurance contracts within the portfolio.
Adjusted IFRS net assets
Equals the Group’s IFRS net assets, less Goodwill.
Asset for incurred claims (“AIC”)
The reinsurers’ share of the liability for incurred claims (“LIC”).
Asset for remaining coverage (“ARC”)
The reinsurers’ share of the liability for remaining coverage (“LRC”).
Combined operating ratio (“COR”)
The combined operating ratio is the ratio of total expenses (which comprises commission expenses and
operating expenses), and net insurance claims relative to net earned premium (“NEP”), expressed as a
percentage.
Contractual service margin (“CSM”)
This represents the unearned profit the entity will recognise as it provides insurance contract service under
the insurance contracts in the group. It is a component of the carrying amount of the asset or liability for a
group of insurance contracts.
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.
Effective tax rate
Effective tax rate is defined as the approximate tax rate calculated by dividing the Group’s profit before tax
by the tax charge going through the Profit or Loss Account.
Expense ratio
Expense ratio is a measure of total expenses (which comprises commission expenses and operating
expenses), and claims handling expenses, relative to net earned premium (“NEP”), expressed as a
percentage.
Fair value through OCI (“FVOCI”)
Unrealised gains and losses from the remeasurement of the fair value financial assets are recognised in the
Statement of Other Comprehensive Income (“OCI”).
Financial Reporting Council (“FRC”)
The UK's regulator for the accounting, audit and actuarial professions, promoting transparency and integrity
in business.
Glossary
Fullment cash ows (“FCF”)
An explicit, unbiased and probability-weighted estimate (i.e. 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.
Gross earned premium (“GEP”)
The proportions of premium attributable to the periods of risk that relate to the current accounting period. It
represents gross written premium (“GWP”) adjusted by the unearned premium provision at the beginning
and end of the accounting period, before deduction of reinsurance expense.
Gross written premium (“GWP”)
Gross written premium 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, before
deduction of reinsurance expense.
IFRS 17 “Insurance Contracts”
An accounting standard that addresses the establishment of principles for the recognition,
measurement,presentation and disclosure of insurance contracts within the scope of the standard
(Effective 1 January 2023).
IFRS net assets
The difference between the Group's total assets and total liabilities.
Insurance revenue
Gross earned premium (“GEP”) plus instalment income.
International Financial Reporting Standards (“IFRS”)
Accounting standards issued by the IFRS Foundation and the International Accounting Standards
Board(“IASB”).
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
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Sabre Insurance Group plc Annual Report and Accounts 2023
179
Liability for remaining coverage (“LRC”)
An entity’s obligation to:
a) investigate and pay valid claims under existing insurance contracts for insured events that have not yet
occurred (i.e. 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 (i.e. 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
Net claims incurred
Net claims incurred is equal to gross claims incurred less amounts recovered from reinsurers.
Net earned premium (“NEP”)
Gross earned premium (“GEP”) less reinsurance expense.
Net insurance revenue
Insurance revenue less reinsurance expense
Net loss ratio (“NLR”)
Net loss ratio measures net insurance claims, less claims handling expenses, relative to net earned
premium expressed as a percentage.
Net prot margin (“NPM”)
Net profit margin measures how much net profit is generated as a percentage of net insurance revenue.
Own Risk and Solvency Assessment (“ORSA”)
An prospective assessment of the Group's risks and solvency capital requirements.
Periodic Payment Order (“PPO”)
A compensation award as part of a claims settlement that involves making a series of annual payments to a
claimant over their remaining life to cover the costs of the care they will require.
Premium allocation approach (“PAA”)
Method for measuring insurance contracts under IFRS 17 “Insurance Contracts”
Glossary continued
Return on tangible equity
Return on tangible equity is measured as the ratio of the Group’s profit after tax to its average tangible
equity over the financial year, expressed as a percentage.
Risk adjustment for non-nancial risk
The compensation an entity requires for bearing the uncertainty about the amount and timing of the cash
flows that arises from non-financial risk as the entity fulfils insurance contracts.
Solvency capital ratio
The ratio of Own Funds (Solvency II capital) to Solvency Capital Requirement “SCR”.
Solvency Capital Requirement (“SCR”)
The total amount of capital that the Group must hold to cover the risks under the Solvency II regulatory
framework. The Group is required to maintain eligible own funds of at least 100% of the SCR.
The Group uses the Standard Formula to determine the SCR.
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Sabre Insurance Group plc Annual Report and Accounts 2023
180
Shareholders
Shareholder profile as at 31 December 2023
Balance Ranges
Total Number of
Holdings
Percentage of
Holders
Total Number of
Shares % Issued Capital
1-100 10 3.52% 471 0.00%
101-1,000 33 11. 6 2% 16,478 0.01%
1,001-10,000 60 21.13% 257,9 81 0.10%
10,001-100,000 60 21.13% 2,173,65 3 0.87%
100,001-1,000,000 76 26.76% 29,012,716 11.61%
1,000,001-999,999,999 45 18.84% 218,538,701 8 7. 41%
Total 284 100.00% 250,000,000 100.00%
Party Type No Of Holders
% of Holders
within Type Balance % Issued Capital
Male 37 13.03% 341,826 0.14%
Female 12 4.23% 22,462 0.01%
Nominee 180 63.38% 207,4 07,16 4 82.96%
Bank 1 0.35% 72 0.00%
Limited Company 24 8.45% 31,674,462 12.67%
Other Organisation 30 10.56% 10,554,014 4.22%
Total 284 100.00% 250,000,000 100.00%
Party Type No Of Holders
% of Holders
within Type Balance % Issued Capital
Private Individuals 49 17. 26% 364,288 0.15%
Nominee Companies 180 63.38% 207,4 07,16 4 82.96%
Limited & Public Limited Companies 24 8.45% 31,674,462 12.67%
Other Organisations & Banks 31 10. 91% 10,554,086 4.22%
Total 284 100.00% 250,000,000 100.00%
Share Price
London Stock Exchange, pence per 0.01 pence share
Highest 165.4pence
Lowest 94.0pence
Shareholder Information
2024 Financial Calendar
Full Year Results 19 March 2024
Trading Update 23 May 2024
Annual General Meeting 23 May 2024
Half Year Results 30 July 2024
Trading Update 17 October 2024
2024 Dividend Calendar
2023 Final Dividend Payment Dates
*
Ex-dividend date 25 April 2024
Record date 26 April 2024
Payment date 5 June 2024
2024 Interim Dividend Payment Dates
**
Ex-dividend date 22 August 2024
Record date 23 August 2024
Payment date 25 September 2024
* 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 Company’s Registrar at: Equiniti, Aspect House,
Spencer Road, Lancing, West Sussex, BN99 6DA.Shareholder helpline is +44 (0)371 384 2030 and +44
(0)371 384 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.
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Financial Statements
Parent Company
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Notes to the Parent Company
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Sabre Insurance Group plc Annual Report and Accounts 2023
181
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
+44 (0)371 384 2030 and +44 (0)371 384 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.
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
Directors, advisers and other information
Directors
Rebecca Shelley – Chair
Geoff Carter
Ian Clark
Karen Geary
Bryan Joseph
Alison Morris
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
5th Floor, 6 More London Place, London, SE1 2DA
Solicitors
Dickson Minto W.S.
16 Charlotte Square, Edinburgh,EH2 4DF
Shareholder Information continued
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Telephone: 020 7403 4099 www.sampsonmay.com
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The material used in this Report is from sustainable resources.
Thepaper mill and printer are both registered with the Forestry
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