| Half-Year Report 2022 Interim dividend announced in-line with policy |
| Sabre Insurance Group plc (the "Group", or "Sabre"), one of the UK's leading motor insurance underwriters, reports its half year results for the six months ended 30 June 2022. These interim accounts should be read in conjunction with our Half-Year Trading Update released on 14 July 2022. A copy of the Trading Update along with a recording of the associated Management presentation can be found on our website. There has been no material change in the reported figures since the Trading Update was released. |
SUMMARY OF RESULTS
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| Gross written premium | £91.8m | £78.2m | £169.3m |
| Net loss ratio | 71.6% | 44.9% | 51.1% |
| Expense ratio | 27.3% | 29.5% | 28.3% |
| Combined operating ratio | 98.9% | 74.4% | 79.4% |
| Adjusted profit before tax | £4.3m | £22.2m | £37.2m |
| Profit before tax | £4.3m | £22.2m | £37.2m |
| Adjusted profit after tax | £3.5m | £18.0m | £30.1m |
| Profit after tax | £3.5m | £18.0m | £30.1m |
| Ordinary interim dividend per share | 2.8p | 3.7p | 3.7p |
| Total interim distribution per share | 2.8p | 3.7p | 3.7p |
| Final dividend per share | N/A | N/A | 11.7p |
| Return on tangible equity (annualised) | 8.5% | 33.5% | 29.2% |
| Solvency coverage ratio (pre-interim/final dividend) | 173% | 185% | 208% |
| Solvency coverage ratio (post-interim/final dividend) | 160% | 169% | 164% |
* A reconciliation between IFRS and non-IFRS measures is given in the Appendix
| KEY HIGHLIGHTS - Sabre announces an interim dividend of 2.8p per share, in-line with the Group's dividend policy, having considered the Group's strong balance sheet and expected increase in profitability across the remainder of 2022 - Pre-dividend solvency capital ratio of 173%, post-dividend solvency capital ratio of 160% - The Group expects to announce a full-year ordinary dividend in-line with its dividend policy, which is to distribute 70% of profit after tax plus a potential special dividend, if appropriate |
| Geoff Carter, Chief Executive Officer of Sabre, commented: "I am pleased to present our interim accounts, in which we disclose our strong capital position at the half-year. We are pleased to report that we remain profitable and continue to generate capital and hold firm our view that such capital should be distributed to shareholders by way of a dividend where it is not required to grow or develop the business. Following the payment of the dividend, we remain at the top of our preferred solvency capital range of 140% to 160%. We are comfortable that distributing capital that would leave us within our capital range provides sufficient cover against any future capital strain and as such expect to be able to pay a further dividend for the full-year. Having taken decisive pricing action ahead of the market, we are confident that significant impacts of extraordinary, rapid inflation will be limited to 2022, with a rebound in profitability for 2023 and beyond."
|
| There will be a call for analysts and investors at 0830hrs. For details, please contact sabre@tulchangroup.com
ENQUIRIES Sabre Insurance Group investor.relations@sabre.co.uk Geoff Carter, Chief Executive Officer Adam Westwood, Chief Financial Officer
Tulchan Communications 020 7353 4200 James Macey White Simon Pilkington Guy Bates |
| DIVIDEND CALENDAR 2022 Interim Dividend Payment Dates | |
| Ex-dividend date Record date Payment date | 18 August 2022 19 August 2022 22 September 2022 |
| FORWARD-LOOKING STATEMENTS DISCLAIMER Cautionary statement This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Sabre's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Sabre's business, results of operations, financial position, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, Sabre disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement. The Sabre Insurance Group plc LEI number is 2138006RXRQ8P8VKGV98
|
| CFO Report |
FINANCIAL AND BUSINESS REVIEW
Highlights
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| Gross written premium | £91.8m | £78.2m | £169.3m |
| Net loss ratio | 71.6% | 44.9% | 51.1% |
| Combined operating ratio | 98.9% | 74.4% | 79.4% |
| Profit before tax | £4.3m | £22.2m | £37.2m |
| Adjusted profit after tax | £3.5m | £18.0m | £30.1m |
| Profit after tax | £3.5m | £18.0m | £30.1m |
| Solvency coverage ratio (pre dividend) | 173% | 185% | 208% |
| Solvency coverage ratio (post dividend) | 160% | 169% | 164% |
| Return on tangible equity (annualised) | 8.5% | 33.5% | 29.2% |
| The first half of the year has been heavily impacted by underlying cost inflation, and Sabre's response to these increasing costs. Overall, our assumed market inflation increased from c.10% to c.12% annually, which meant that significant price increases were needed to both meet the current levels of inflation and respond to the rapid increase in inflation against our previous assessment. Given market pricing remained low, Sabre's competitiveness was impacted as a result, meaning that whilst growth overall was strong, volumes in the motor book were subdued. Overall, motorcycle business contributed £16.9m to the H1 GWP, and taxi business £5.2m. The pricing action taken means that we are now pricing to our target combined operating ratio. The rapid increase in inflation has impacted both open prior-year claims and claims incurred during the year. This has resulted in a net loss ratio of 71.6%, well above Sabre's normal performance. Conversely, the expense ratio has decreased to 27.3%, a result of continued tight control of costs and increasing net earned premium. Overall, a net combined ratio of 98.9% has generated an underwriting profit, which when combined with non-risk income and investment returns has generated a profit before tax for the period of £4.3m (H1 2021: £22.2m). |
Revenue
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| Profit or loss |
| | |
| Gross written premium | £91.8m | £78.2m | £169.3m |
| Gross earned premium | £89.0m | £82.5m | £165.9m |
| Net earned premium | £77.5m | £72.7m | £145.4m |
| Other operating income | £1.0m | £1.0m | £2.1m |
| Customer instalment income | £1.8m | £1.9m | £3.9m |
| Interest revenue calculated using the effective interest method | £0.7m | £0.6m | £1.2m |
| |
| | |
| Other Comprehensive Income |
| | |
| Fair value (losses) / gains on debt securities through OCI | (£8.2m) | (£2.2m) | (£5.7m) |
| Revenues have grown strongly during H1 2022, with all of this growth coming through the new motorcycle and taxi partnerships. The motor book has lost some volume due to the necessary rate increases employed during the past 6 months to tackle inflation. We estimate that the current run-rate for motor business is c.20% down year-on-year and, while we expect this to improve considerably should market prices correct to adjust for current and past levels of inflation, we cannot predict exactly when this correction might happen. This is a consequence of our continued focus on profitability over growth. Other income remains proportional to business written. Investment returns are booked based on yield (effective interest) as the portfolio is run on a 'buy-and-hold' basis. Market value losses have been taken through other comprehensive income, and are expected to reverse as the bonds approach maturity. Movements in market value have little impact on the Group's solvency capital as they are largely offset by movements in the rate at which claims reserves are discounted. |
Operating Expenditure
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| Net insurance claims* | £55.5m | £32.7m | £74.2m |
| Current-year net loss ratio | 67.3% | 50.7% | 55.8% |
| Prior-year net loss ratio | 4.3% | (5.8%) | (4.7%) |
| Financial year net loss ratio | 71.6% | 44.9% | 51.1% |
| Net operating expenses | £21.2m | £21.4m | £41.2m |
| Expense ratio | 27.3% | 29.5% | 28.3% |
| Combined ratio | 98.9% | 74.4% | 79.4% |
* Net insurance claims shown here excludes £3.8m (6 months 2021: £3.9m, 12 months 2021: £6.8m) of claims handling expenses.
| The Group recorded a financial year net loss ratio of 71.6%. The current-year net loss ratio of 67.3% (H1 2021: 50.7%) is reflective of a number of factors unique to this period, primarily the impact of inflation on business written in 2021 and early 2022, the earn-through of COVID-19 related discounts and growth strain generated through the motorcycle and taxi business. The prior-year net loss ratio of 4.3% (H1 2021: (5.8%)) has been impacted by the rapid increase of inflation feeding through into open claims, indexation of reinsurance policies and the continued slow settlement of open claims. Gross loss ratio (i.e. excluding the effect of reinsurance) continues to be highly volatile, as movements on a small number of large claims can generate significant movements in the ratio over a short period. As such, we continue to focus on net loss ratio, which gives a far more accurate view of overall underwriting performance. Our expense ratio has reduced to 27.3% for H1 2022, against 28.3% for the full-year 2021 and 29.5% in H1 2021. This is reflective of an increase in net earned premium set against a cost base which remains well under control. |
Earnings per Share
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| Basic earnings per share | 1.39p | 7.22p | 12.09p |
| Diluted earnings per share | 1.38p | 7.15p | 11.98p |
| Earnings per share for the current and comparative period are calculated on the basis of the current capital structure. Diluted Earnings per share for H1 2022 is 1.38p compared to 7.15p for the comparative period in 2021, reflecting lower profit after tax reported in H1 2022 than in the comparative period. The difference between basic and diluted earnings per share reflects the maximum dilution effect of share awards which have been granted but which have not vested. |
Cash and Investments
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| | £'k | £'k | £'k |
| Government bonds | £82.3m | £85.1m | £86.2m |
| Government-backed securities | £80.6m | £85.7m | £83.9m |
| Corporate bonds | £64.3m | £66.1m | £64.6m |
| Cash and cash equivalents | £27.8m | £24.4m | £30.6m |
| The Group continues to hold a low-risk investment portfolio and sufficient cash to meet its future claims liabilities. The Group operates a 'buy-and-hold' strategy in which a proportion of the portfolio is invested in investment-grade corporate bonds, in order to achieve a steady return on invested capital while maintaining a majority of government-backed assets. The size of the overall invested portfolio has remained consistent with the prior reporting period, while the amount of cash held remains high, reflecting the continued importance of maintaining strong liquidity in the current environment. |
Insurance Liabilities
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| | £'k | £'k | £'k |
| Gross outstanding claims | £237.8m | £227.2m | £232.5m |
| Reinsurance assets | £93.7m | £97.9m | £103.6m |
| Net outstanding claims | £144.0m | £129.3m | £128.9m |
| The Group's insurance liabilities continue to reflect the underlying profitability and volume of business written. The Group continues to hold excess-of-loss reinsurance contracts across its entire book at an excess of £1.0m per claim. |
| Leverage The Group continues to hold no external debt. All of the Group's capital is considered 'Tier 1' under Solvency II. The Directors continue to hold the view that this currently allows the greatest operational flexibility for the Group. Dividends Where the Board believes that the Group holds capital which it considers surplus to the Group's requirements, the Group would intend to return such surplus capital to shareholders. This assessment is generally made at year-end, with capital distributed via a special full-year dividend. Under normal circumstances, the Board considers a Solvency II capital coverage ratio within the range of 140% to 160% to be appropriate, and will consider this when determining the potential for special dividends. The Board may revise the Group's dividend policy from time to time as it considers appropriate. The Board has declared an ordinary interim dividend of 2.8p per share (2021: 3.7p), in line with the Group's policy to pay an interim dividend equal to one third of the previous year's ordinary dividend. Auditor Rotation We are pleased to announce that following a successful competitive tender process, as part of our normal auditor rotation, PwC were appointed on 25 May 2022 as the Group's new external auditors. |
| CONDENSED CONSOLIDATED PROFIT OR LOSS ACCOUNT |
| |||
| |
| Unaudited | Unaudited | Audited |
|
|
| 6 months ended | 6 months ended | 12 months ended |
|
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| Notes | £'k | £'k | £'k |
| Gross written premium | 10 | 91,782 | 78,220 | 169,322 |
| Less: Reinsurance premium ceded | 10 | (2,856) | (1,860) | (21,233) |
| Net written premium | 10 | 88,926 | 76,360 | 148,089 |
| Less: Change in unearned premium reserve | |
| | |
| Gross amount | 3.1.1 | (2,734) | 4,284 | (3,426) |
| Reinsurers' share | 3.1.1 | (8,684) | (7,905) | 779 |
| Net earned premium |
| 77,508 | 72,739 | 145,442 |
| | |
| | |
| Interest income on financial assets using effective interest rate method | 4.4 | 673 | 610 | 1,210 |
| Net fair value gains/(losses) on derecognition of financial assets measured at fair value through OCI | | 24 | - | (16) |
| Instalment income | | 1,771 | 1,908 | 3,924 |
| Other operating income | 6 | 1,045 | 1,011 | 2,098 |
| Total income | | 81,021 | 76,268 | 152,658 |
| | |
| | |
| Insurance claims | 3.4 | (55,327) | (43,730) | (104,984) |
| Insurance claims recoverable from reinsurers | 3.4 | (3,994) | 7,192 | 23,969 |
| Net insurance claims | | (59,321) | (36,538) | (81,015) |
| | |
| | |
| Finance costs | | (4) | (8) | (16) |
| Commission expenses | | (6,626) | (6,348) | (12,942) |
| Operating expenses | 7 | (10,725) | (11,213) | (21,486) |
| Total expenses | | (17,355) | (17,569) | (34,444) |
|
| |
| | |
| Profit before tax | | 4,345 | 22,161 | 37,199 |
|
| |
| | |
| Tax charge | 8 | (886) | (4,160) | (7,059) |
| Profit for the period attributable to ordinary shareholders | | 3,459 | 18,001 | 30,140 |
| | |
| | |
| Basic Earnings Per Share (pence per share) | | 1.39 | 7.22 | 12.09 |
| Diluted Earnings Per Share (pence per share) | | 1.38 | 7.15 | 11.98 |
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
| ||
| | Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Profit for the period attributable to ordinary shareholders | 3,459 | 18,001 | 30,140 |
| |
| | |
| Items that are or may be reclassified subsequently to profit or loss |
| | |
| Fair value losses on debt securities | (8,212) | (2,176) | (5,658) |
| Realised (gains)/losses transferred to profit or loss account | (24) | - | 16 |
| Tax credit | 1,569 | 402 | 1,069 |
|
| (6,667) | (1,774) | (4,573) |
| |
| | |
| Items which will not be reclassified to profit or loss |
| | |
| Revaluation losses on owner-occupied properties | - | - | - |
| Tax credit | - | - | - |
|
| - | - | - |
| |
| | |
| Total other comprehensive loss for the period | (6,667) | (1,774) | (4,573) |
| |
| | |
| Total comprehensive (loss) / income for the period attributable to ordinary shareholders | (3,208) | 16,227 | 25,567 |
| CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
| ||||
|
|
| Unaudited at | Unaudited at | Audited at | |
|
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 | |
|
| Notes | £'k | £'k | £'k | |
| Assets | |
| | | |
| Goodwill | | 156,279 | 156,279 | 156,279 | |
| Property, plant and equipment | | 4,019 | 4,103 | 4,066 | |
| Right-of-use asset | | 62 | 311 | 187 | |
| Reinsurance assets | 3.1 | 93,713 | 97,912 | 112,312 | |
| Deferred tax assets | | 2,404 | 236 | 820 | |
| Deferred acquisition costs | 3.1.2 | 13,531 | 14,498 | 13,791 | |
| Insurance receivables | 3.2 | 42,105 | 38,989 | 38,003 | |
| Loans and other receivables | 4.2 | 39 | 13 | 74 | |
| Current tax assets | | 2,998 | 620 | - | |
| Prepayments, accrued income and other assets | | 1,381 | 1,702 | 821 | |
| Financial investments | 4.1 | 227,224 | 236,812 | 234,667 | |
| Cash and cash equivalents | 4.3 | 27,796 | 24,411 | 30,611 | |
| Total assets | | 571,551 | 575,886 | 591,631 | |
| | |
| | | |
| Equity | |
| | | |
| Issued share capital | | 250 | 250 | 250 | |
| Own shares | | (2,120) | (2,088) | (2,257) | |
| Merger reserve | | 48,525 | 48,525 | 48,525 | |
| FVOCI reserve | | (9,030) | 436 | (2,363) | |
| Revaluation reserve | | 831 | 831 | 831 | |
| Share-based payments reserve | | 1,618 | 1,513 | 1,841 | |
| Retained earnings | | 186,590 | 202,955 | 205,900 | |
| Total equity | | 226,664 | 252,422 | 252,727 | |
| | |
| | | |
| Liabilities | |
| | | |
| Insurance liabilities | 3.1 | 237,756 | 227,210 | 232,516 | |
| Unearned premium reserve | 3.1 | 93,510 | 83,066 | 90,776 | |
| Lease liability | | 60 | 317 | 193 | |
| Insurance payables | 3.3 | 6,140 | 4,223 | 7,115 | |
| Trade and other payables | 5.1 | 5,694 | 5,941 | 5,831 | |
| Current tax liabilities | | - | - | 580 | |
| Accruals | | 1,727 | 2,707 | 1,893 | |
| Total liabilities | | 344,887 | 323,464 | 338,904 | |
| Total equity and liabilities | | 571,551 | 575,886 | 591,631 | |
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
| ||
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| ORDINARY SHAREHOLDERS' EQUITY - at 1 January | 250 | 250 | 250 |
| At period end | 250 | 250 | 250 |
| |
| | |
| OWN SHARES - at 1 January | (2,257) | (1,494) | (1,494) |
| Net movement in own shares | 137 | (594) | (763) |
| At period end | (2,120) | (2,088) | (2,257) |
| |
| | |
| MERGER RESERVE - at 1 January | 48,525 | 48,525 | 48,525 |
| At period end | 48,525 | 48,525 | 48,525 |
|
|
| | |
| FVOCI RESERVE - at 1 January | (2,363) | 2,210 | 2,210 |
| Fair value losses on debt securities | (8,212) | (2,176) | (5,658) |
| Realised (gains)/losses transferred to profit or loss account | (24) | - | 16 |
| Tax credit | 1,569 | 402 | 1,069 |
| At period end | (9,030) | 436 | (2,363) |
| |
| | |
| REVALUATION RESERVE - at 1 January | 831 | 831 | 831 |
| Revaluation gains/(losses) on owner-occupied properties | - | - | - |
| Tax credit | - | - | - |
| At period end | 831 | 831 | 831 |
| |
| | |
| SHARE-BASED PAYMENT RESERVE - at 1 January | 1,841 | 1,817 | 1,817 |
| Settlement of share-based payments | (992) | (957) | (1,051) |
| Charge in respect of share-based payments | 769 | 653 | 1,075 |
| At period end | 1,618 | 1,513 | 1,841 |
| |
| | |
| RETAINED EARNINGS - at 1 January | 205,900 | 214,261 | 214,261 |
| Share-based payments | 403 | (139) | (115) |
| Profit for the period attributable to ordinary shareholders | 3,459 | 18,001 | 30,140 |
| Ordinary dividends paid | (23,172) | (29,168) | (38,386) |
| At period end | 186,590 | 202,955 | 205,900 |
| |
| | |
| Total equity at period end | 226,664 | 252,422 | 252,727 |
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
| |||
| | Unaudited | Unaudited | Audited | |
|
| 6 months ended | 6 months ended | 12 months ended | |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 | |
|
| £'k | £'k | £'k | |
| CASH FLOWS FROM OPERATING ACTIVITIES |
| | | |
| Profit before tax for the period | 4,345 | 22,161 | 37,199 | |
| Adjustments for: |
| | | |
| Depreciation of property, plant and equipment | 50 | 75 | 136 | |
| Depreciation of right-of-use assets | 124 | 125 | 249 | |
| Share-based payment - equity-settled schemes | 769 | 653 | 1,075 | |
| Investment return | (800) | (759) | (1,507) | |
| Interest on lease liability | 4 | 8 | 16 | |
| Expected credit loss | 17 | 21 | 16 | |
| Operating cash flows before movements in working capital | 4,509 | 22,284 | 37,184 | |
| Movements in working capital: |
| | | |
| Change in reinsurance assets | 18,599 | 2,009 | (12,391) | |
| Change in deferred acquisition costs | 260 | 293 | 1,000 | |
| Change in insurance receivables | (4,102) | (5,013) | (4,027) | |
| Change in loans and other receivables | 35 | 71 | 10 | |
| Change in prepayments, accrued income and other assets | (560) | (834) | 47 | |
| Change in insurance liabilities | 5,240 | 664 | 5,970 | |
| Change in unearned premium reserve | 2,734 | (4,284) | 3,426 | |
| Change in insurance creditors | (975) | (2,023) | 869 | |
| Change in trade and other payables | (137) | 411 | 301 | |
| Change in accruals | (166) | 262 | (552) | |
| Cash generated from operating activities before investment of insurance assets | 25,437 | 13,840 | 31,837 | |
| Taxes paid | (4,479) | (4,370) | (5,988) | |
| Net cash generated from operating activities before investment of insurance assets | 20,958 | 9,470 | 25,849 | |
| Interest and investment income received | 1,451 | 2,106 | 4,273 | |
| Net proceeds from the sale, maturity and purchases of invested assets | (1,464) | 5,922 | 3,191 | |
| Net cash generated from operating activities | 20,945 | 17,498 | 33,313 | |
| CASH FLOWS FROM INVESTING ACTIVITIES |
| | | |
| Purchases of property, plant and equipment | (3) | (5) | (28) | |
| Net cash used by investing activities | (3) | (5) | (28) | |
| CASH FLOWS FROM FINANCING ACTIVITIES |
| | | |
| Payment of principal portion of lease liabilities | (133) | (128) | (264) | |
| Net cash used in acquiring and disposing of own shares | (452) | (1,690) | (1,928) | |
| Dividends paid | (23,172) | (29,168) | (38,386) | |
| Net cash used by financing activities | (23,757) | (30,986) | (40,578) | |
| Net decrease in cash and cash equivalents | (2,815) | (13,493) | (7,293) | |
| Cash and cash equivalents at the beginning of the period | 30,611 | 37,904 | 37,904 | |
| Cash and cash equivalents at the end of the period | 27,796 | 24,411 | 30,611 | |
| NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| CORPORATE INFORMATION Sabre Insurance Group plc is a company incorporated in the United Kingdom and registered in England and Wales. The address of the registered office is Sabre House, 150 South Street, Dorking, Surrey, RH4 2YY, England. The nature of the Group's operations is the writing of general insurance for motor vehicles and motorcycles. The Company's principal activity is that of a holding company. 1. GENERAL INFORMATION The condensed consolidated interim financial statements comprise the results and balances of the Group for the six-month period ended 30 June 2022, the comparative period for the six months ended 30 June 2021 and the year ended 31 December 2021. The information in the condensed consolidated interim financial statements is unaudited and does not constitute statutory accounts as defined in s.434 of the Companies Act 2006. The independent auditor's report on the Group accounts for the year ended 31 December 2021 is unqualified, does not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and does not include a statement under s.498(2) or (3) of the Companies Act 2006. 2. ACCOUNTING POLICIES 2.1. Basis of preparation The condensed consolidated interim financial statements have been prepared and approved by the Directors in accordance with UK-adopted International Accounting Standard 34 ('Interim Financial Reporting'). As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, these interim financial statements have been prepared applying the accounting policies and presentation that will be applied in the preparation of the annual financial statements of the Group and will be prepared in accordance and fully comply with UK-adopted international accounting standards, comprising International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRSs'). The annual financial statements were 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 condensed consolidated financial statements values are presented in Pounds Sterling (£) rounded to the nearest thousand (£'k), unless otherwise indicated. The Group does not consider it is exposed to material seasonal volatility in its financial results. 2.2. Going concern Having assessed the Group's forecasts, projections and principal risks of the Group over the full duration of the planning cycle, the Directors have a reasonable expectation that the Group will continue in operational existence for a period of not less than twelve months. Accordingly, the results for the period ended 30 June 2022 have been prepared on a going concern basis. The Group's principal risks and uncertainties are outlined on pages 19 to 26 of the 31 December 2021 Annual Report and Accounts and have not changed since the last reporting date. The principal risks are: - Strategic, Governance, Regulatory and Compliance - Insurance risk - Operations - Financial and Capital - People - Ongoing Systemic Risks - Impact of COVID-19 - Climate change - Inflation - Brexit Geopolitical tensions, including the war in Ukraine, are creating volatility within domestic and global markets. The individual risks relating to these tensions, notably increases in inflation and energy costs, supply chain issues and consumer confidence could have an impact on the Group's future profitability. The Group continues to monitor the risks and the impact on the Group. 1.3. New and amended standards and interpretations adopted by the Group Amendments to IFRS The following amended IFRS standards became effective for the six months ended 30 June 2022: - Annual Improvements to IFRS 2018-2020 - Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards - Subsidiary as a First-time Adopter - Amendment to IFRS 9 Financial Instruments - Fees in the '10 per cent' Test for Derecognition of Financial Liabilities - Amendment to IAS 41 Agriculture - Taxation in Fair Value Measurements - Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) - Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) - Reference to the Conceptual Framework (Amendments to IFRS 3) None of the amendments have had a material impact to the Group.
|
| New standards not yet effective IFRS 17 - "Insurance Contracts" The effective date for IFRS 17 is 1 January 2023. IFRS 17 will change the way insurance contracts are accounted for and reported. Revenue will no longer be equal to premiums written but instead reflect a change in the contract liability on which consideration is expected. On initial assessment the major change will be on the presentation of the statement of profit or loss, with premium and claims figures being replaced with insurance contract revenue, insurance service expense and insurance finance income and expense. IFRS 17 also has additional disclosure requirements. IFRS 17 prescribes a comprehensive model, the general model, which requires entities to measure an insurance contract at initial recognition as the total of the fulfilment cash flows (comprising the estimated future cash flows, an adjustment to reflect the time value of money and an explicit risk adjustment for non-financial risk) and the contractual service margin. The fulfilment cash flows are remeasured on a current basis each reporting period. The unearned profit (contractual service margin) is recognised over the coverage period. IFRS 17 also provides a simplification to the general model, the premium allocation approach ("PAA"). This simplified approach is applicable for certain types of contracts, including those with a coverage period of one year or less. The liability for remaining coverage is similar to the current premium reserve profile recognised over time. The principles of the general model remain applicable to the liability for incurred claims. All contracts issued by the Group are for one year or less and the Group expects to apply the PAA model to all insurance contracts written. The Group is continuously assessing the impact of the design decision and relevant accounting policy choices. The Group's assessment of the requirements of the standard against current data, processes and valuation models does not indicate a material impact on the Group's financial results. The next steps for the Group are to incorporate changes required in the internal management and financial statement reporting process to report its results under IFRS 17 and finalise the accounting policies and methodologies for the transitional approach that will be applied. Management does not expect the transition to have a significant impact on the Group's profit or the net asset value. |
3. INSURANCE LIABILITIES AND REINSURANCE ASSETS
| CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS There have been no significant changes to the principles, estimates and judgements used in applying the Group's accounting policies during the period. Full details of these critical estimates and judgements are disclosed in page 107 of the Group's Annual Report and Accounts 2021.
|
The Group's insurance liabilities and reinsurance assets are summarised below:
| |
| Unaudited at | Unaudited at | Audited at |
| |
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| Notes | £'k | £'k | £'k |
| Outstanding claims | 3.1 | 237,756 | 227,210 | 232,516 |
| Unearned premium reserve | 3.1.1 | 93,510 | 83,066 | 90,776 |
| Deferred acquisition costs | 3.1.2 | (13,531) | (14,498) | (13,791) |
| Reinsurance assets | 3.1 | (93,713) | (97,912) | (112,312) |
| Receivables arising from insurance and reinsurance contracts | 3.2 | (42,105) | (38,989) | (38,003) |
| Payables arising from insurance and reinsurance contracts | 3.3 | 6,140 | 4,223 | 7,115 |
| Total |
| 188,057 | 163,100 | 166,301 |
3.1 Insurance liabilities and reinsurance assets
| |
| Unaudited at | Unaudited at | Audited at |
| |
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| Notes | £'k | £'k | £'k |
| GROSS |
|
| | |
| Claims incurred and reported |
| 309,130 | 308,054 | 309,892 |
| Claims incurred but not reported |
| (75,685) | (84,659) | (81,272) |
| Claims handling provision |
| 4,311 | 3,815 | 3,896 |
| Outstanding claims liabilities | 3.1.1 | 237,756 | 227,210 | 232,516 |
| Unearned premium reserve | 3.1.1 | 93,510 | 83,066 | 90,776 |
| Total insurance liabilities - Gross |
| 331,266 | 310,276 | 323,292 |
|
|
|
| | |
| RECOVERABLE FROM REINSURERS |
|
| | |
| Claims incurred and reported |
| (111,793) | (124,378) | (127,812) |
| Claims incurred but not reported |
| 18,080 | 26,466 | 24,184 |
| Outstanding claims liabilities | 3.1.1 | (93,713) | (97,912) | (103,628) |
| Unearned premium reserve | 3.1.1 | - | - | (8,684) |
| Total reinsurers' share of insurance liabilities |
| (93,713) | (97,912) | (112,312) |
|
|
|
| | |
| NET |
|
| | |
| Claims incurred and reported |
| 197,337 | 183,676 | 182,080 |
| Claims incurred but not reported |
| (57,605) | (58,193) | (57,088) |
| Claims handling provision |
| 4,311 | 3,815 | 3,896 |
| Outstanding claims liabilities | 3.1.1 | 144,043 | 129,298 | 128,888 |
| Unearned premium reserve | 3.1.1 | 93,510 | 83,066 | 82,092 |
| Total insurance liabilities - Net |
| 237,553 | 212,364 | 210,980 |
| When claims are initially reported, case estimates are set based on a reasonable worst-case expectation of settlement costs (for example, assuming full liability). Case estimates are amended throughout the life of a claim as further information emerges, Quarterly, an actuarially-determined adjustment to open case reserves is booked at a portfolio level, which converts the open claims reserves to a true "best estimate basis". This can result in a negative 'Incurred But Not Reported' ("IBNR") adjustment, if the case reserves held are in excess of a "best estimate basis". |
3.1.1 Movement in insurance liabilities and reinsurance assets
| | Unaudited at 30 June 2022 | Unaudited at 30 June 2021 | Audited at 31 December 2021 | ||||||
| | Gross | RI share | Net | Gross | RI share | Net | Gross | RI share | Net |
|
| £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k |
| CLAIMS AND CLAIMS HANDLING EXPENSES |
|
|
| | | | | | |
| Claims incurred and reported | 309,892 | (127,812) | 182,080 | 313,164 | (123,440) | 189,724 | 313,164 | (123,440) | 189,724 |
| Claims incurred but not reported | (81,272) | 24,184 | (57,088) | (90,267) | 31,424 | (58,843) | (90,267) | 31,424 | (58,843) |
| Claims handling provision | 3,896 | - | 3,896 | 3,649 | - | 3,649 | 3,649 | - | 3,649 |
| Total at the beginning of the period | 232,516 | (103,628) | 128,888 | 226,546 | (92,016) | 134,530 | 226,546 | (92,016) | 134,530 |
| |
|
|
| | | | | | |
| Cash paid for claims settled in the period | (46,262) | 5,921 | (40,341) | (39,188) | 1,296 | (37,892) | (92,247) | 12,357 | (79,890) |
| Increase/(decrease) in liabilities |
|
|
| | | | | | |
| - from current period claims | 57,846 | (5,257) | 52,589 | 39,413 | (2,342) | 37,071 | 89,480 | (8,072) | 81,408 |
| - from prior period claims | (6,344) | 9,251 | 2,907 | 439 | (4,850) | (4,411) | 8,737 | (15,897) | (7,160) |
| Total at the end of the period | 237,756 | (93,713) | 144,043 | 227,210 | (97,912) | 129,298 | 232,516 | (103,628) | 128,888 |
| |
|
|
| | | | | | |
| Claims incurred and reported | 309,130 | (111,793) | 197,337 | 308,054 | (124,378) | 183,676 | 309,892 | (127,812) | 182,080 |
| Claims incurred but not reported | (75,685) | 18,080 | (57,605) | (84,659) | 26,466 | (58,193) | (81,272) | 24,184 | (57,088) |
| Claims handling provision | 4,311 | - | 4,311 | 3,815 | - | 3,815 | 3,896 | - | 3,896 |
| Total at the end of the period | 237,756 | (93,713) | 144,043 | 227,210 | (97,912) | 129,298 | 232,516 | (103,628) | 128,888 |
| Amounts due from reinsurers in respect of claims already paid by the Group on the contracts that are reinsured are included in Note 3.2. |
| | Unaudited at 30 June 2022 | Unaudited at 30 June 2021 | Audited at 31 December 2021 | ||||||
| | Gross | RI share | Net | Gross | RI share | Net | Gross | RI share | Net |
|
| £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k |
| UNEARNED PREMIUM RESERVE |
|
|
|
|
|
|
|
|
|
| At the beginning of the period | 90,776 | (8,684) | 82,092 | 87,350 | (7,905) | 79,445 | 87,350 | (7,905) | 79,445 |
| Charged to the profit or loss account | 2,734 | 8,684 | 11,418 | (4,284) | 7,905 | 3,621 | 3,426 | (779) | 2,647 |
| Total at the end of the period | 93,510 | - | 93,510 | 83,066 | - | 83,066 | 90,776 | (8,684) | 82,092 |
3.1.2 Movement in deferred acquisition costs
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| DEFERRED ACQUISITION COSTS |
| | |
| At the beginning of the period | 13,791 | 14,791 | 14,791 |
| Net decrease during the period | (260) | (293) | (1,000) |
| Total at the end of the period | 13,531 | 14,498 | 13,791 |
3.2 Receivables arising from insurance and reinsurance contracts
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Due from brokers and intermediaries | 24,069 | 18,886 | 17,954 |
| Due from policyholders | 18,036 | 20,203 | 20,139 |
| Less: provision for impairment of broker and intermediary receivables | - | (100) | (90) |
| Total at the end of the period | 42,105 | 38,989 | 38,003 |
| The carrying value of insurance and other receivables approximates to fair value. There are no amounts expected to be recovered more than 12 months after the reporting date. |
3.3 Payables arising from insurance and reinsurance contracts
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Insurance creditors | 1,914 | 1,746 | 1,244 |
| Amounts due to reinsurers | 4,226 | 2,477 | 5,871 |
| Total at the end of the period | 6,140 | 4,223 | 7,115 |
| Payables arising from insurance and reinsurance contracts are expected to be settled within 12 months. The carrying value of payables approximates fair value. |
3.4 Insurance claims
| | Unaudited at 30 June 2022 | Unaudited at 30 June 2021 | Audited at 31 December 2021 | ||||||
| | Gross | RI share | Net | Gross | RI share | Net | Gross | RI share | Net |
|
| £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k |
| Movement in claims provision(1) | 51,088 | 3,994 | 55,082 | 39,686 | (7,192) | 32,494 | 97,970 | (23,969) | 74,001 |
| Movement in claims handling provision | 414 | - | 414 | 166 | - | 166 | 247 | - | 247 |
| Claims handling expenses allocated | 3,825 | - | 3,825 | 3,878 | - | 3,878 | 6,767 | - | 6,767 |
| Net insurance claims | 55,327 | 3,994 | 59,321 | 43,730 | (7,192) | 36,538 | 104,984 | (23,969) | 81,015 |
(1) The movement in the claims provision includes both the movement in the provision for claims outstanding and claims paid during the period.
4. FINANCIAL ASSETS
The Group's financial assets are summarised below:
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Debt securities held at fair value through other comprehensive income | 227,224 | 236,812 | 234,667 |
| Loans and receivables | 39 | 13 | 74 |
| Cash and cash equivalents | 27,796 | 24,411 | 30,611 |
| Total | 255,059 | 261,236 | 265,352 |
4.1 Debt securities at fair value through other comprehensive income
The Group's debt securities held at fair value through other comprehensive income are summarised below:
|
| Unaudited at 30 June 2022 | Unaudited at 30 June 2021 | Audited at 31 December 2021 | |||
|
| £'k | % holdings | £'k | % holdings | £'k | % holdings |
| Government bonds | 82,260 | 36.20% | 85,077 | 35.93% | 86,192 | 36.73% |
| Government-backed securities | 80,620 | 35.48% | 85,676 | 36.18% | 83,878 | 35.74% |
| Corporate bonds | 64,344 | 28.32% | 66,059 | 27.89% | 64,597 | 27.53% |
| Total | 227,224 | 100.00% | 236,812 | 100.00% | 234,667 | 100.00% |
4.2. Loans and receivables
The Group's loans and receivables comprises of:
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Other debtors | 41 | 15 | 76 |
| Provision for expected credit losses | (2) | (2) | (2) |
| Total | 39 | 13 | 74 |
| The estimated fair values of loans and receivables are the discounted amounts of the estimated future cash flows expected to be received. The carrying value of loans and receivables approximates fair value. Provision for expected credit losses are based on the recoverability of the individual loans and receivables. |
4.3. Cash and cash equivalents
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Cash and cash equivalents | 27,796 | 24,411 | 30,611 |
| Total | 27,796 | 24,411 | 30,611 |
| Cash and cash equivalents include money market funds with no notice period or penalty for withdrawal. The carrying value of cash and cash equivalents approximates fair value. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9 the identified impairment loss was immaterial. |
4.4. Net investment income
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Interest income on financial assets using effective interest rate method |
| | |
| Interest income from debt securities | 799 | 759 | 1,507 |
| Investment fees | (141) | (153) | (308) |
| Interest income from cash and cash equivalents | 15 | 4 | 11 |
| Total | 673 | 610 | 1,210 |
4.5. Net losses from fair value adjustments on financial assets
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
| | £'k | £'k | £'k |
| Profit or loss |
| | |
| Realised fair value gains/(losses) on debt securities | 24 | - | (16) |
| Realised fair value losses on debt securities reclassified to profit or loss | 24 | - | (16) |
| |
| | |
| Other Comprehensive Income |
| | |
| Fair value losses on debt securities | (8,229) | (2,197) | (5,674) |
| Expected credit loss through OCI | 17 | 21 | 16 |
| Unrealised fair value losses on debt securities through other comprehensive income | (8,212) | (2,176) | (5,658) |
| |
| | |
| Net fair value losses on debts securities through other comprehensive income | (8,188) | (2,176) | (5,674) |
5. FINANCIAL LIABILITIES
The Group's financial liabilities are summarised below:
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Financial liabilities at amortised cost |
| | |
| Lease liabilities | 60 | 317 | 193 |
| Trade and other payables, excluding insurance payables | 5,694 | 5,941 | 5,831 |
| Total | 5,754 | 6,258 | 6,024 |
5.1. Trade and other payables, excluding insurance payables
| | Unaudited at | Unaudited at | Audited at |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Trade and other creditors | 197 | 309 | 321 |
| Other taxes | 5,497 | 5,632 | 5,510 |
| Total | 5,694 | 5,941 | 5,831 |
6. OTHER OPERATING INCOME
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Marketing fees | 206 | 264 | 463 |
| Fee income from the sale of auxiliary products and services | 135 | 66 | 196 |
| Administration fees | 704 | 681 | 1,439 |
| Total | 1,045 | 1,011 | 2,098 |
| Other income relates to auxiliary products and services, including marketing and administration fees, all relating to the motor insurance business. |
7. OPERATING EXPENSES
| |
| Unaudited | Unaudited | Audited |
| |
| 6 months ended | 6 months ended | 12 months ended |
| |
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| Notes | £'k | £'k | £'k |
| Employee expenses | 7.1 | 6,458 | 7,292 | 12,338 |
| Property expenses |
| 154 | 151 | 331 |
| IT expenses including IT depreciation |
| 2,315 | 2,456 | 5,125 |
| Other depreciation |
| 6 | 21 | 33 |
| Industry levies |
| 2,915 | 2,802 | 5,000 |
| Policy servicing costs |
| 1,140 | 1,229 | 2,282 |
| Other operating expenses |
| 1,362 | 1,177 | 2,189 |
| Expected credit loss on financial assets | 4.5 | 17 | 21 | 16 |
| Operating expenses before adjustments for deferred acquisition costs and claims handling expenses |
| 14,367 | 15,149 | 27,314 |
| Adjusted for: |
|
| | |
| Claims handling expense reclassification |
| (3,825) | (3,878) | (6,767) |
| Movement in deferred acquisition costs |
| 183 | (58) | 939 |
| Total operating expenses |
| 10,725 | 11,213 | 21,486 |
7.1. Employee expenses
The aggregate remuneration of those employed by the Group's operations comprised:
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Wages and salaries | 4,730 | 5,321 | 9,417 |
| Issue of share-based payments | 769 | 653 | 1,075 |
| Social security expenses | 680 | 778 | 1,193 |
| Pension expenses | 273 | 241 | 475 |
| Other staff expenses | 6 | 299 | 178 |
| Employee expenses before adjustments for deferred acquisition costs and claims handling expenses | 6,458 | 7,292 | 12,338 |
| Adjusted for: |
| | |
| Claims handling expense reclassification | (2,977) | (3,092) | (5,239) |
| Movement in deferred acquisition costs | (20) | (236) | 535 |
| Total employee expenses | 3,461 | 3,964 | 7,634 |
8. TAX CHARGE
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Current taxation |
| | |
| Charge for the period | 901 | 4,119 | 6,935 |
|
| 901 | 4,119 | 6,935 |
| Deferred taxation |
| | |
| Origination and reversal of temporary differences | (15) | 41 | 124 |
| | (15) | 41 | 124 |
| |
| | |
| Current taxation | 901 | 4,119 | 6,935 |
| Deferred taxation | (15) | 41 | 124 |
| Tax charge for the period | 886 | 4,160 | 7,059 |
Tax recorded in other comprehensive income is as follows.
| | Unaudited | Unaudited | Audited |
| | 6 months ended | 6 months ended | 12 months ended |
| | 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Current taxation | (1,564) | - | - |
| Deferred taxation | (5) | (402) | (1,069) |
| Total | (1,569) | (402) | (1,069) |
| From 1 April 2023, The Finance Act 2021 increases the UK corporation tax from 19% to 25%. This means that for any temporary differences expected to reverse on or after 1 April 2023, the new tax rate of 25% will be relevant. The Group has deferred tax balances accordingly. The impact of this adjustment on the deferred tax balances is not material. |
9. DIVIDENDS
|
| Unaudited | Unaudited | Audited | |||
|
| 6 months ended | 6 months ended | 12 months ended | |||
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 | |||
|
| pence per share | £'k | pence per share | £'k | pence per share | £'k |
| Amounts recognised as distributions to equity holders in the period |
|
| | | | |
| Interim dividend for the current year | - | - | - | - | 3.7 | 9,218 |
| Final dividend for the prior year | 9.3 | 23,172 | 11.7 | 29,168 | 11.7 | 29,168 |
| | 9.3 | 23,172 | 11.7 | 29,168 | 15.4 | 38,386 |
| Proposed dividends |
|
| | | | |
| Interim dividend in respect of the current year (1) | 2.8 | 7,000 | 3.7 | 23,750 | | |
| (1) Subsequent to 30 June 2022, the Directors declared an interim dividend for 2022 of 2.8p per ordinary share. This dividend will be paid on 22 September 2022. This dividend will be accounted for as an appropriation of retained earnings in the year ended 31 December 2021 and is not included as a liability in the Statement of Financial Position as at 30 June 2022. The trustees of the employee share trusts waived their entitlement to dividends on shares held in the trusts to meet obligation arising on share incentive schemes, which reduced the dividends paid for the period ended 30 June 2022 by £78k (30 June 2021: £82k and 31 December 2021: £114k). |
10. LINE OF BUSINESS ANALYSIS
| | Unaudited for the 6 months ended | Restated for the 6 months ended | ||||||
| | 30 June 2022 | 30 June 2021 | ||||||
| | Motor vehicle | Taxi | Motorcycle | Total | Motor Vehicle | Taxi(1) | Motorcycle | Total |
|
| £'k | £'k | £'k | £'k | £'k | £'k | £'k | £'k |
| Profit or Loss Account information |
|
|
|
| | | | |
| Gross written premium | 69,640 | 5,219 | 16,923 | 91,782 | 77,450 | 770 | - | 78,220 |
| Less: Reinsurance premium ceded | (1,882) | (182) | (792) | (2,856) | (1,770) | (90) | - | (1,860) |
| Net written premium | 67,758 | 5,037 | 16,131 | 88,926 | 75,680 | 680 | - | 76,360 |
| |
|
|
|
| | | | |
| Gross written premium | 69,640 | 5,219 | 16,923 | 91,782 | 77,450 | 770 | - | 78,220 |
| Less: Change in unearned premium reserve | 11,718 | (3,784) | (10,668) | (2,734) | 4,214 | 70 | - | 4,284 |
| Gross earned premium | 81,358 | 1,435 | 6,255 | 89,048 | 81,664 | 840 | - | 82,504 |
| Reinsurance premium ceded | (1,882) | (182) | (792) | (2,856) | (1,770) | (90) | - | (1,860) |
| Less: Change in unearned premium reserve | (8,402) | (74) | (208) | (8,684) | (7,828) | (77) | - | (7,905) |
| Reinsurance premium payable | (10,284) | (256) | (1,000) | (11,540) | (9,598) | (167) | - | (9,765) |
| Net earned premium | 71,074 | 1,179 | 5,255 | 77,508 | 72,066 | 673 | - | 72,739 |
| | Restated 12 months ended | |||
| | 31 December 2021 | |||
| | Motor vehicle | Taxi(1) | Motorcycle | Total |
|
| £'k | £'k | £'k | £'k |
| Profit or Loss Account information | | | | |
| Gross written premium | 164,582 | 1,509 | 3,231 | 169,322 |
| Less: Reinsurance premium ceded | (21,019) | (184) | (30) | (21,233) |
| Net written premium | 143,563 | 1,325 | 3,201 | 148,089 |
| | | | | |
| Gross written premium | 164,582 | 1,509 | 3,231 | 169,322 |
| Less: Change in unearned premium reserve | (622) | 137 | (2,941) | (3,426) |
| Gross earned premium | 163,960 | 1,646 | 290 | 165,896 |
| Reinsurance premium ceded | (21,019) | (184) | (30) | (21,233) |
| Less: Change in unearned premium reserve | 574 | (3) | 208 | 779 |
| Reinsurance premium payable | (20,445) | (187) | 178 | (20,454) |
| Net earned premium | 143,515 | 1,459 | 468 | 145,442 |
| (1) 'Taxi' was not shown as a separate line of business in the 2021 Annual Report and Accounts, as it was not considered to be a separate, material element of premium income. Following the partnership deal with Freeway, premium from the provision of taxi insurance has increased significantly and as such it is now considered both useful and relevant to disclose this separately. The 31 December 2021 business lines have been restated to split Taxi from Motor Vehicle. |
11. RELATED PARTY TRANSACTIONS
| There has been no change in any of the relationships as disclosed in Note 18 of the 31 December 2021 Annual Report and Accounts. No related party transactions have taken place in the period ending 30 June 2022 that have materially affected the financial position or the financial performance of the Group. |
12. CONTINGENT LIABILITY
| In the 2021 Annual Report and Accounts, we disclosed a contingent liability regarding a contested determination in relation to the 2015, 2016 and 2017 corporation tax filings of a subsidiary of the Group, which is currently dormant. During 2022 HMRC accepted the Group's appeal against their determination and as such, the matter is now fully closed with no change in the tax position of the Group. |
13. SUBSEQUENT EVENTS
| Other than the declaration of an interim dividend as disclosed in Note 9, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the statement of financial position date. |
| DIRECTORS' RESPONSIBILITY STATEMENT |
| We confirm that to the best of our knowledge: The condensed consolidated financial statements for the six months ended 30 June 2022 have been prepared in accordance with International Accounting Standard 34 ("IAS 34") as adopted by the UK. The interim management report includes a fair review of the information as required by: - DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of the important events that have occurred during the first six months of the current financial year and their impact on the condensed set of consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and - DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially impacted the financial position or performance of the Group during the period; and any changes in the related party transactions from the Group's consolidated financial statements for the year ended 31 December 2021 that could do so.
Signed on behalf of the Board
|
| Geoff Carter Chief Executive Officer 25 July 2022 | Adam Westwood Chief Financial Officer 25 July 2022 |
| INDEPENDENT REVIEW REPORT TO SABRE INSURANCE GROUP PLC |
| Report on the condensed consolidated interim financial statements Our conclusion We have reviewed Sabre Insurance Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the Half-Year Report 2022 of Sabre Insurance Group plc for the 6 month period ended 30 June 2022 (the "period"). Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The interim financial statements comprise: - the Condensed Consolidated Statement of Financial Position as at 30 June 2022 - the Condensed Consolidated Profit or Loss Account and the Condensed Consolidated Statement of Comprehensive Income for the period then ended - the Condensed Consolidated Statement of Cash Flows for the period then ended - the Condensed Consolidated Statement of Changes in Equity for the period then ended - the explanatory notes to the interim financial statements The interim financial statements included in the Half-Year Report 2022 of Sabre Insurance Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. Basis for conclusion We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We have read the other information contained in the Half-Year Report 2022 and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE. However, future events or conditions may cause the group to cease to continue as a going concern. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The Half-Year Report 2022, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Half-Year Report 2022 in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Half-Year Report 2022, including the interim financial statements, the directors are responsible for assessing the group'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 to cease operations, or have no realistic alternative but to do so. Our responsibility is to express a conclusion on the interim financial statements in the Half-Year Report 2022 based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.
PricewaterhouseCoopers LLP Chartered Accountants London 25 July 2022 |
| APPENDIX - FINANCIAL RECONCILIATIONS |
ADJUSTED PROFIT BEFORE TAX
|
| Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Profit before tax | 4,345 | 22,161 | 37,199 |
| Add: |
|
|
|
| Amortisation of intangible assets | - | - | - |
| Exceptional items | - | - | - |
| Adjusted profit before tax | 4,345 | 22,161 | 37,199 |
ADJUSTED PROFIT AFTER TAX
|
| Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Profit after tax | 3,459 | 18,001 | 30,140 |
| Add: |
|
|
|
| Amortisation of intangible assets | - | - | - |
| Exceptional items | - | - | - |
| Tax on exceptional items | - | - | - |
| Adjusted profit after tax | 3,459 | 18,001 | 30,140 |
NET LOSS RATIO
|
| Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Net insurance claims | 59,321 | 36,538 | 81,015 |
| Less: Claims handling expenses | (3,825) | (3,878) | (6,767) |
| Net claims incurred | 55,496 | 32,660 | 74,248 |
| Net earned premium | 77,508 | 72,739 | 145,442 |
| Net loss ratio | 71.6% | 44.9% | 51.1% |
EXPENSE RATIO
|
| Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Total expenses | 17,355 | 17,569 | 34,444 |
| Plus: Claims handling expenses | 3,825 | 3,878 | 6,767 |
| Net operating expenses | 21,180 | 21,447 | 41,211 |
| Net earned premium | 77,508 | 72,739 | 145,442 |
| Expense ratio | 27.3% | 29.5% | 28.3% |
COMBINED OPERATING RATIO
|
| Unaudited | Unaudited | Audited |
|
| 6 months ended | 6 months ended | 12 months ended |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Total expenses | 17,355 | 17,569 | 34,444 |
| Net insurance claims | 59,321 | 36,538 | 81,015 |
|
| 76,676 | 54,107 | 115,459 |
| Net earned premium | 77,508 | 72,739 | 145,442 |
| Combined operating ratio | 98.9% | 74.4% | 79.4% |
SOLVENCY COVERAGE RATIO - PRE-DIVIDEND
|
| Unaudited at | Unaudited at | Audited at |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Solvency II net assets | 90,203 | 107,465 | 110,114 |
| Solvency capital requirement | 52,090 | 58,132 | 52,955 |
| Solvency coverage ratio - pre-dividend | 173.2% | 184.9% | 207.9% |
SOLVENCY COVERAGE RATIO - POST-DIVIDEND
|
| Unaudited at | Unaudited at | Audited at |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| Solvency II net assets | 90,203 | 107,465 | 110,114 |
| Less: Final dividend | (7,000) | (9,250) | (23,250) |
| Solvency II net assets (post dividend) | 83,203 | 98,215 | 86,864 |
| Solvency capital requirement | 52,090 | 58,132 | 52,955 |
| Solvency coverage ratio - post-dividend | 159.7% | 169.0% | 164.0% |
RETURN ON TANGIBLE EQUITY
|
| Unaudited at | Unaudited at | Audited at |
|
| 30 June 2022 | 30 June 2021 | 31 December 2021 |
|
| £'k | £'k | £'k |
| IFRS net assets at year end | 226,664 | 252,422 | 252,727 |
| Less: |
|
|
|
| Goodwill at year end | (156,279) | (156,279) | (156,279) |
| Closing tangible equity | 70,385 | 96,143 | 96,448 |
| Annualised closing tangible equity * | 66,844 | 104,894 | 96,448 |
| Opening tangible equity | 96,448 | 110,121 | 110,121 |
| Average tangible equity | 81,646 | 107,508 | 103,285 |
| Annualised adjusted profit after tax ** | 6,918 | 36,002 | 30,140 |
| Annualised return on tangible equity ** | 8.5% | 33.5% | 29.2% |
| * Annualised closing tangible equity is a proxy of the expected closing IFRS tangible equity as at 31 December 2022. This is equal to the closing tangible equity as at 30 June 2022, plus the profit after tax for the 6 months to 30 June 2022, less the interim dividend paid of £7,000k (30 June 2021: £23,750k). No adjustment to the 31 December 2021 closing tangible equity has been made. ** Half year adjusted profit after tax for 30 June 2022 and 30 June 2021 annualised. No adjustment to the full year adjusted profit for the period 31 December 2021 has been made. |
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
