A RESILIENT
STRATEGY FOR
SUCCESS
Sabre Insurance Group plc
Annual Report and Accounts 2019
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
STRATEGIC REPORT
02 Strategy introduction
03 Disciplined underwriting
04 Strategy: Risk management
05 Strategy: Growth
06 Strategy: Operations
07 Strategy: Distribution
08 Chairman’s letter
10 Market context
12 Chief Executive Officer’s review
13 Our strategic priorities
16 Our business model
18 Key performance indicators
20 Principal risks and uncertainties
25
26 Chief Financial Officer’s review
30 Corporate social responsibility
Viability statement
40 Chairman’s governance letter
42 Board of Directors
44 Governance Report
48 Audit and Risk Committee Report
52 Nomination Committee Report
53 Remuneration Committee Report
56 Directors’ Remuneration Policy
61 Annual Report on Directors’ Remuneration
69 Directors’ Report
73
Directors’ and Officers’
Responsibilities Statement
Independent Auditor’s Report
74
78
79
80
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes to the Consolidated
Financial Statements
110 Parent Company Statement
82
81
of Financial Position
111 Parent Company Statement
of Changes in Equity
111 Parent Company Statement
of Cash Flows
112 Notes to the Parent Company
Financial Statements
114 Financial Reconciliations
116 Shareholder Information
117 Directors, Advisers and Other Information
Sabre Insurance Group plc
A motor insurer based
in the UK, with a track
record of market-leading
underwriting performance
and a diverse, multi-channel
distribution strategy.
£197.0m
GROSS WRITTEN PREMIUM
£45.7m
ADJUSTED PROFIT AFTER TAX
73.4%
COMBINED OPERATING RATIO
214%
SOLVENCY COVERAGE RATIO
Sabre Insurance Group plc Annual Report and Accounts 2019
01
01
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 OUR STRATEGY
A resilient strategy to
deliver profitable and
controlled long-term growth
KEY
BUSINESS
PRINCIPLES
STRONG RETURNS
AND CASH GENERATION
MARKET-LEADING
UNDERWRITING PERFORMANCE
CONTROLLED AND ATTRACTIVE
GROWTH ACROSS THE CYCLE
These principles manifest in our five
strategic priorities listed below and
are explored in more detail over the
next five pages:
DISCIPLINED
UNDERWRITING
PAGE 03
RISK
MANAGEMENT
PAGE 04
GROWTH
OPERATIONS
DISTRIBUTION
PAGE 05
PAGE 06
PAGE 07
02
Sabre Insurance Group plc Annual Report and Accounts 2019
Disciplined underwriting
Delivering market-leading
underwriting performance
Remaining focused
on our core principles
has allowed us to
deliver a strong
financial result and
ensure the business
remains well positioned
for future opportunities
and challenges”
Geoff Carter
Chief Executive Officer
SOPHISTICATED PRICING MODEL
CLAIMS MANAGEMENT PROCESS
Actuarially-driven pricing strategy
utilising an agile proprietary model.
The Group operates a highly sophisticated
pricing model, assessing the individual risk
associated with each policy and presenting a
price based purely upon that assessment of
risk and with a consistent target margin for
new and renewing business across customer
segments. Over 17 years of experience
in underwriting, along with expert and
consistent management of claims, has
allowed the construction of a uniquely
accurate and successful pricing model.
This allows us to underwrite higher-premium
business confidently, which may be outside
more mass market insurers’ risk appetite.
Maintaining a robust and extensive
claims management process and counter-
fraud expertise.
Sabre operates a robust claims management
function with skilled, experienced claims
handlers and a proprietary claims workflow
system which drives efficiency and provides
management with high-quality, up to date
information. In addition, the Group has robust
counter-fraud capabilities which seek to
ensure that potential fraud is identified at the
point of quote or sale and when claims are
made. Throughout the claims process, the
Group aims to treat customers and claimants
fairly through the application of a transparent
and consistent process.
UNIQUE PROPRIETARY DATA
A unique and extensive catalogue of
claims data, compiled from more than
17 years of successful underwriting.
The accuracy of our pricing model relies upon
a vast proprietary dataset, consisting of claims
data built up over our lifetime and continually
updated as we write new risks. Due to our
extensive underwriting footprint, this data
allows us to price accurately across the UK
motor insurance market. All of our data is held
on a single policy administration system,
ensuring that high-quality, reliable data is
readily available. Our proprietary data is further
enhanced through the use of third-party data
validation and enrichment.
17+ yrs
OF UNIQUE PROPRIETARY DATA
03
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 Risk management
We seek to maintain a
conservative approach
to risk management
CASE STUDY
RESPONDING TO
REGULATORY CHANGE
Responding to regulatory review
of the UK motor insurance market.
In 2018, a super-complaint was made to
the Competition and Markets Authority
(“CMA”) in respect of the perceived
competitiveness of home insurance in the
UK. In particular, the renewal of business at
high prices in order to take advantage of
lack of customer engagement in the
process (the “loyalty penalty”) was cited.
This was referred to the Financial Conduct
Authority (“FCA”), which committed to
carry out a review of the sector, also
bringing in UK motor insurance, which
it considered may also be benefiting from
a loyalty penalty. In October 2019, the FCA
published an interim report on its market
study, widely criticising the use of the
loyalty penalty. Several potential remedies
were proposed to mitigate the use of such
practices in the future.
Sabre’s underwriting philosophy is based
on there being an appropriate price for all
policies, based on the risk presented by
those policies. Therefore, we calculate the
price for new business on the same basis as
renewals, reflecting changes in the risk on
renewal, rather than non-risk factors such as
the propensity to shop around. Our aversion
to accept conduct risk in this area has left
Sabre in a strong position, potentially
benefiting from regulatory intervention
which may prohibit competitors from
under-pricing policies for new customers.
PRUDENT STEWARDSHIP OF CAPITAL
FOCUS ON UNDERWRITING RISK
We maintain sufficient capital to allow
operational resilience and meet regulatory
requirements under all reasonably
foreseeable outcomes.
Sabre’s successful underwriting strategy
means that the Group generates significant
regulatory capital through its normal business
operations. This capital can be retained within
the business in order to provide a ‘buffer’
against future events, invested in new
projects, or returned to shareholders.
Maintaining a level of capital at over 140%
of our solvency capital requirement provides
a sufficient buffer against all reasonably
foreseeable events. In the absence of any
capital-intensive projects, we are satisfied
that capital above this level is available to
be distributed to shareholders. In the normal
course of events we would expect to return
any capital in excess of 160% of our
Solvency II requirements to shareholders.
In some market conditions we may retain a
higher proportion of capital.
We maintain
a conservative
approach to risk
management through
the use of reinsurance,
a simple and low risk
investment strategy
and prudent solvency
coverage ratio.
04
We focus on pricing discipline and use of
reinsurance to maintain underwriting
risk at the desired level.
Sabre’s core strategy is based on taking a
precisely calculated risk through its underwriting,
while minimising other risks throughout the
business, such as operational, regulatory, market
and counterparty exposure. We manage our
underwriting risk through maintaining absolute
discipline in pricing and focusing on our core
strength of underwriting UK motor business.
We manage our exposure to individual larger
claims through an excess of loss reinsurance
programme. In exchange for a proportion of
our premium income, a panel of high-quality
reinsurers take the cost of any individual loss
over £1m. This limits volatility in our result and
provides for a reduction in the level of capital
we are required to hold.
MANAGING RISKS THROUGHOUT
THE BUSINESS
Sabre aims to minimise exposure
to any risk other than those inherent
in underwriting insurance.
Sabre’s focus on a single market allows us to
address regulatory risks efficiently, such as the
FCA’s pricing review and developments in
prudential regulation such as Solvency II. The
simplicity of our operations makes monitoring
of key risk issues straightforward and allows
us to deploy the right amount of resource at an
appropriate time.
We operate a large investment portfolio, but
undertake to manage this in a highly
conservative manner, through the purchase of
low-risk investments such as UK government
bonds and, potentially, diverse highly-rated
corporate bonds. As a result, we accept a
lower yield on these investments, with the
benefit that we can focus our attention on our
area of expertise – underwriting.
From January 2020, we have appointed
Goldman Sachs Asset Management, one of
the world’s leading investment managers, to
assist with managing our investment portfolio.
Sabre Insurance Group plc Annual Report and Accounts 2019 Growth
Achieving controlled
growth over the long term
CASE STUDY
LAUNCHING DIRECT
VAN INSURANCE
“Insure2Drive van” was launched at the
end of 2018.
When we launch a new product or initiative,
we ensure that we are operating within
our skillset, that we have appropriate data
available to us and that the product would
be complementary to our current offering.
The direct van product was an extension of
our van capability, which we already offered
via brokers. The launch of this on our direct
platform, sold via price comparison
websites, was phased in from the end of
2018 and throughout 2019. This allowed us
to expand our footprint in van, to reach
customers who were not served through
our traditional broking channels, while
allowing us to use our existing dataset
to provide accurate pricing.
LONG-TERM GROWTH
GROWTH THROUGH THE CYCLE
Over the past 10 years, Sabre has grown
where market conditions allow.
Continued application of our strategy has
allowed Sabre to grow without compromising
profitability. Since 2009, we have grown from
a premium of £99m to £197m, and increased
in-force policies from 209,000 to 327,000. Over
that period, we have grown where market
conditions allow – typically where others in
the market are increasing rates, and we have
stood still or contracted where necessary to
maintain profitability. We always aim to enter
a market upturn from a position of strength,
where we are able to grow without generating
excessive operational or capital strain.
The UK motor insurance market is
historically cyclical, with periods of low
pricing followed by market price increases,
to recover to acceptable levels of profit.
Sabre aims to underwrite at a broadly
consistent margin, irrespective of market
conditions. Therefore, as the cost of managing
claims is generally inflationary, we will
increase our prices year-on-year to cover that
cost. Sometimes our competitors do not
reflect increases in the cost of claims in their
pricing, decrease prices to what is an
uneconomic level or pursue an aggressive
growth strategy. In those conditions, we
become less competitive in some areas of the
market and are happy to forego some volume.
Conversely, when the market corrects with an
appropriate level of price increases, we have
no need to increase our prices to the same
degree as our competitors and can therefore
become significantly more competitive.
This can happen quickly and is a feature
of our approach to operating within a cyclical
industry. Against this backdrop, we continue
to innovate with new rating factors, expanding
our footprint further and developing innovative
pricing techniques, which over the long term
allow us to price more accurately and therefore
increase the size of our business.
Our approach is to treat volume as an output
from disciplined underwriting and not allow it
to become a target.
327k
IN-FORCE POLICIES
05
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019
Operations
A flexible and robust
operational model
FLEXIBILITY
OUR TEAM
Outsource non-core operations while
keeping expertise in-house.
Talented people making good decisions
every day.
Sabre’s primary skills are within technical
underwriting and the management of claims.
Given our focus on profitability over volume,
we seek to retain a low fixed cost base. We
do this by outsourcing volume-dependent
administrative tasks, which fall outside of our
core technical skillset. Primarily this means
the administration of customer-facing activities
such as mid-term adjustments and the
processing of new policies, which is handled
by our network of brokers and, for our direct
products, by an experienced outsourced
administrator. For claims, the ‘first notification
of loss’ call centre is outsourced. In each case,
the outsourced operations are expert in
providing high-quality customer service, and
can handle variations in the volume of policies,
which allows us maximum operational flexibility
We invest in our people, making sure that they
have the appropriate training and skills to work
consistently well, and apply Sabre’s core
values in everything they do. We invest in
innovative technology, such as software
robotics, to allow our staff to focus on the
complex, technical aspects. We employ only
the resources we need to run the business,
with well-defined roles throughout the
Company. As we grow, the implementation
of more automated processes means that
our staff costs should grow at a slower rate,
increasing cost efficiency.
while focusing on our core competencies. 680YEARS’ COMBINED EXPERIENCE
IN THE CLAIMS TEAM
CASE STUDY
DEVELOPING
OUR PEOPLE
At Sabre, we take pride in providing
an effective learning and development
environment for our employees. We look
out for employees who show potential to
take on greater responsibility and invest
in their development through tailored
internal and external training.
As an example, we identified the need for
a dedicated claims supply chain manager,
who could address the increasing
demands of managing a complex pool of
claims suppliers, through considering
value, compliance, Environmental, Social
and Governance, and General Data
Protection Regulation issues. We
identified a talented individual within
our claims team, and built a specific
training programme for her development
which included:
– EU GDPR Foundation &
Practitioner training
– Business Contract Law training
– In-house teach-ins from Finance,
Company Secretariat, and
Actuarial teams
– Participation in the reinsurance
renewal process
– Attendance at various industry
seminars and conferences
Throughout 2020, this training will be
extended to cover regulatory issues
and best practice in engagement
of outsourcers.
This individual has significantly
enhanced our claims supplier
processes and has become a key
element of our procurement strategy
and management team.
In her words:
“I am very grateful to Sabre for the
time invested in my career and the
support given to assist with my
development. I have thrived in the
environment provided by Sabre
and thoroughly enjoy my job. I feel
valued at Sabre and committed
to contributing to the success of
the business.”
06
Sabre Insurance Group plc Annual Report and Accounts 2019
Distribution
A diversified,
multi-channel strategy
STRONG BROKER RELATIONSHIPS
SELLING DIRECT TO THE CUSTOMER
Brokers account for approximately 69%
of the gross written premium income in
the year ended 31 December 2019.
The Group has established a broad network
of over 1,000 insurance brokers across the
UK over the course of more than 20 years.
Sabre’s broker relationships allow us to leverage
the brokers’ well-established and recognised
brands, retail pricing capabilities and customer
relationships whilst also providing the Group
with privileged access to certain customer
groups (as a result of the brokers’ affinity
partnerships and/or presence on the high street).
Just under one third of our policies come
to us direct, through our brands.
Operating direct brands ensures that we can
offer our products to those customers not
served by traditional brokers, while allowing
us a direct line of sight to customer and price
comparison site data. This gives us the
resilience to operate in the absence of brokers
if the need were to arise. Given the efficiency
of the UK motor market, we are confident that
providing our products directly gives potential
customers the best chance of finding us, if we
are able to provide the cheapest quote for them.
OF GWP FROM DIRECT BRANDS
31%
69%
OF GWP FROM BROKERS
PRICE COMPARISON WEBSITES
The majority of UK motor insurance
products are sold through Price
Comparison Websites (“PCWs”).
The increasing importance of the internet as
a sales medium has seen PCWs progressively
become the dominant distribution channel
for new car policies in the UK private motor
vehicle insurance market. We believe that this
development has been positive for the Group’s
use of insurance brokers as, although some
brokers continue to maintain a presence on
the high street, many brokers have adapted
successfully to the rise of PCWs and the
majority of our broker sales now originate
from PCWs.
Go Girl was launched in
November 2011 to target
female drivers and is primarily
promoted via PCWs.
Insure 2 Drive was launched in
November 2010 offering
general motor insurance and is
also almost entirely promoted
via PCWs. It is a general motor
vehicle insurance product
which, from December 2018,
also provides cover for vans
direct to our customers.
07
GIVING OUR
CUSTOMERS CHOICE
Our own brands allow our customers
to come to Sabre direct.
In addition to its broker distribution
network, the Group has two direct brands:
Go Girl, and Insure 2 Drive. When a
customer chooses to buy a Sabre policy
direct through one of our brands, they are
assured a high-quality level of customer
service, as well as the same great claims
experience enjoyed by all Sabre customers.
80%
POLICIES SOLD VIA BROKERS
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CHAIRMAN’S
LETTER
The dedication
and expertise of
our people is
the key to our
continued success.”
PATRICK SNOWBALL
Chairman
I am pleased to introduce Sabre Insurance
Group plc’s Annual Report and Accounts
2019, our second full 12 months’ report
following Sabre’s successful initial public
offering (“IPO”) in December 2017.
This Annual Report and Accounts is
presented against a period of significant
social and economic uncertainty as a
result of the COVID-19 outbreak. I am
mindful, in commenting in this report,
of the great difficulties that are being
experienced throughout the world at this
time. The Board and I will ensure that
we continue to consider the needs of
all stakeholders as the crisis develops.
For Sabre, this has presented a test of our
operational resilience, as we look to protect
our people and support social distancing.
08
Sabre Insurance Group plc Annual Report and Accounts 2019 We have taken a detailed look at our
financial robustness and liquidity. It has
been reassuring that, while the challenges
presented are unprecedented, Sabre appears
to have both the operational and financial
resilience to continue to apply its long-term
strategy throughout these uncertain
market conditions.
Sabre has continued to execute its well-tested
strategy during 2019. We focus purely on the
UK motor insurance sector, providing insurance
both through our mutually beneficial relationship
with insurance brokers and direct to customers
through our direct brands. Over the years we
have built a considerable bank of specialist skills
in this market, allowing us to provide fairly
priced but profitable policies to almost all
potential customers, with a tendency towards
those parts of the market which are less
well-served by our competitors. This somewhat
insulates us from wider market conditions.
The Board has continued to support Sabre’s
long-established strategy of focusing on
profitability rather than growth, giving us
confidence of long-term success in the highly
competitive motor insurance market.
The performance of the business continues
to be underpinned by a relentless focus
on maintaining the highest standards of
operational excellence, governance and
financial reporting throughout the Group.
Driving this are our highly experienced
executive and management teams, supported
by hugely talented individuals throughout
the business.
Core to the successful operation of our
business is an understanding of the needs of
all stakeholders. Our Board considers the
impact of key decisions on impacted
stakeholder groups, in the context of the wider
purpose of our Group. Information about our
approach to stakeholder engagement can be
found on pages 30 to 39.
Our Code of Conduct can be found on the
Company’s website at www.sabreplc.co.uk/
about-us/code-of-conduct/ and information
regarding our risk management processes can
be found on pages 20 to 24.
2019 Performance
The Group has delivered a good result for
2019, under challenging market conditions.
This demonstrates the strength of Sabre’s
strategy, providing resilience throughout the
motor insurance cycle. The CEO, in his report,
comments more extensively on turbulence
within the UK motor insurance market.
The Board remains confident that Sabre’s
long-standing and resilient business model,
track record of underwriting discipline,
very experienced executive team and
operational management team, allow us to
react to any changes in the market from a
position of strength.
The Board is aware of the general stress in the
market, with claims inflation and other costs
not being reflected in market pricing increases.
The Board is comfortable that the Company’s
strategy, which focuses on margin and not
policy volume, is in the best long-term interest
of all the Company’s stakeholders.
We continue to favour returning excess capital
to shareholders by way of dividend.
Notwithstanding the strong cash generation in
2019 and the Group’s robust capital position,
the Board intends only to propose an ordinary
dividend of 8.1p in respect of the full year 2019
at this stage.
Given the unprecedented nature of the
response to COVID-19 and uncertainty as to
the length of Government restrictions, the
Board has determined that it is prudent to
withhold any element of special distribution of
excess capital. The Board may propose an
interim dividend representing the return of
surplus capital later in the financial year should
the situation become clearer.
We will continue to focus on delivering an
ordinary dividend of 70% of Adjusted Profit
After Tax (“PAT”), and return excess capital to
shareholders are appropriate.
Further detail of the Company’s performance
is outlined in the Chief Executive’s review and
Chief Financial Officer’s review on pages 12 to
15 and 26 to 29 respectively of this
Annual Report.
Our people
The dedication and expertise of our people is
the key to our continued success. Employee
turnover continues to be low, while we have
enhanced employee engagement during 2019,
including a series of employee lunches hosted
by a Non-executive Director. The Board has
continued to encourage employees to
participate in the success of the Group
through the provision of Save as You Earn and
Share Investment Plans, both of which provide
a relatively low-risk and cost effective way of
entering the shareholder register. Further
discussion of employee engagement can be
found on pages 31 to 33 of this report.
I would like to take this opportunity to thank
all of our employees for their continued
commitment and hard work.
Shareholder engagement
I would like to thank all our shareholders for
their support during the year, and to welcome
new shareholders of all sizes to our register.
I am keen to maintain an active dialogue and
the Board is committed to keeping you
informed of significant developments by
providing regular updates on our performance
and proactively engaging when appropriate.
PATRICK SNOWBALL
Chairman
6th April 2020
09
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 OUR MARKET
Understanding
a competitive
marketplace
At Sabre we live the UK motor insurance market every day, and
knowledge of the underlying market is crucial to our success.
The market continues to undergo a great deal of change, across regulation, pricing, technology and
distribution. Early recognition of negative trends and proactive corrective actions, and cautious approach
to reflection of potentially positive news, is at the heart of our prudent way of doing business.
COMPETITION
AND PRICING
Price Comparison Websites (PCWs)
continue to be the dominant distribution
channel in the UK, and we trade
successfully in this market both via our
network of supporting brokers and direct.
Whilst PCWs provide a user-friendly and
transparent method of comparing quotes
across the market, this transparency can also
act as a brake on required rate increases in
the mass markets. One competitor with an
imperfect view of market challenges or an
aggressive growth strategy, can prevent other
major competitors being able to increase rates
to a rational level due to the instant and painful
impacts on volume.
As Sabre is active in all areas of the private
motor market (quoting for nearly 98% of risks)
our volumes are impacted by mass-market
price competitiveness, but are significantly
insulated due to our natural tendency towards
higher average premium “non-standard”
business. In weak market conditions we can
continue to generate good volumes and profits
without needing to chase prices down and
undermine profitability – albeit this will restrict
our growth opportunities and may drive
contraction of the business pending the
market turn.
In our view the market is currently at the
weakest part of the cycle with competitors
looking to push price increases but being
constrained by impacts on volume.
CLAIMS
TRENDS
Over the long term, the key driver of
price movements in the motor insurance
market is the costs of claims. For Sabre
these represent around 50 to 55p for every
£1 of premium received. For most of our
competitors this is nearer 65 to 75p.
In order to price policies effectively and
maintain the same level of profitability, prices
must be increased to reflect the increasing
cost of claims, known as claims inflation.
Throughout 2019 Sabre has viewed claims
inflation as being within a 7% to 8% range.
This is significantly higher than overall inflation
in the UK economy and is driven by:
– Significant increases in the cost of fixing
vehicles due to the increased technology
being fitted;
– Dramatic increases in the cost of theft
claims, facilitated by keyless entry
technology; and
– Ongoing increases in the overall cost of
personal injury claims.
All market participants have their own view on
the actual rate of claims inflation, but in our
view market prices need to rise significantly to
maintain acceptable levels of profitability.
Sabre’s strategy is to increase our own prices
to cover increases in the cost of claims.
DISTRIBUTION
TRENDS
In recent years many market
commentators have predicted a sea
change in distribution and underwriting
techniques driven by technology –
generally badged as “InsurTech” –
and a plethora of new businesses have
launched in the UK and internationally.
The primary focus of these start-ups to date
has been on distribution rather than technical
underwriting, pricing and claims management.
New launches have covered the waterfront
from digital wallet and concierge services,
payment on demand or by miles driven
and next generation telematics.
Sabre is keen to engage with potential winners
in this market, but is also wary of distractions
from the core business by over-focusing in
this area. To date we have not identified many
partners who can meet our core requirements
of differentiated customer benefits, ability
to deploy our existing sophisticated rating
structure and cost effective IT integration.
We will continue to review and seek out
viable future business partners.
In the meantime we believe that PCWs will
maintain a dominant position for the foreseeable
future, and many brokers will continue to be a
significant part of the value chain.
Sabre operates a robust multi-channel
distribution network, selling both through
brokers and direct through its consumer
brands. This provides resilience and positions
the Group well to take advantage of the
numerous opportunities presented by the
changing environment.
10
Sabre Insurance Group plc Annual Report and Accounts 2019
REGULATION
MARKET AT A GLANCE
Throughout 2019 and into 2020 there
have been very significant impacts
from regulatory and legislative
interventions. The most noteworthy
of these are:
Ogden discount rate
This rate, used in the calculation
settlement of high-value Personal
Injury claims, was set after a period
of consultation at minus 0.25%.
The industry as a whole anticipated
a more beneficial outcome.
This has an impact both on insurers’ own
financial results and their reinsurers, who
will bear much of this cost. Sabre had
been cautious in reflecting anticipated
changes in the Ogden discount rate so
avoiding significant direct impacts.
We are also alive to the possibility of
reinsurance programme cost increases.
Civil liability (whiplash) reforms
These reforms have the laudable aim of
reducing the propensity for exaggerated
personal injury claims as well as reducing
the cost and easing the process for
handling lower-value genuine claims.
Whilst there are many good aspects
to the reforms, we believe that there
is potential for deficiencies in the rules
to undermine the objectives materially
– these are discussed in more detail in
the CEO’s report.
There is, nonetheless, a risk that some
competitors may overestimate (in our
view) the value of the changes, which
could slow market price increases.
FCA pricing review
In 2019 the FCA launched a review into
market pricing techniques, primarily
focused on “loyalty penalties” where
renewal prices are materially higher than
new business and behavioural pricing
techniques – utilising non risk-based data.
Sabre does not utilise either of these
techniques and seeks to price new
business and renewals at the same level
using only risk-based data.
The review is likely to continue well into
2020. Whilst Sabre would expect to be
either largely unaffected or potentially a
net winner we are conscious of the risk
of unintended consequences from the
regulator’s remedies and are therefore
fully involved in the consultation process.
- 0.25%
OGDEN DISCOUNT RATE
£13bn
VALUE OF THE UK PRIVATE
MOTOR INSURANCE MARKET
27.5m
NUMBER OF POLICIES IN 2019
47%
FEMALE DRIVERS
53%
MALE DRIVERS
THE UNITED KINGDOM’S DEPARTURE FROM THE EUROPEAN UNION
The United Kingdom (UK) departed from
the European Union (EU) in January this
year, under a transitional arrangement
which is due to end by 31 December 2020.
The stated aim of the Government
is to negotiate a wide-ranging trade
agreement before this date in order to
minimise friction in cross-border trade.
The exact shape of this agreement, and
whether it will be achieved in the desired
timescale, is uncertain. Therefore, we
continue to assess the impact of exiting
the transitional period in either an
“orderly manner”, with a deal achieved,
or a “disorderly” exit, with no deal having
been reached. We consider the latter
outcome similar to that which would
have occurred had we left the EU with
no transitional arrangement.
Although there are some issues common
to both types of exit, management
continues to believe a “disorderly” scenario
to be more disruptive, and as such has
concentrated its analysis and planning
on such a scenario.
Sabre’s business is conducted entirely
within the UK. All of Sabre’s products are
sold in the UK, primarily to UK citizens or
those intending to drive primarily within
the UK. As Sabre’s policyholders are
entitled to drive overseas while maintaining
their cover, Sabre does have some small
exposure to overseas counterparties as a
result of accidents abroad. Given the
UK-focused nature of Sabre’s operations,
management believes the Group is well
insulated from many of the more disruptive
impacts of the UK’s exit from the EU. All of
Sabre’s assets are held within the UK.
We have, however, identified a number of
operational and economic consequences
which would impact Sabre. These are:
– Claims costs may be adversely impacted
through trade tariffs, disruption to
“just-in-time” supply chains, movement
in exchange rates and increased care
costs associated with larger value
personal injury claims, due to a shortage
of care staff.
– Policyholders driving within the EU
would be required to obtain a ‘green
card’ to evidence their cover. We have
implemented sufficient processes and
resource to manage such requests should
they arise. We have also communicated
this requirement to our customers in
advance of the UK’s departure.
– The wider UK economy may shrink in the
event of a disorderly exit. While the Group
is committed to monitoring the soundness
of its financial counterparties, which are
considered very low risk under such
circumstances, we recognise that an
economic downturn can have an impact
on consumer behaviour. Motor insurance
is a compulsory product for drivers, and as
such the Group’s addressable market is
unlikely to be affected. The impact on
costs of such a downturn is broadly
neutral. We might expect a cost benefit
through reduction in miles driven offset
by an increase in the propensity for fraud.
– Overall we would anticipate the market
to continue to be in a turbulent state as
competitors seek to balance pushing
through price increases to cover cost
inflation with maintaining acceptable
levels of business volumes, whilst also
understanding and responding to the
fundamental regulatory changes
in process.
11
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CHIEF EXECUTIVE’S REVIEW
This performance
reflects the continuing
effectiveness of Sabre’s
proven business
model and consistent
long-term strategy of
focusing on profitability
over volume growth.”
GEOFF CARTER
Chief Executive Officer
12
2019 was another positive year for
Sabre, with these robust results being
achieved against the backdrop of
turbulent market conditions and
ongoing headwinds. This performance
reflects the continuing effectiveness
of Sabre’s proven business model
and consistent long-term strategy
of focusing on profitability over
volume growth.
I am pleased to present the Chief Executive
Officer’s review for the 2019 financial year.
While we routinely assess our long-term
objectives, they have remained the same for
a number of years and continue to be the
basis of our strategy going forward:
– Deliver market-leading underwriting
performance;
– Continue to generate strong levels of
capital through our profitable underwriting;
– Deliver strong returns to shareholders; and
– Achieved controlled growth across
the cycle.
Sabre Insurance Group plc Annual Report and Accounts 2019 2019 proved to be one of the most turbulent
periods for UK motor insurance that I can recall
- bringing together regulatory, technological and
claims management pressures. Despite this,
remaining focused on our core principles has
allowed us to deliver a robust financial result
and ensure the business remains well
positioned for future opportunities and
challenges. The current COVID-19 uncertainty
and rapidly changing situation is only
exacerbating the level of turbulence. Our views
on this are outlined below.
Our key priority throughout the year has been
to ensure we continue to price new business
within our target COR range, having set a
mid-70%’s target and an 80% ceiling. We have
continued to optimise pricing within this range
for profitability depending on prevailing market
conditions. On an ongoing basis we balance
volume and margin to deliver the highest
long-term absolute profit.
outlined in our IPO prospectus, where in a soft
market we tend to become less competitive in
the lower-premium areas of the market, which
can become significantly under-priced, while
generally maintaining a strong hold on our core,
higher-premium business.
Profitability came in modestly behind
expectations, primarily driven by the lag
between applying price increases and these
fully covering the emerging claim costs. This is
an almost inevitable sequence of events in
periods of very rapid claims inflation. This
impact was partly mitigated by a one-off
accrual release of £3.3m from the MIB levy.
COVID-19
We are very conscious of the fast-changing
situation and are focused on our colleagues’
welfare, wider societal impacts and on ensuring
continued high quality service to customers,
claimants and brokers.
In 2019 the optimal point was slightly higher
than our long term mid-70%’s target, and as
market pricing conditions improve, we will look
to move back slightly lower in the range ahead
of taking volume growth.
Having implemented our contingency plan we
now have almost all of our colleagues working,
highly efficiently, from home, and are
monitoring the effectiveness of our key
suppliers’ contingency arrangements.
This is always the most profitable approach.
We are very comfortable with the margin we
achieved in 2019 prices, and in early 2020 are
taking the opportunity to enhance this as we
witness pricing improving in the market.
Throughout the year we continued to view
claims inflation as being within a 7.5% to 8.5%
range, but also identified additional emerging
cost pressures, outlined later in this review.
Because of this, we have been assertive in
pushing through rate increases, in line with our
policy of treating volume as an output, not a
target. These rate increases have exceeded
10% year-on-year. We believe this is an
appropriately prudent position given our view
of cost inflation and should maintain our COR
within our target range. Within our market
segment we do not see any evidence of
claims inflation easing or envisage this
changing in the near future, and see good
reasons for continuing to apply significant price
increases in 2020.
Despite this level of rate increases, 2019 GWP
came in slightly better than expected, at 6.2%
lower than the prior year. This suggests either
market rates were starting to harden or that
competitors are moving away from the more
non-standard / higher premium sectors which
we typically serve.
As we anticipated would be the case during the
softer part of the market cycle, our policy count
has decreased while our average premium has
increased. This is in line with the position we
We have considered the developing COVID-19
situation in detail, and have modelled a number
of reasonably foreseeable scenarios. We
are also aware of the wider economic and
societal context within which we are reporting
these results.
We intend to continue to employ all of our
colleagues on their full salaries and currently
do not believe we will need to take advantage
of any of the available Government support.
We are also seeking to support our smaller
suppliers and local stakeholders through
this period, and have offered all colleagues
paid leave each week to support NHS or
other volunteering.
Our modelling of COVID-19 scenarios does
not suggest that we would undermine our
capital base in any reasonably foreseeable
stressed scenario, and shows that it is likely
that we will continue to be profitable and capital
generative. One such stressed scenario is the
loss of 50% of our premium income during
2020. If such stressed scenarios were to occur
these would be likely to reduce future years’
profitability and dividends.
We would currently anticipate a significant,
temporary, reduction in claims frequency, but
as social distancing continues and then
ultimately winds down this may be balanced by
short-term increases in claims costs such as a
lack of availability of replacement parts and of
staff within car body shops, new claim trends
emerging and increased propensity to claim
by financially stretched individuals. In addition,
we would expect operational pressures to
emerge for us and our key partners driven by
remote working.
We are also aware that some financially
stretched customers may struggle to continue
to pay premiums. We are supporting customers
by taking a more flexible approach to risk
changes or claims events, and are also looking
to support essential workers by prioritising their
claims. We also fully support the principles
outlined by the ABI in mid-March.
The situation, however, continues to evolve and
unforeseen challenges and social and economic
scenarios could occur.
Dividend
As outlined at last year’s results presentation
we maintain a capital range in order to allow
us to support the total dividend across the
market cycle, allowing us to take advantage of
growth opportunities and cover unanticipated
cost increases.
As at end 2019 our capital had reached 214%
of our capital requirements as a result of our
ongoing profitability, and significantly exceeded
our preferred range of 140 to 160%.
Looking forward we believe that growth
opportunities requiring capital may emerge in
later 2020 or possibly early 2021, but there is
also a risk of further cost pressures, including
the impacts of COVID-19.
The Group has an established dividend policy to
pay a full year ordinary dividend of 70% of
adjusted profit after tax (‘PAT’), and to return
excess capital to shareholders as appropriate.
Notwithstanding the strong cash generation in
2019 and the Group’s robust capital position,
the Board intends only to propose an ordinary
dividend of 8.1p in respect of the full year 2019
at this stage.
Given the unprecedented nature of the
response to COVID-19 and uncertainty as to
the length of Government restrictions, the
Board has determined that it is prudent to
withhold any element of special distribution of
excess capital. The Board may propose an
additional interim dividend representing the
return of surplus capital later in the financial
year should the situation become clearer. In
taking this decision, the Board has considered
recent industry communications from the
Prudential Regulation Authority and the
European Insurance and Occupational
Pensions Authority, and concluded that the
payment of a final ordinary dividend would be
prudent and does not fall outside of the
Group’s risk appetite.
13
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CHIEF EXECUTIVE’S REVIEW
CONTINUED
Prior to the most recent announcements of
restrictions, the intent of the Board was to
propose a final ordinary dividend of 8.1 pence
per share together with a special dividend of
5.2 pence per share. Including the interim
dividend of 4.7 pence per share already paid,
the total dividend for the year would have been
18.0 pence per share. This would have equated
to approximately 100% of PAT and reflected
early uncertainties regarding COVID-19.
Our capital coverage post this payment remains
at a strong 180%, which is above our usual
preferred operating range of 140-160%.
Our strategy
Sabre has had a consistent strategy over many
years, which is to focus on underwriting private
motor insurance in the UK, where we have
established a strong market position, naturally
biased toward the specialist, higher premium
customers. Our success will continue to be
underpinned by several core trading principles:
– Maintaining market-leading underwriting
performance through a disciplined and
actuarially-driven pricing strategy
– Expanding our extensive and proprietary
dataset combined with investment in data
enrichment
– Retaining a broad underwriting footprint while
maintaining a bias toward the specialist,
higher premium segments
– Utilising our robust and effective claims
management function to ensure a firm but
fair approach to claims
– Effectively leveraging our diversified,
multi-channel distribution network
– Using our streamlined operating model to
control expenses efficiently
– Ensuring prudent case reserving and a
consistent portfolio reserving approach
– Maintaining a conservative approach to risk
management through the use of reinsurance,
a simple and low risk investment strategy and
prudent solvency coverage ratio
– Providing high class customer service and
efficient claims handling
Underlying these principles is our core belief
that in a risk-taking business, volume must be
treated as an output of disciplined underwriting
and should never be a target. This means we
are happy to accept as much growth as we can
handle operationally in attractive parts of the
market cycle, but conversely must be prepared
to maintain our size, or contract, where we do
not believe we can write business at the
required level of profitability.
To support this strategy, we target a COR
across our book in a range around mid-70%’s,
with a ceiling of 80%. At any point in the
market cycle we will be seeking to optimise
profits by writing business at the most
appropriate point in this range.
While we remain agnostic about the mix of
business we underwrite and the proportion
from each distribution channel, we will continue
to seek to benefit from attracting a higher
percentage of the specialist, higher premium
section of the market compared to mainstream
motor insurers.
Strategic developments
One of the contributing factors toward Sabre’s
success has been that we continue to operate
within our well defined trading principles and
will only seek to launch new initiatives where
we are confident that they can add meaningful
value. For the foreseeable future this will mean
that we focus on opportunities to expand our
footprint for things “with engines, wheels and
that stay on the ground”.
We remain fully committed to the broker
market, and cherish the strong relationships we
enjoy. We believe that our technical pricing and
claims expertise when aligned to brokers’
marketing, customer management and retail
pricing expertise will continue to prove to be a
winning combination and a competitive
advantage.
In 2019 we reviewed a number of “InsurTech”
opportunities, but to date have not identified
any that can combine strong, differentiated,
customer demand with our current required
ways of working (broadly being able to utilize
our sophisticated rating models and remaining
in full control of the underlying net premium). I
am, however, very pleased to confirm that we
have been able to agree a trading agreement
with Saga. We believe that Saga’s customer
focus and differentiated marketing will
complement the distribution through our
existing brokers.
Our direct van product was launched in late
2018 and has now rolled out to most of the
major price comparison websites. It is
generating pleasing business volumes at our
target profitability. We monitor customer
feedback closely and are pleased with the
service levels being provided both by our own
staff and outsourced partners.
Following a review of the telematics market we
concluded that our direct telematics offering
was unlikely to be able to generate acceptable
returns at meaningful volumes. We therefore
withdrew the DriveSmart product in 2019, but
maintain a small market presence in telematics
via specialist brokers. We will continue to
monitor the market as technology and
distribution opportunities evolve. This
development will not have any meaningful
impact on our financial results, but removes a
distraction from the operation.
Looking to 2020 we will continue to review
new opportunities actively, but our primary
focus will continue to be on the continuous
evolution of our core pricing and claims handling
capabilities, including the use of machine
learning in these areas.
The market
As previously mentioned, the UK private motor
insurance market is experiencing a period of
significant turbulent change, where a number
of headwinds are combining to generate
significant cost and strategic challenges. At the
last results presentation in July 2019 we
presented a view which said these pressures
were finely balanced between cost savings and
pressures. For 2020 – we no longer believe this
to be the case and we anticipate the inflationary
factors to significantly outweigh any potential
tailwind benefits.
Overall, we believe that we can successfully
manage industry wide cost increases by
identifying issues early and pricing accordingly.
We will continue to be quick to react to possible
bad news and cautious in responding to
potential benefits.
To outline the most significant of these market
changes very briefly:
Claims Inflation
As discussed previously, rapid developments in
the technology deployed within vehicles
continue to generate significant increases in
“bent metal” claims costs. 2019 was the first
year that these claims were a higher proportion
of total claims than personal injury claims. We
continue to believe that claims inflation is –
conservatively – running at around 7.5% to
8.5% and have increased our prices throughout
2019 to reflect this. Given the increasing
propensity for expensive technology to be
positioned in high crash risk areas of cars we
do not expect this inflation to tail off in the
near future.
For clarity, our view is that the degree of claims
inflation between competitors in the market
could be meaningfully impacted by the mix of
business being written. In addition to “bent
metal” claims, theft claims remain at historical
high levels, primarily enabled by keyless entry
technology, whilst Credit Hire costs continue to
increase. Personal injury (“PI”) claims are
performing within expected levels, although
inflationary pressures have been maintained
from the release of the 15th Edition of the
Judicial College Guidelines (issued bi-annually)
which broadly increased damages valuations
by 7%.
14
Sabre Insurance Group plc Annual Report and Accounts 2019
Ogden Discount rate
We avoided the temptation to reflect a higher
Ogden discount rate within our pricing or
reserving assumptions until the actual rate was
confirmed. We therefore avoided swings in our
results over the last two years as the rate was
confirmed at minus 0.25%, a worse position
than the market generally anticipated. The rate
is now set for another four years and so does
not provide any tailwind prospects. Whilst we
have avoided direct impacts, we are not
immune from certain knock-on impacts:
– MIB levy
The MIB (Motor Insurers’ Bureau)
compensates claimants injured or killed by
uninsured drivers or those without the
correct insurance cover. These costs are
met through a levy on all UK motor
insurers.
Claims paid by the MIB will, obviously, also
be impacted by the Ogden discount rate. In
addition, recent European legislation and
Supreme Court judgements have left the
MIB responsible for accidents caused on
private land by vehicles not requiring motor
insurance such as quad bikes.
The MIB has also picked up the cost of
developing the new MOJ (Ministry Of
Justice) portals to support the Civil Liability
Act reforms.
Taking all of these issues together we anticipate
material increases in the MIB levy.
– Reinsurance
It has been well publicised that reinsurers
have been seeking to reprice their UK
motor portfolios to reflect several years of
underwhelming performance and Ogden
impacts leading to substantial double digit
increases. Whilst we would not expect to
be anywhere near the higher end of market
increases, we are conscious of the impact
of any such impact, and would expect this
to create immediate pricing pressures for
some competitors.
Whiplash and associated reforms
The Bill to support these changes has passed
Royal Assent and is now the Civil Liability Act,
but with a target launch date now pushed back
to August from the original April date.
The key ambition for the Act is to reduce the
cost of personal injury claims and the legal
costs linked to smaller personal injury claims.
Whilst this is a worthy aim, and the MIB
working with the MOJ have made good
progress on IT portal builds we remain
concerned the Act will not achieve its
objectives as there are a number of key policy
points outstanding - and the potential for
unintended consequences.
These include:
– No tariff published for secondary injuries
which may result in test litigation to establish
the correct method of valuation
– Lack of an alternative dispute resolution
process
– Cost recovery on child claims
– Fraud concerns – IP address for devices
and identification of claimants at medical
examinations
– Growth in non-whiplash claims e.g. tinnitus
– Cost layering – e.g. additional fees,
rehabilitation on credit basis, specialist fees
being introduced
– Extended medical prognoses to escape
two year tariff limit and introduce further
medical experts
– Potential considerable increase in claims
department operational complexity and
need for court decisions to confirm areas
of dispute
– IT build may not integrate with final rule set
In addition, we believe that claims management
companies may emerge seeking to exploit
weaknesses in the controls around the process.
Given the demise of PPI claims and clamping
down on holiday sickness claims they may be
looking for the next income opportunity.
Whilst this could represent a tailwind for claims
cost reductions, we believe it may be some
time before the holistic position can be
assessed accurately.
FCA pricing review
The review on “loyalty penalty” and behavioural
pricing techniques is still a significant potential
development for the motor insurance market.
At this stage recommendations are not known,
but it seems likely some action will be
forthcoming.
Sabre does not utilise either of these
approaches. All of our premiums are based on
risk factors, and we seek to maintain parity
between new business and renewal pricing.
Whilst we would expect to be a net beneficiary
of any changes we are alive to potential
unintended consequences of any proposed
recommendations.
Non-PRA regulated insurers
We are aware that some insurers regulated
outside of the UK are now being more critically
challenged on solvency levels. Whilst this
could be positive for us if insurers either leave
the UK market or need to increase prices
to enhance solvency levels there could be
knock on impacts from any insurer failures,
through calls on the Financial Services
Compensation Scheme.
Stakeholders
We have always been focused on our
environmental impacts and how our actions
influence our customers and other
stakeholders. In this year’s Annual Report and
Accounts we have taken the opportunity to
highlight our activities in many of these areas.
Colleagues
I would like to thank my colleagues throughout
Sabre for their expertise, commitment and
support throughout 2019 and especially for
their commitment as we implemented remote
working for the first time. We are pleased that
in addition to normal performance bonuses we
have been able to continue our tradition of
paying an end of year bonus reflecting our
ongoing strong performance, which in 2019
was £1,250 (net of tax) for all employees.
Outlook
Due to our consistent and disciplined focus on
our trading principles the Board remains
confident in the longer term outlook for Sabre
and its ability to navigate through the current
market challenges.
We are confident that our pricing actions and
focus on profitability will have maintained our
position within our target COR range. Clearly
the result of earning through a slightly higher
combined ratio on a lower premium means our
profit for 2020 may decline slightly from 2019.
As previously flagged we would also
anticipate a reducing impact from prior-year
reserve releases.
We are entirely comfortable with this position
as we believe it leaves us with a solid platform
from which to grow both profit and volume in
future years, and we will continue to use our
capital range to support an attractive dividend.
Although difficult to predict with any degree of
certainty how the insurance cycle will develop
through 2020, our base case view is for
continued cost inflation but also enhanced
pricing margins and potentially subsequent
modest volume growth facilitated by market
pricing action. These assumptions clearly
may be impacted by on-going COVID-19
uncertainties.
We will continue to follow a disciplined pricing
approach, targeting our required level of
profitability rather than volume and will update
shareholders as the year develops.
GEOFF CARTER
Chief Executive Officer
6 April 2020
15
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019
BUSINESS MODEL
Creating value
through experience
OUR INPUTS
OUR CHANNELS
HOW WE MANAGE RISK
INDIRECT
DISTRIBUTION
The Group has established
a broad network of almost
1,000 insurance brokers
across the UK over the
course of more than
20 years.
DIRECT DISTRIBUTION
GoGirl
Launched in 2011 to appeal
to young female drivers.
Insure2Drive
Launched in 2010 as a general motor
insurance product.
PRICE COMPARISON
WEBSITES
PCWs are websites that
enable customers to obtain
and compare quotes from
a wide variety of insurers
and brokers.
LONG-
STANDING
MANAGEMENT
EXPERIENCED
SENIOR AND
OPERATIONAL
TEAM
MARKET-
LEADING
PROPRIETARY
DATA
STRONG
BROKER
RELATIONSHIPS
ANALYSIS
AND PRICING
EXPERTISE
UNDERWRITING
DISCIPLINE
Maintaining price discipline
throughout the insurance cycle.
71.9%
10-YEAR AVERAGE COMBINED
OPERATING RATIO
PROPRIETARY
DATASET
Extensive dataset, compiled
from more than 15 years of
underwriting experience.
17 yrs
CONSISTENTLY COMPILED DATASET
16
Sabre Insurance Group plc Annual Report and Accounts 2019
HOW WE MANAGE RISK
OUR OPERATING MODEL
VALUE CREATION
CLAIMS
EXPERIENCE
Dealing with our customers
both fairly and quickly whilst
focusing on the identification of
fraud and effective management
of injury claims.
680 yrs
OF COLLECTIVE EXPERIENCE
PROPRIETARY
AND AGILE
PRICING MODEL
Disciplined, actuarially driven
pricing strategy utilising a
proprietary and agile model.
STRONG CASH
GENERATION
Strong cash
Our underwriting discipline and
generation
streamlined operating model give us
confidence that we can deliver our
Our underwriting discipline and
target dividend payout ratio of a
streamlined operating model give us
minimum of 70% of profit after tax.
confidence that we can deliver our
target dividend payout ratio of a
PREMIUM GROWTH
minimum of 70% of profit after tax.
We anticipate high single-digit growth
Customer growth
in gross written premium across the
insurance cycle, while maintaining our
We anticipate high single-digit growth
target combined operating ratio.
in gross written premium across the
insurance cycle, while maintaining our
MAINTAINING
target combined operating ratio.
EXPERTISE
Maintaining expertise
We continue to refine our underwriting
model to drive increasingly accurate,
We continue to refine our underwriting
customer-focused pricing. We aim
model to drive increasingly accurate,
to retain and develop superior levels
customer focussed pricing. We aim
of expertise in underwriting and
to retain and develop superior levels
claims management at all levels
of expertise in underwriting and
within our business.
claims management at all levels
within our business.
STRONG BALANCE
Strong balance sheet
SHEET
Our focus on profitability allows us
Our focus on profitability allows us
to deliver value to shareholders while
to deliver value to shareholders while
maintaining a strong balance sheet,
maintaining a strong balance sheet,
operating with an excess regulatory
operating with an excess regulatory
capital of 140% to 160% of our
capital target, of 140% to 160% of our
Solvency Capital Requirement.
Solvency Capital Requirement.
IN-HOUSE
PRICING AND CLAIMS
MANAGEMENT
The Group has a streamlined operating
model, with certain functions where
the Directors believe the Group has
significant expertise (such as pricing and
claims management) being maintained
in-house and certain other functions
outsourced to third-party providers,
whom the Directors believe can improve
efficiency and provide scale optionality.
PARTNERS
CUSTOMER SUPPORT
Telephone sales and phone and email
based customer support for the direct
brands are outsourced to Right Choice,
a specialist motor insurance broker
based in the UK.
FNOL AND REPAIR MANAGEMENT
First Notice Of Loss and repair
management are outsourced to the
Innovation Group, which provides
support to the insurance, fleet,
automotive and property industries.
INFORMATION TECHNOLOGY
The Group’s IT system is in the process
of being outsourced to a cloud based
infrastructure as a service or “IaaS”
provider. As a result the Group’s IT
infrastructure will be hosted by a third
party on virtual servers with state of the
art security.
PRICE DISTRIBUTION
Policy prices are distributed to brokers
via a number of specialist software
houses. These software houses typically
provide brokers with sales and
administration systems, as well as
enabling brokers to access policy prices
set by the Group.
Sabre Insurance Group plc Annual Report and Accounts 2019
17
STRATEGIC REPORT KEY PERFORMANCE INDICATORS
GROSS WRITTEN PREMIUM
£’000
NET LOSS RATIO
%
£197m 51.5%
2019
2018
2017
197,040
2019
210,017
2018
210,736
2017
EXPENSE RATIO
%
21.9%
51.5
2019
48.5
2018
46.5
2017
COMBINED OPERATING
RATIO %
73.4%
21.9
2019
22.1
2018
22.0
2017
73.4
70.6
68.5
ADJUSTED PROFIT
AFTER TAX £’000
SOLVENCY COVERAGE RATIO
RETURN ON TANGIBLE EQUITY
PROFIT BEFORE TAX
%
%
£’000
£45.7m 214%
41.6%
£56.5m
Definition
Definition
Definition
Definition
Definition
Definition
Definition
Definition
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.
The Group’s combined operating
ratio (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.
The Group’s 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.
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.
The Group’s adjusted profit
The Group is required to maintain
The ability to generate profits
Profit before tax as presented
after tax measures profit from
regulatory capital at least equal to
while maintaining capital at an
on an IFRS basis represents
operations, net of tax, adjusted
its SCR. The SCR is calculated
appropriate level is an important
the Group’s total income,
to offset the effect of amortisation
based upon the risks presented
part of the Group’s strategy,
less expenditure, before
of intangible assets and
by the Group’s operations and the
and the Directors believe that
any tax charges or any other
exceptional expenses excluding
various elements of its balance
Return on Tangible Equity is
comprehensive income.
tax which do not relate to the
sheet. The Group’s solvency
an appropriate quantification of
Group’s underlying performance
coverage ratio is the ratio of the
how successful the Group is in
(such as fees incurred in connection
Group’s regulatory capital in a
achieving this strategy. Return
with acquisitions or capital
particular period to its SCR for
on Tangible Equity is measured as
markets transactions).
the same period, expressed as
the ratio of the Group’s adjusted
a percentage. Solvency coverage
profit after tax to its average
ratio is stated before the final
tangible equity over the financial
dividend declared in respect
year, expressed as a percentage.
of 2019.
Aim
Aim
Aim
Aim
Aim
Aim
Aim
Aim
To maintain growth in GWP
when this can be done without
compromising the underwriting
profitability or broader
efficiency of the Group.
To maintain our underwriting
discipline such that our loss ratio
remains broadly consistent,
contributing to a combined
operating ratio of 70-80%.
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 70-80%.
Sabre seeks to achieve a COR
of 70-80% on all business
underwritten. Accordingly, the
loss and expense ratios need to
be managed to ensure they
contribute to the preferred
level of profitability.
This is a function of Sabre’s other
To maintain a solvency ratio
To make efficient use of the
Through careful management
KPIs and we intend to deliver
in the range of 140–160%. Taking
capital available to the business
of expenses and skilled
sustainable profit growth over
into account specific foreseeable
and achieve broadly consistent
underwriting, we intend to
the medium term.
requirements for capital.
returns year on year.
deliver sustainable profit growth
over the medium term.
Performance
Performance
Performance
Performance
Performance
Performance
Performance
Performance
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
How our KPIs link to Directors’ remuneration
Directors’ and senior management remuneration focuses on:
– Profit after tax
– Return on capital
– Total shareholder return
– Personal performance assessments
– Customer services.
These performance metrics are directly linked to the Group’s
performance as measured by the Key Performance Indicators (KPIs).
How our KPIs link to Sabre’s strategy
Sabre’s strategic priorities are outlined on pages 2 to 7 of this
report. The most fundamental of these is underwriting profitability,
and as such Sabre’s KPIs focus on measures of profitability, specifically
loss ratio, expense ratio, combined operating ratio and adjusted profit
after tax. As the Group is focused on managing risk, maintaining an
appropriate solvency coverage is important, so Solvency Coverage
Ratio is considered a KPI. The Group monitors its growth, and intends
to grow when market conditions allow, as such the level of gross
written premium forms a KPI. Effective deployment of capital
is also considered an overarching element of Sabre’s strategy,
which is measured through Return on Tangible Equity.
18
Sabre Insurance Group plc Annual Report and Accounts 2019
GROSS WRITTEN PREMIUM
NET LOSS RATIO
EXPENSE RATIO
COMBINED OPERATING
£’000
%
%
RATIO %
ADJUSTED PROFIT
AFTER TAX £’000
SOLVENCY COVERAGE RATIO
%
RETURN ON TANGIBLE EQUITY
%
PROFIT BEFORE TAX
£’000
£197m 51.5%
21.9%
73.4%
£45.7m 214%
41.6%
£56.5m
2019
2018
2017
45,711
50,069
53,288
2019
2018
2017
2016
214
213
160
2019
2018
2017
2016
41.6
54.4
81.8
2019
2018
2017
2016
56,479
61,363
55,512
Definition
Definition
Definition
Definition
Definition
Definition
Definition
Definition
The Group’s GWP comprises
Net loss ratio measures net
all premiums in respect of
insurance claims, less claims
The Group’s expense ratio is
a measure of total expenses
The Group’s combined operating
ratio (COR) is the ratio of total
policies underwritten in a
particular financial period
handling expenses, relative
(which comprises commission
expenses (which comprises
to net earned premium
expenses and operating
commission expenses and
regardless of whether such
expressed as a percentage.
expenses), and claims handling
operating expenses), and net
expenses, relative to NEP,
expressed as a percentage.
insurance claims relative to NEP,
expressed as a percentage.
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.
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.
The Group’s adjusted profit
after tax measures profit from
operations, net of tax, adjusted
to offset the effect of amortisation
of intangible assets and
exceptional expenses excluding
tax which do not relate to the
Group’s underlying performance
(such as fees incurred in connection
with acquisitions or capital
markets transactions).
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 period to its SCR for
the same period, expressed as
a percentage. Solvency coverage
ratio is stated before the final
dividend declared in respect
of 2019.
The ability to generate profits
while maintaining capital at an
appropriate level is an important
part of the Group’s strategy,
and the Directors believe that
Return on Tangible Equity is
an appropriate quantification of
how successful the Group is in
achieving this strategy. Return
on Tangible Equity is measured as
the ratio of the Group’s adjusted
profit after tax to its average
tangible equity over the financial
year, expressed as a percentage.
Profit before tax as presented
on an IFRS basis represents
the Group’s total income,
less expenditure, before
any tax charges or any other
comprehensive income.
Aim
Aim
Aim
Aim
Aim
Aim
Aim
Aim
To maintain growth in GWP
To maintain our underwriting
To minimise operating
Sabre seeks to achieve a COR
when this can be done without
discipline such that our loss ratio
expenditure within the business
of 70-80% on all business
compromising the underwriting
remains broadly consistent,
and optimise the efficiency with
underwritten. Accordingly, the
profitability or broader
efficiency of the Group.
contributing to a combined
operating ratio of 70-80%.
which we do business in order to
loss and expense ratios need to
allow for achievement of a COR
be managed to ensure they
of 70-80%.
contribute to the preferred
level of profitability.
This is a function of Sabre’s other
KPIs and we intend to deliver
sustainable profit growth over
the medium term.
To maintain a solvency ratio
in the range of 140–160%. Taking
into account specific foreseeable
requirements for capital.
To make efficient use of the
capital available to the business
and achieve broadly consistent
returns year on year.
Through careful management
of expenses and skilled
underwriting, we intend to
deliver sustainable profit growth
over the medium term.
Performance
Performance
Performance
Performance
Performance
Performance
Performance
Performance
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
See CFO’s review pages 26 to 29.
Reconciliation to IFRS Measures
A reconciliation between IFRS and non-IFRS measures
is given on pages 114 - 115s .
19
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 COVID-19
The global outbreak of COVID-19 presents
operational, market, counterparty and
insurance risk to the Group. The Directors
continue to monitor these risks closely and
take all appropriate steps to manage the
impact on policyholders, employees and other
stakeholders. This is discussed in more detail
in the Chief Executive Officer’s report.
PRINCIPAL RISKS
AND UNCERTAINTIES
RISK MANAGEMENT
RISK GOVERNANCE
Audit and Risk Committee
The Group operates a joint Audit and Risk
Committee which allows for effective
monitoring and management of the Group’s
exposure to risk as well as assurance through
the Internal Audit function, oversight of
external audit and oversight of the Group’s
compliance function. A separate Committee
report can be found on pages 48-51 of this
Annual Report.
Internal Audit
The Group’s Internal Audit function, which
is outsourced to BDO, provides independent,
objective assurance on the internal control
environment, focusing on the design and
operating effectiveness of the governance
processes, risk management procedures,
internal control and information systems.
The Chief Risk Officer and Company Secretary
is responsible for the relationship between the
Company and BDO, and reports to the Chair
of the Audit and Risk Committee.
Operating management
The Group’s Senior Management Team
assumes primary responsibility for the
day-to-day risks that it takes in the pursuit
of our business objectives, and for adherence
to risk management practices, processes
and controls.
Framework
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
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. During the year the Company
implemented a Management Risk Forum
(“Forum”), which typically meets every other
month. The Forum gives management the
regular opportunity to review and discuss the
risks which the Company 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 Company is exposed to, are in place.
What this involves in practice is covered on
the following pages.
20
Sabre Insurance Group plc Annual Report and Accounts 2019
RISK APPETITE
The Group has adopted a straightforward risk appetite reflective of its continued
strategic focus on generating returns through underwriting activity while limiting
exposure to all other areas of risk. The Group considers risk in the context of the
core elements of its Solvency Capital Requirement calculation, which are
summarised in the table below.
Risk area
Strategic and
governance
Insurance risk
(underwriting
and reserving)
Counterparty
Operational
Risk appetite
The Group aims to operate a simple governance structure, with clear reporting lines and direct accountability.
The Group complies fully with the Senior Managers and Certification Regime (“SMCR”) and Solvency II
(“SII”) rules which provide for an adequate framework to manage the firm’s risk in this regard. In following
these rules, the Group ensures those setting strategy are fit and proper and that the Board is sufficiently
diverse and effective.
The Group acknowledges that accepting underwriting risk is core to its business. The Group does, however,
aim to ensure that the only material risk accepted by the firm is “pure” pricing risk and that this risk is kept
within an acceptable tolerance. Underwriting risk is managed in particular with reference to the Group’s
pricing and claims management activity, and through prudent use of reinsurance. The Group recognises that
the reserves held in respect of incurred claims require a significant degree of judgement, and aims in all
circumstances to hold reserves in accordance with the appropriate accounting or regulatory framework. The
Group aims to calculate its reserves on a consistent basis over time.
The Group minimises counterparty risk where possible and monitors the stability and performance of brokers
closely. Sabre does acknowledge that in allowing brokers credit terms, there will always be some residual
degree of counterparty default risk. Sabre also accepts a degree of default risk on its direct instalment policies,
however the rate of default must remain acceptable in the context of the interest rate gains on such policies.
The Group aims to hold all material exposures with strongly rated counterparties and to diversify such
exposure where possible. Primarily, this relates to the Group’s management of its exposure to reinsurers.
In general, the Group attempts to minimise operational risk across the business through close monitoring of
key risk areas including IT and systems, people, regulatory exposure, outsourcing, financial crime, taxation
and accounting. The Group aims to comply fully with all applicable laws and regulation, including General Data
Protection Requirements (“GDPR”). Supply chain management is seen as key to ensuring operational risk is
minimised, particularly where processes are outsourced to a third party. The risk of fraud or error is
considered to be pervasive across all business areas, and as such all processes are developed in such a way
as to minimise exposure to such risks.
Market
The Group’s investment approach is to maintain suitable levels of liquidity; to preserve the capital; and to
invest in low risk stable investments that attract a coupon that is sufficient to meet any deterioration in the
capital value. Proper regard is given to the credit standing of custodians and counterparties.
Capital management
The Group aims to retain sufficient capital such that in all reasonably foreseeable scenarios it will hold
regulatory capital in excess of its Solvency Capital Requirement. The Board currently considers that this is
achieved through maintaining a regulatory capital surplus of 140% to 160%.
21
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
ASSESSMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The Directors confirm that they have undertaken a robust
assessment of the principal risks and uncertainties that the
Group faces – this includes those that threaten the business
model, future performance, solvency or liquidity of the Group.
Set out in the table below is an overview of the principal risks
we believe could threaten our strategy, performance and reputation
and the actions we are taking to respond to and mitigate those risks.
The Audit and Risk Committee has reviewed the current risk
environment, including evolving risk issues. The Committee
has also considered the evolving claims environment. All such
risks are appropriately captured in the existing risk framework,
therefore there have been no significant changes to the risk
profile of the Group in 2019.
Particular risk issues considered by the Directors during the year include:
– The outcome of the FCA’s review of market pricing
– The impact of climate change on our business and operations
– The continued risks around the United Kingdom’s exit from the
European Union
– Legal reform around small personal injury claims
– The planned withdrawal of the LIBOR.
Each of these issues has been incorporated into the narrative of the
table below.
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.
Key elements
Description
Mitigation
Insurance risk
Pricing
Failure to price risks effectively can result in worse than
expected loss ratios or significant unexpected changes in
volumes of business written. This includes appropriate
estimation of the increasing cost of claims, through both
historical trends, such as repair costs, and emerging
considerations such as climate change and the impact
of legal reforms.
Claims
management
A consistent approach to the management of claims is
essential for the accurate pricing of policies based upon
claims experience and is key to limiting the indemnity
cost of such claims.
The Group operates a highly sophisticated pricing model
which is built upon fully tested scientific principles. The
model is updated only when sufficient data has been
collected and analysed to support such a change.
Management continually monitors the market for pricing
developments, but prioritises maintenance of strong margins
over the volume of business written.
The Group ensures that all claims employees are
appropriately trained in the “Sabre way” of managing claims,
ensuring a fair outcome for both the claimant and the Group.
Sabre 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.
Reserving
Large losses
Reinsurance
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, climate change and the UK’s departure from
the EU are equally relevant to reserving.
There is a consistent and cautious approach to reserving with
a risk margin held above the actuarial best estimate. The
Group’s actuarial function analyses and projects historical
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. As part of the audit process, the Group
commissions an additional independent actuarial review
on a triennial basis.
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 individually large losses and
catastrophic events.
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.
22
Sabre Insurance Group plc Annual Report and Accounts 2019
Key elements
Description
Market and counterparty risk
Mitigation
Interest rate
The Group invests primarily in UK Government 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
macroeconomic factors, such as political uncertainty and the
unknown impact of the UK’s exit from the EU, in particular
the risk that sufficient trade deals are not reached before the
end of the “transition period”.
The investment portfolio is relatively short term, limiting the
impact of interest rate movements on profit. The maturity
profile of these investments is designed to match the pattern
of outgoing claims payments, such that on a Solvency II
basis the impact of any movement in interest rates is
mitigated by a converse movement in the value of claims
liabilities, which are discounted on the regulatory
balance sheet.
Default
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.
Liquidity
Inadequate monitoring of liquidity could result in the inability
to meet liabilities as they fall due.
The appointment of a new investment manager has been
made alongside which will continue the strategy of low risk
bonds with appropriate duration matching against our
liabilities.
The Group invests primarily in UK Government securities,
which carry an extremely 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.
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 be actively traded and therefore
liquid, it ensures that the maturity of its investment portfolio
is matched to its ongoing cash requirement.
Capital management
Solvency
position
Should the Group fail to maintain adequate solvency capital,
this could result in regulatory intervention which may limit
profitability or the ability of the Group to distribute capital.
Some issues impact primarily on the Solvency position but
do not affect the trading result of the Group. The emerging
issue of the withdrawal of LIBOR is the most relevant
example. This may impact the valuation of the Group’s
technical provisions, although the timing and effect (if any)
are unknown.
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 Committee and undergo appropriate
independent scrutiny.
Strategic and governance
Description
The Board must set an appropriate strategy which delivers
value to stakeholders while maintaining the financial and
operational stability of the Group. Management must
implement this strategy in a timely and effective manner.
The Group operates appropriate corporate governance, as
described in the Governance Report on pages 44 to 47.
Through this, the Board maintains oversight of management
and the Group’s performance and financial position.
23
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
Key elements
Description
Operational risk
Mitigation
Insurance
market
exposure
The Group operates solely within the UK motor insurance
market. The ability to sell policies at an appropriate margin is
therefore impacted by new entrants offering discounted
policies or irrational behaviour by existing participants.
The Group monitors the impact of its pricing decisions on the
volume of business written and has close relationships with
key broker partners and other industry bodies. The Group’s
strategy to maintain profitability over volume dictates that
extreme corrective action will not be taken during any
short-term reductions in market prices caused by
competitor activity.
Regulatory
Legal
IT systems
and
infrastructure
IT security
The Group is subject to a number of regulatory regimes,
including prudential regulation by the Prudential Regulation
Authority (“PRA”) and conduct regulation through the
Financial Conduct Authority (“FCA”). This regulation dictates
elements of the Group’s operational activity such as the
manner in which customers are treated and the recruitment
and development of employees. The FCA continues to focus
on fair market pricing which, while well managed through the
Group’s risk appetite, nonetheless increases conduct risk for
the Group.
The Group has an extremely low appetite for accepting any
risk other than that which relates to the underwriting of its
insurance policies, and therefore its decision-making reflects
this in relation to conduct risk and other regulatory matters.
The Group operates a simple risk framework which is
approved by the Board. The Group monitors legal and
regulatory developments in the UK and closely monitors
its exposure to regulatory risk. The Group culture ensures
the interests of our customers and their fair treatment
are paramount.
The Group 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.
The Group has established a robust risk and control
framework and sets the clear objective to minimise the risk
of non-compliance with all laws and regulations.
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.
Loss of data, including personal data, could lead to significant
financial or reputational detriment. Theft of the Group’s
Intellectual Property could impact the ability of the Group to
compete in the market. This is an area of increasingly
complex regulation, including the General Data Protection
Requirements (“GDPR”).
Financial
crime
Financial crime, whether internal or external, could result in
material loss of assets and significant reputational risk.
Financial crime can include misappropriation of assets or
fraudulent activity designed to misrepresent the financial
performance or position of the Company.
The Group addresses issues such as the GDPR proactively,
establishing working groups which report to the Executive
Committee where required. The Group takes a zero-
tolerance approach to the risk of loss of personal data or its
own Intellectual Property and has a framework of system-
level and other operational controls to ensure it is
appropriately safeguarded.
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.
Outsourcing
Distribution
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.
While 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 continually reviews the financial stability
and solvency of its larger brokers.
24
Sabre Insurance Group plc Annual Report and Accounts 2019
The Board has considered 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 31
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 2022 (the “Viability
Period”), 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.
VIABILITY STATEMENT
Assessing viability
In making its assessment, the Board took into
account the potential impact of the principal
risks that could prevent the Company from
achieving its strategic objectives. The
assessment was based on the Group’s 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 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 Company’s viability.
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 longer-term viability
The assessment of principal risks facing the
Company and robust downside sensitivity
analysis leads the Board to a reasonable
expectation that the Company will remain
viable, continue in operation and meet its
liabilities as they become due over the Viability
Period through to 31 December 2022.
COVID-19
In light of the current uncertainty regarding
the impact of COVID-19, additional scenario
testing was carried out to assess the impact of
reasonably foreseeable scenarios. These
scenarios include a significant decrease in
planned gross written premiums during 2020
and beyond, an increased loss ratio and a
failure of some of our brokers and/or
reinsurers. The Board believes that under
these reasonably foreseeable, but unlikely,
scenarios, the conclusions in the statement
remain unchanged.
The Board has considered those
circumstances which may cause the
business to cease to function effectively
as a going concern, to run out of liquidity,
or to breach its Solvency Capital Requirement,
both before and after the payment of the
proposed final dividend. The Board has
not identified any reasonably foreseeable
scenario, or stressed scenario, which could
cause any of these to occur. Such scenarios
considered include enhanced political or
regulatory intervention, wide-ranging failure
of counterparties and failure of the stock
markets to function effectively.
25
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CHIEF FINANCIAL OFFICER’S REVIEW
Sticking to our strategy through
turbulent market conditions
The Group’s
combined ratio has
remained strong, well
within the preferred
70-80% corridor”
ADAM WESTWOOD
Chief Financial Officer
HIGHLIGHTS
2019
2018
Gross written premium
£197.0m £210.0m
Net loss ratio
51.5%
48.5%
Combined operating ratio
73.4%
70.6%
Adjusted profit after tax
£45.7m £50.1m
Profit after tax
£45.7m £49.6m
Solvency ratio capital
(pre-dividend)
Solvency ratio capital
(post-dividend)
214%
213%
180%
161%
Return on opening SCR
74.9%
82.0%
Return on tangible equity
41.6%
54.4%
Throughout 2019, the Group has
increased the price of its core product
to reflect the increased level of current
and projected costs, including the costs
of claims and other increases in the
expense base, such as the MIB levy.
As these increases in our premiums have
generally been ahead of the market, our
products have become less competitive
and the Group’s total top-line income has
reduced a little, by 6.2%. The Group’s
combined operating ratio has remained
strong, well within the preferred 70-80%
corridor at 73.4%, benefiting from continued
discipline in pricing current-year business
and the run-off from prior-year claims
reserves.
Favourable market-value movements
generated an increase in net investment
return, at £2.4m for 2019 (2018: £0.8m). The
Group maintained its low-risk, buy-and-hold
investment strategy throughout the year.
Other income through instalment interest
and other fees generated a consistent level
of income, contributing £5.3m to the result
(2018: £5.9m), relative to the total level of
premium written.
Overall, adjusted profit after tax has decreased
to £45.7m for the year (2018: £50.1m), a
consequence of the higher combined ratio
and lower level of premium income for the
year. The Group has continued to maximise
long-term profit by writing business at a
combined ratio selected to optimise the
combined effect of the loss ratio and level
of premium written, rather than focusing on
just one factor, such as chasing volume.
26
Sabre Insurance Group plc Annual Report and Accounts 2019 The Directors have proposed an ordinary final
dividend of 8.1 pence per share (2018: 6.8p),
representing 70% of the Group’s profit after
tax (after the payment of the interim dividend),
in line with the Group’s strategy set out in its
IPO prospectus. The Directors have deferred
any declaration of a special dividend to
distribute excess capital due to the ongoing
uncertainty around the economic impacts of
COVID-19. Along with the interim dividend of
4.7 pence per share, the total dividend
proposed in respect of 2019 is 12.8 pence per
share, equal to approximately £32.0m
(2018: £50.1m).
Given the unprecedented nature of the
response to COVID-19 and uncertainty as to
the length of Government restrictions, the
Board has determined that it is prudent to
withhold any element of special distribution of
excess capital. The Board may propose an
interim dividend representing the return of
surplus capital later in the financial year should
the situation become clearer.
We will continue to focus on delivering an
ordinary dividend of 70% of Adjusted Profit
After Tax (“PAT”), and return excess capital to
shareholders are appropriate.
The Group’s return on tangible equity was
41.6% for 2019, a reduction from 54.4% in
2018. The decrease is a result of the reduction
in adjusted profit after tax, and the increase
in average tangible equity held by the Group,
which increased from £92.1m to £110m. The
increase in average equity is due to the Group
having held significantly less excess regulatory
capital at the start of 2018, with a regulatory
capital excess of 160% compared to 213% at
the end of 2018. The regulatory capital excess
as at 31 December 2019 is 214%, having
generated significant capital through normal
trading activity during the year and paid two
dividends, the final dividend in respect of 2018
and an interim dividend in respect of 2019.
Revenue
2019
2018
Gross written premium
£197.0m £210.0m
Gross earned premium
£203.7m £208.6m
Net earned premium
£183.2m £188.2m
Other technical income
£1.2m
£1.8m
Customer instalment
income
Investment return
£4.1m
£4.1m
£2.4m
£0.8m
In order to meet the increased cost of claims
and other expenses, the Group has increased
its underlying premium prices by over 10%
during 2019. As these increases have been
well above those which appear to have been
applied to the market as a whole, our prices
have become less competitive and as such
the volume of policies written has reduced.
This is core to Sabre’s strategy, to maximise
total profitability even when this comes at
the expense of top-line growth. In the past,
when the market has corrected systemic
under-pricing, Sabre has been in a very
strong position due to this disciplined approach
to pricing throughout the cycle, allowing
high-levels of growth or margin strengthening.
The level of other technical income
and instalment income remains broadly
proportionate to the amount of direct business
written, notwithstanding that instalment
income is earned over the life of a financed
policy while other income is generally
recognised upfront.
The Group continues to be exposed to
market value movements across its investment
portfolio, which remains invested in UK
Government bonds. A net investment return
of £2.4m was recorded in 2019 against £0.8m
in 2018. Sabre generally holds these
investments to maturity, therefore any market
value movements, which can generate in-year
gains and losses, are unwound as the bonds
regress towards par value.
As of January 2020, the Group has appointed
an investment manager, Goldman Sachs
Asset Management, who will work with
management to explore opportunities to
increase yield moderately, while maintaining
a simple, low-risk and largely buy-and-hold
investment strategy.
£197.0m
GROSS WRITTEN PREMIUM
2018: £210.0M
51.5%
NET LOSS RATIO
2018: 48.5%
73.4%
COMBINED
OPERATING RATIO
2018: 70.6%
27
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 Operating expenditure
2019
2018
Gross claims incurred
£110.3m £72.2m
Net claims incurred
£94.4m £91.3m
Current-year loss ratio
Financial year loss ratio
62.8%
59.2%
51.5%
48.5%
Net operating expenses
£40.1m £41.6m
Expense ratio
Combined operating ratio
21.9%
73.4%
22.1%
70.6%
Net claims incurred reported in the Consolidated Statement
of Comprehensive Income include both the costs incurred in
meeting liabilities incurred under insurance contracts and an
allocation of overhead expenses deemed attributable to the
handling claims. For 2019 this allocation from net operating
expenses was £7.6m (2018: £6.5m). The figures in the table
above do not reflect this allocation, in-line with the calculation
of loss ratio and expense ratio.
The best indication of the Group’s underwriting
performance during the year is to review the
net claims incurred position on a current
accident year and financial year basis.
This gives the cost of claims after any
expected recoveries from reinsurers. During
2019, the Group sought to optimise profit by
writing business towards the top-end of its
preferred Combined Operating Ratio corridor
CHIEF FINANCIAL
OFFICER’S REVIEW
CONTINUED
of between 70-80%. This, along with the
historically high levels of short-tail claims
inflation, resulted in a higher current accident-
year loss ratio than in 2018. The Group did,
however, benefit from the estimated ultimate
settlement costs of prior-year claims reducing
from those recorded in the prior-year reserves,
giving a prior-year loss ratio improvement of
11.2% (2018: improvement of 10.7%). We
believe that a considerable element of this
prior-year reserve movement is exceptional
and unlikely to recur.
(or above) the amount for which they were
reserved at the start of the year, this can lead
to significant movements in our gross reserves
and our gross claims incurred. As such, these
figures are volatile and often the result of
movements on a small number of claims.
Due to the reinsurance programme in place,
such movements do not have a material impact
on the Group’s profit due to the equal and
opposite impact on reinsurers’ share of claims
incurred. As such, we focus on the net result
when comparing year-on-year performance.
The gross (i.e. before the benefit from
reinsurance) loss ratio can be volatile
year-on-year. As we insure a relatively small
number of vehicles, with c.327k policies in
force, single large claims can have a very
significant impact on our gross claims incurred.
To counter such volatility, the Group operates
an excess of loss reinsurance programme,
which means that for any claim costing more
than £1m, any costs above £1m are taken by
the reinsurance market. This reduces volatility
in the net profit, at a cost of approximately
10% of our annual gross earned premium.
Similarly, where claims are settled below
Net operating expenses at £40.1m (2018:
£41.6m) are stated after recording a one-off
£3.3m reduction in the accrual held against
MIB levies, which is discussed further in note
25 to the financial statements. Excluding the
impact of this one-off reduction in the accrual,
the accrual levy paid to the MIB increased in
2019, and is expected to increase further in
2020. Excluding the impact of the reduction in
the accrual, the expense ratio would have
increased to 23.8% against 22.1% in the prior
year. The 1.7% increase in expense ratio
is driven primarily by increases in staff costs
(c.0.8% impact on expense ratio) and industry
levies (c.0.7% impact on expense ratio); in both
cases, the increase in expense ratio is due in
part to the reduced top-line. For staff costs,
we continue to run excess capacity on our
claims team in order to be best placed to
take advantage of growth opportunities where
appropriate, while providing inflationary
increases in staff salaries and incurring costs
in relation to the earn-through of free shares
issued to staff along with the post-IPO
long-term incentive plans. The increase in
levies, which has been flagged previously,
follows a continued upward trend in those
costs resulting from the change in the Ogden
rate, the inflationary claims environment, and
other legal and regulatory developments, which
have increased the industry view of the cost of
uninsured liability. The MIB levy also continues
to be impacted by the costs of implementing
new processes and systems ahead of the legal
reforms planned for April 2020.
The Group continues to maintain tight control
of costs, which remain largely volume
dependent due to the broker model and
outsourced administration of the Group’s
direct business.
£45.7m
PROFIT AFTER TAX
2018: £49.6M
28
Sabre Insurance Group plc Annual Report and Accounts 2019
74.9%
RETURN ON
OPENING SCR
2018: 82.0%
41.6%
RETURN ON
TANGIBLE EQUITY
2018: 54.4%
Taxation
In 2019 the Group recorded a corporation
tax expense of £10.8m (2018: £11.8m),
an effective tax rate of 19.07%, as compared
to an effective tax rate of 19.22% in 2018.
The effective tax rate is equal 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
Basic earnings per share
18.35p
19.90p
Diluted earnings per share
18.22p
19.77p
2019
2018
Basic earnings per share for 2019 is 18.35
pence compared to 19.9 pence for 2018. The
number of shares has not changed materially
during the year, which means that earnings
per share is proportionate to profit after tax.
Cash and investments
2019
2018
UK Government bonds
£263.6m £286.6m
Corporate bonds
£0.0m
£0.5m
Cash and cash equivalents
£31.8m £22.8m
The Group continues to hold a low-risk
investment portfolio and cash reserves
sufficient to meet its future claims liabilities.
There has been no change to the Group’s
investment or liquidity strategy during the year.
As discussed earlier, an asset manager has
been appointed to assist management in
prudent and efficient deployment of invested
assets, while sticking to our low-risk,
low-distraction philosophy.
Insurance liabilities
2019
2018
Gross insurance liabilities
£212.2m £215.8m
Reinsurance assets
£83.9m £82.4m
Net insurance liabilities
£128.3m £133.4m
The Group’s net insurance liabilities continue
to reflect the underlying profitability and
volume of business written. There was
relatively little movement on larger
outstanding claims during the year, hence
gross insurance liabilities are at a similar level
to 2018. The level of net insurance liabilities
held remains proportionate to the volume
of business written.
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
The Directors have proposed a total dividend
of 12.8 pence per share in respect of 2019,
consisting of the interim dividend of 4.7 pence
per share and an ordinary final dividend of
8.1 pence per share. The total amount
proposed to be distributed to shareholders by
way of dividends for 2019 is therefore £32.0m,
equal to approximately 70% of the Group’s
adjusted profit after tax. Excluding the capital
required to service this dividend, the Group’s
SCR coverage ratio at 31 December 2019
would be 180%. This is consistent with the
Group’s policy to pay an ordinary dividend of
70% of profit after tax, and to consider
passing excess capital to shareholders by way
of a special dividend.
ADAM WESTWOOD
Chief Financial Officer
29
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019
CORPORATE RESPONSIBILITY STATEMENT
Focusing on our people
and customers
As a Group we focus on our people and contributing to the
communities in which we operate. We comply with environmental
protection laws and seek to minimise detrimental effects that our
activities may have on the environment.
166
EMPLOYEES
SUSTAINABILITY FRAMEWORK
Our approach to corporate
responsibility is supported by five
strategic pillars which ensure we
consider all our stakeholders as
we make decisions about how to
run our business.
01 EMPLOYEES
02 COMMUNITIES
03 ENVIRONMENT
04 CUSTOMERS
05 PARTNERS
57%
95
MALE STAFF
43%
71
FEMALE STAFF
30
Sabre Insurance Group plc Annual Report and Accounts 2019
01 EMPLOYEES
The Group operates out of one site in
Dorking and, as at 31 December 2019,
employed 166 people.
People are key to our success. The Company
seeks to create a positive and collaborative
working environment where all employees
contribute to, and participate in, the success
of the business in a culture which requires the
Company and its employees to operate in an
honest, professional manner with a work ethic
which recognises the importance of a healthy
work/life balance. We are proud to say that
31% of our employees have been with the
Company for ten or more years.
Communication is key to fostering this
environment, with Geoff Carter and Senior
Management conducting employee briefings
and Q&A sessions throughout the year. The
Company holds appraisals which take place
twice a year. During the year, the Board
appointed Ian Clark to represent employee
voices at the Board. Ian hosted lunches
throughout the year to get to know
employees, and give them the opportunity
to raise any matters of concern with him.
In response to these meetings, the Company
introduced ‘Ask Sabre’, a facility allowing
employees to ask management questions
regarding the business, and to raise any
concerns they may have.
In 2018, the Company introduced an
all-employee survey, to monitor the culture of
the Company. This is now an annual exercise.
In 2019 employees were asked to complete
a questionnaire about their experience of
working at Sabre. The response rate was 49%
(2018: 57%). Of those who responded, over
91% (2018: 88%) would recommend Sabre as
a place to work.
In addition to the Company’s Code of Conduct
(which can be found on our website at
www.sabreplc.co.uk/about-us/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, harassment, flexible working,
health and safety, maternity and paternity
leave, season ticket loans, training and
development, and modern slavery. Emphasis
is also placed on employee wellbeing, where
all employees are offered an annual health and
wellbeing check, flu vaccinations, free fruit
and to participate in the Government’s cycle to
work scheme. The workforce policies and
practices are consistent with the Company’s
values and support the long-term success of
the business through supporting its
employees.
42%
EMPLOYEES HAVE BEEN
WITH THE COMPANY
FOR 10 YEARS OR MORE
The Company operates several share plans
to ensure employees are easily able to become
shareholders in the Company. At the time of
Listing, employees were granted shares in the
Company through the Company’s Share
Incentive Plan and Long Term Incentive Plan.
The Company launched its first Save As You
Earn grant in 2018, and during 2019 increased
the maximum monthly employee contribution
from £250 to £500. In addition to this, during
2019, Sabre expanded its Share Incentive Plan,
allowing employees to purchase Partnership
shares to a maximum of £1,800 a year, with
the Company matching shares purchased
through the Plan at a 1:3 ratio.
31
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CORPORATE RESPONSIBILITY STATEMENT
CONTINUED
TRAINING DURING THE YEAR
We have had a successful year for those
that wish to pursue further qualifications
which relate to their role at the Company.
During the year, the Company sponsored
a member of the Claims Department to
complete the Insurance Foundation
module (FIT); this was successfully
completed. The FIT is the initial module
of the Chartered Insurance Institute (CII)
exams. Two members of the Claims
Department completed the Insurance,
Legal and Regulatory (IF1) modules.
These were both successful. We have
two Claims Handlers who had previously
completed these modules and are now
working towards the Diploma in
Insurance. One of these employees
completed the Insurance Claims Handling
Process (IF1) module and the Claims
Practice (M85) module. The other has
successfully completed the Motor
Insurance Products (IF5) and Insurance
Claims Handling Process (IF4) modules.
It is not just the Claims Department
that have been working towards further
qualifications. We have a member of the
Underwriting Team who successfully
completed the IF1 module and is now
working towards the next. Also, in IT
an employee successfully completed
Interconnecting Cisco Networking
Devices Part 2 Exam. An employee
in Finance is undertaking a Chartered
Institute of Management Accountant
qualification and another a Masters in
Business Administration.
Training
The Company operates an e-training
programme for all the Company’s employees
focusing on business needs including topics
such as anti-bribery and corruption,
whistleblowing and modern slavery. The
Company offers ongoing training to all
employees and external courses for newly
promoted employees where appropriate, as
well as encouraging and financially supporting
employees to take professional Chartered
Insurance Institute (CII) exams for their own
development. The Company intends to
support more employees completing similar
qualifications in future years. We aim to
continue to support employees financially with
these qualifications as well as providing paid
study leave and time to take the examination.
THE CLAIMS MILESTONE
PROGRAMME
All new claims handlers are enrolled on
to our two-year Milestone programme.
The training provided is apprenticeship
style learning, offering the individual the
opportunity to develop their
understanding of the claims handling
process and to enhance their customer
service skills and technical insurance
knowledge. As part of the scheme,
trainees will spend time understanding
the key areas of the department, starting
in our Technical Support Unit and then a
minimum of six months on our Training
Academy, before graduating to one of
our main claims teams.
The Milestone scheme adopts a four-
monthly appraisal process, to include a
performance related pay rise for the trainee
following each review. An assessment is
completed before each appraisal which
assists the Team Leader to identify key
areas of development and objective setting
for the next appraisal period.
Secondment opportunities in our specialist
teams, such as Counter Fraud and Credit
Hire, allow the individual to further
improve their understanding of a particular
subject. Trainee claims handlers are also
encouraged to study towards gaining
insurance qualifications through the
Chartered Institute of Insurers, which
Sabre funds on behalf of its employees.
32
Sabre Insurance Group plc Annual Report and Accounts 2019
Diversity
During 2019 the Board reviewed its
Diversity Policy. The Company 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 equality and diversity
among our workforce, whilst
eliminating unlawful discrimination.
Sabre’s Diversity Policy aims:
– To promote equality, fairness and
respect for all our employees;
– To ensure that the Company does not
discriminate against an individual,
specifically due to their age, disability,
gender reassignment, marriage and
civil partnership, pregnancy and
maternity, race (including colour,
nationality, and ethnic or national
origin), religion or belief, sex (gender)
and sexual orientation; and
– To avoid all forms of unlawful
discrimination.
The % of women working within Sabre:
Number and % of women on the Board
As at 31 December 2019
As at 31 December 2018
29%
2/7
71%
29%
29%
2/7
71%
29%
Number and % of women
on the Executive Committee
As at 31 December 2019
As at 31 December 2018
20%
20%
20%
1/5
80%
20%
1/5
80%
Number and % of women on the Leadership Team
As at 31 December 2019
As at 31 December 2018
43%
43%
43%
3/7
57%
43%
3/7
57%
Number and % of women in Senior Management
roles (report to the Executive Committee)
As at 31 December 2019
As at 31 December 2018
36%
8/22
64%
36%
62%
38%
38%
8/21
Number and % of women working at Sabre
As at 31 December 2019
As at 31 December 2018
43%
45%
71/159
55%
45%
43%
71/166
57%
Female
Male
Gender pay gap
Whilst Sabre currently has fewer than 250
employees, and therefore is not required to
submit a formal statement on its gender pay
gap, our intention is to be transparent and
commit to publish our gender pay gap report
on an annual basis. Sabre believes that by
publishing this information it holds the
Company accountable to ensuring gender
equality regarding pay. We confirm that the
data and supporting narrative contained in this
report is accurate and that the figures in this
report have been calculated using the standard
methodologies used in the Equality Act 2010
(Gender Pay Gap Information) Regulations
2017. A copy of our Gender Pay Gap Report is
available on the Company’s website: https://
www.sabreplc.co.uk/about-us/corporate-
governance/gender-pay-gap-report-2019/
We are continuing to develop an inclusive
and diverse company. During the recruitment
and interview process we ensure fair,
non-discriminatory and consistent processes
are followed, and Sabre has a policy of, where
practical, advertising all roles internally to allow
employees to progress and develop. Sabre
also supports working parents through shared
parental leave, enhanced maternity and
paternity leave and where possible embraces
flexible working for all our employees.
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 below:
Department
Start date
Annual
rate
(£) Gender
Claims Negotiator
July 2016 21,507
Female
April 2016 21,839
Female
October 2015 22,019
Male
Since Sabre was incorporated we have
reviewed and increased salaries year on year.
We benchmark salaries from the insurance
industry, offer competitive salaries and are
proud to offer a personal performance bonus
plan for all employees.
Modern Slavery Statement
The Group has a Modern Slavery Statement,
which is available on the Company’s website:
https://www.sabreplc.co.uk/about-us/
corporate-governance/modern-slavery-
statement/
Sabre commits to support the aims of the
Modern Slavery Act and recognises that
insurance underwriters, like any other
business, must seek to ensure that modern
slavery or human trafficking does not feature
in any part of its business or supply chains.
Sabre is committed to acting responsibly and
ethically in business relationships and to
ensuring that slavery and human trafficking
does not occur anywhere within our business
operations. Sabre has a zero-tolerance
approach to any form of slavery and human
trafficking within the Group or its suppliers.
A risk-based approach is used to assess the
likelihood of modern slavery occurring. We
require all suppliers to provide their Modern
Slavery Statements as part of the tender
process prior to their appointment and then
annually if successfully appointed. These
statements are reviewed by Management to
ensure that our suppliers recognise that acts
of slavery and human trafficking will not be
tolerated, that these acts are removed from
their business and supply chain. Sabre expects
that all suppliers share Sabre’s commitment to
acting responsibly and ethically. Any supplier
which does not meet the Group’s
expectations will have their relationship
reviewed, and potentially terminated if the
risks are not subsequently addressed or their
Modern Slavery Statement is not deemed
satisfactory by Sabre’s management.
In addition, all employees must complete
annual training on how to spot modern slavery
and the risks associated with it. The intention
of providing this compulsory training is to
equip employees with the skills to recognise
signs of slavery, to understand that it will not
be tolerated, and to report any suspected
cases to Senior Management, with the
overarching objective to prevent slavery
and human trafficking occurring within
the Group and its suppliers.
During the year ended 31 December 2019
there were no reports relating to modern
slavery or violations of human rights reported
(directly or indirectly) or cases identified.
There were also no incidents reported
relating to our supply chain, either by
internal supplier relationship managers
or our suppliers themselves.
33
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CORPORATE RESPONSIBILITY STATEMENT
CONTINUED
02 COMMUNITIES
At the beginning of 2019, Sabre introduced
a charity committee in order to prioritise and
plan fundraising events throughout the year.
It was decided that the Group needed one
charity that all its employees would support
and that the charity would be chosen by its
employees. Employees were encouraged to
put forward their suggestions as to which
charity should be chosen for 2019 and 2020
respectively. Following these proposals, the
charity committee voted and with agreement
from the Senior Management Team, the
charity chosen was St Barnabas & Chestnut
Tree House. St Barnabas House offers
palliative care to people in the local
community, both at the hospice and in the
comfort of the patient’s own home. Chestnut
Tree House is a children’s hospice caring for
over 300 children and young adults with
progressive life-shortening conditions.
At the end of the year, Sabre and its
employees have raised £1,121 for St Barnabas
& Chestnut Tree House. This money has been
raised through events organised by the charity
committee, such as raffles and bake sales.
The Group appreciates that it is not only
monetary donations that are required to help
charities, but also people’s time can be just as
beneficial to a charity. In 2020, the charity
committee is planning an initiative called ‘give
a day away’, where a number of employees
will be given time out of their working day to
help volunteer at St Barnabas & Chestnut Tree
House; this may include assisting with
renovations, gardening or simply interacting
with the patients in the hospice.
SABRE’S APPROACH TO DATA PROTECTION
– During preparations for compliance with
the GDPR, Sabre implemented a GDPR
working group to ensure all areas of the
business were GDPR ready. This included
retaining the expertise of external parties
to advise and assist in the drafting of our
Privacy Policy. The policy is reviewed on a
regular basis.
– All employees are trained, at least
annually, on Data Protection. 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.
– A GDPR Oversight Committee, chaired
by our Data Protection Officer, meets
every eight weeks 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.
– Reporting of Data Protection risks is
formally made to Catherine Barton,
Chair of the Audit and Risk Committee,
to whom the Data Protection Officer
reports directly.
– During Q1 of 2019, Sabre tasked BDO as
part of the Internal Audit work to review
the IT Managed Service Provision, Cyber
Security measures and IT Policies &
Procedures. All suggested actions have
been/or are in the process of being
remediated and will be complete by the
end of 2020.
– Annual penetration tests are completed
by an external organisation.
During the financial year ending 31 December
2019 the total donations by the Group and
its employees amounted to £18,001
of which £2,303 (2018: £1,228) was raised by
employees and £15,698 donated by Sabre
(2018: £4,512). All donations made by Sabre
employees were matched by the Group, and
donations were made by the Group to
employees who were fundraising for their own
causes, participating in various different
activities or challenges for charities close to
their hearts. Sabre will continue to support
employees in this way throughout 2020.
The Group and its employees have also
supported various other charities throughout
the year, with some of those charities
highlighted below:
– Macmillan Cancer Support (charity) – the
World’s Biggest Coffee Morning donation
– St Catherine’s Hospice
– Comic Relief
– Children in Need
– Alzheimer’s Society
– The Royal British Legion
The Group also supports local schools by
providing work experience for students, with
an induction to the Group and the opportunity
to work for each department and gain an
understanding of the business to make it
as valuable a learning experience as possible
for the students.
RAISED FOR CHARITY BY EMPLOYEES
£2.3k
£19.4k
SABRE DONATED TO CHARITY
34
Sabre Insurance Group plc Annual Report and Accounts 2019
03 THE ENVIRONMENT
Sabre recognises that its business has an
impact on the environment, and further
recognises the importance of reducing that
impact. Sabre does this by following current
best practice wherever possible regarding
reducing the Company’s impact on the
environment.
Sabre’s approach
to environmental matters
During the year, the Board appointed Adam
Westwood to be the Board Director responsible
for Environmental, Social and Governance
matters. It was felt as this is a naturally
growing area of concern for investors, that in
his role as Chief Financial Officer, Adam was
the most appropriate for the position.
Sabre operates from a single site in Dorking,
consisting of two adjacent offices. As such,
our people work within walking distance of
one another, and there is negligible business-
as-usual travel for most staff. Our offices are
required to have an aesthetic consistent with
the surrounding Area of Outstanding Natural
Beauty within the Surrey Hills. Within that
constraint, we aim to operate our offices as
efficiently as possible, despite our relatively
small footprint.
We understand that our responsibilities extend
beyond simply operating an efficient office.
We also ensure that our environmental
consciousness is set through the tone at the
top all the way through the business. Our
management must be, and be seen to be,
aware of our impact on our surroundings, and
willing to compromise in order to satisfy our
desire to create a positive impact. This is not
the preserve of big initiatives, indeed these are
not always possible for an organisation of our
scale. It is the small, everyday decision-making
which will help us make a difference. Going
forward, we intend to gauge and steer our
staff’s engagement through employee lunches
and in formal communication with our staff.
The provision of motor insurance, our core
operation, is generally environmentally light.
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 our 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.
Sabre continues to operate a number of
measures within its business such as:
– Heating and air conditioning timing
management systems to reduce switch
on times
– Low energy monitors and other technology
– Recycling bins for paper, plastic, cans
and batteries
– Electric charging points for electric and
hybrid vehicles
Emissions data
The GHG emissions data for the Group for the
period from 1 January 2019 to 31 December
2019 is set out below, alongside prior years.
We are pleased to see the continued decline
in our GHG emissions.
The emissions data is measured in tonnes of
carbon dioxide equivalent (“tCO2e”) and covers:
i. Scope 1 emissions being direct emissions
resulting from combustion of fuel and
operation of facilities; and
ii. Scope 2 emissions being indirect emissions
from purchased grid electricity and other
energy for own use.
Tonnes of CO2e
2019
2018
2017
Scope 1
Scope 2
Total footprint
(Scope 1
and Scope 2)
Number of
employees
tCO2e per employee
–
74
–
104
–
138
74
104
138
166
0.5
159
0.7
151
0.9
The footprint is calculated in accordance with
the GHG Protocol and Carbon Trust (“CT”)
guidance on calculating organisational
footprints. Activity data has been converted
into carbon emissions using published
emissions factors.
The footprint includes data for the Group’s
offices in Dorking where its employees are
located. The footprint does not include
outsourced activities, for example repair shops
and third-party suppliers. As the Group does
not own any vehicles and business travel
through private vehicles is limited, the data is
not available or accurate and accordingly
transport emissions have been excluded from
the reporting scope.
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.
Our targets
Given Sabre’s relatively low impact on the
environment, we do not set a pure target CO2
footprint. We consider that our culture is
sufficient to ensure that individual and
corporate decision-making will have the net
effect of carrying out our activities in the most
environmentally friendly way possible. We do,
however, aim to reduce our relative use of
office consumables, and will look to whether
an appropriate measure of such use can be
reported in the future.
Global climate change
We recognise that global climate change
appears to be having some effect on our
environment, and will continue to do so under
most plausible scenarios. Much of the activity
described above is designed to reduce our
impact on our environment and, where
possible, to minimise our contribution to the
man-made factors which are likely to be
driving such change.
We have considered not only our impact on
the environment, but also the impact of global
climate change on our business. This includes
the impact on day to day operations as well as
the underwriting risks presented by vehicles
which operate within the environment. This
is discussed further on page 22 within the
Principal risks section of the Strategic Report.
Policies and procedures
Sabre’s environmental policy is available
on our corporate website, at
https://www.sabreplc.co.uk
35
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CORPORATE RESPONSIBILITY STATEMENT
CONTINUED
Claims
Most customers only experience our service
when they make a claim. We understand this
can be a stressful process and seek to make
the process as easy as we can and “no
hassle” 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 top class
partners, over which we apply a strong suite of
service-level parameters, which are monitored
regularly to ensure customers receive great
service at all touch points – whether by our
own team or outsourced partners.
04 CUSTOMERS
Customers are at the heart of Sabre’s
business model; we aim to provide
access to motor insurance for almost
everyone, at a fair price, and for all of our
customers to experience high-quality
customer service.
Pricing
We price all of our policies based upon our
estimate of the ultimate cost to us of servicing
that policy including paying claims and taking a
consistent margin regardless of the premium
level. This is based upon our view of the risks
presented by each individual policy, taking into
account both the person and the vehicle
insured. This assessment is based on many
years of claims data. Because we seek
to offer premiums to almost everyone,
we have generated a deep pool of data,
which allows us to provide the best possible,
risk-adjusted prices.
Customer experience
Customers are able to reach us through
several channels, either through our extensive
broker network or directly through our own
brands, Go Girl and Insure2Drive.
However our customers reach us, we
strive to ensure they experience easy and
straightforward customer service.
CUSTOMER CONTACT
Go Girl
Insure2Drive
Broker
Customers
36
Sabre Insurance Group plc Annual Report and Accounts 2019
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
staff and customer welfare as well as meeting
any regulatory requirements.
05 PARTNERS
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 seek to ensure that all of our suppliers are
paid the correct amount, on time.
Commercial terms with our suppliers are
negotiated in order to deliver the best value to
our shareholders, whilst also ensuring partners
can earn a reasonable profit and sustain a
mutually beneficial ongoing relationship.
Brokers
Approximately 69% of our premium income is
sourced through brokers. 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.
37
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 OUR STAKEHOLDERS
Sabre aims to provide high-quality
motor insurance at a fair price
OUR PURPOSE
To provide motor insurance, available
to the widest possible range of
drivers, based upon a fair, risk-based
pricing model that is consistent
across all customers. Generate
reliable returns and return this to
shareholders, or reinvest in the
business in order to increase
future returns.
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.
The consideration of stakeholder needs is not
new to Sabre, however this year we are taking
the opportunity to explain in more detail how
we, and in particular our Board, engage with
stakeholders, and how stakeholder needs are
at the core of our decision-making.
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 39 of the Strategic Report set out who
our stakeholders are and how our strategy
impacts them. We further discuss how we
engage with our key stakeholders, and our
own employees, on pages 30-37 of
the Strategic Report.
Listening to the needs of stakeholders
Our Board interacts with stakeholders through
direct engagement as well as through
information provided by management.
Key engagement activities include:
– Appointing a Non-executive Director
to be responsible for direct employee
engagement, which involves meeting with
employees at all levels within the business
throughout the year in order to discuss
their concerns, ambitions, and views
on the business;
– Engaging with shareholders, at the regular
management roadshows, attendance at
investor conferences and through meetings
with the Chairman;
– The Board and management allow time for
informal discussions with shareholders
before and after the Group’s AGM. This
is an opportunity to interact with smaller,
non-institutional shareholders;
– Regular supervisory meetings between
individual Board members and the Group’s
regulatory supervisory team, which
facilitates wider discussion of the issues
facing the insurance industry as a whole,
as well as Company-specific matters; and
– Reports from executive management to
the Board on customer service, including
complaints root-cause analysis and whether
customer service metrics have been met.
Embedding stakeholder interests
within our culture
Through informed discussion at Board level,
our Executive Team carries forward
stakeholder consideration into and throughout
the business. Sabre operates a culture of
openness and transparency, with
management at all levels working amongst
their operational teams, ensuring that the tone
from the top is well embedded in the day to
day operations of the Company.
Ensuring stakeholder interests are
taken into account
The Board is aware of its responsibilities in
respect of stakeholders, and ensures that the
needs of relevant stakeholder groups are
considered in all Board-level decision-making.
Consideration is given to the Company’s wider
purpose, as well as its primary objective to
generate value for its shareholders. With the
increasing focus on the relationship between
stakeholder interests and governance,
we take increased care to ensure such
considerations are documented, and that the
Board receives adequate, appropriate training
on its responsibilities.
38
Sabre Insurance Group plc Annual Report and Accounts 2019
EXAMPLE: EMPLOYEE ENGAGEMENT
LUNCHES — COMMENTARY FROM
IAN CLARK, NON-EXECUTIVE
DIRECTOR
During 2019, a series of employee
lunches were hosted by our Non-
executive Director responsible for
employee engagement, Ian Clark.
Who attends the employee
lunches?
Employees across all departments and
at all levels of the business were invited
to the lunches. The discussions were
open and I am pleased that the
questions raised were interesting and
helped me get a good feel for the wants
and needs of our employees.
What has Sabre and the Board
learnt from the employee lunches?
We have been through a period of some
change at Sabre, at the corporate level,
listing on the London Stock Exchange
and the enhanced governance that
comes with that. I was very interested
to hear if and how those changes had
affected the day-to-day lives of our
employees. There was, as I would
expect, much discussion of the
employee review process as well as the
Group’s performance, and how that
filtered down throughout our employee
population. Overall, I have taken away
some useful talking points, which I have
raised with the Executive Team. One of
the outcomes was the introduction of
the ‘Ask Sabre’ inbox, which allows
employees to email management
with questions. The answers are then
shared with employees through the
Company’s Intranet.
How do you process the output
from the lunches?
I report back to the Board on my key
findings and, where useful, discuss
these with the Executive Team. This
helps the Board to assess the overall
culture at Sabre and provides an
opportunity to identify any concerns
held by our employees, who continue
to be Sabre’s most valuable asset.
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.
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.
CUSTOMERS
Underwriting performance
Provide 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.
Operations
Skills-based operations allow for fulfilling
employment. Conformity with best practice.
Growth
Over time, scale benefits allow lower
prices without sacrificing margin.
Distribution
A flexible distribution model allows protection
of bottom-line throughout the market cycle
and responds to emerging customer demand.
Distribution
Broker-led distribution retains technical
skills in-house.
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.
REGULATORS
Underwriting performance
Only underwrite business that will meet our
target margins and generate appropriate
regulatory capital.
Risk management
Maintain capital headroom. Minimise conduct
risk and ensure full compliance with legal and
regulatory landscape.
Growth
Grow when the market allows, without
sacrificing profitability or capital security.
Operations
Ensure 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.
39
STRATEGIC REPORTSabre Insurance Group plc Annual Report and Accounts 2019 CORPORATE
GOVERNANCE INTRODUCTION
The Board is
committed to
high standards
of corporate
governance
PATRICK SNOWBALL
Chairman
DEAR SHAREHOLDER
It is my pleasure to present our third
Corporate Governance Report. This
report explains our current governance
framework, how we have applied the
provisions of the Code and includes
committee reports from the Audit and
Risk Committee, Nomination Committee
and Remuneration Committee.
Governance
The Board is committed to high standards of
corporate governance. The Group is regulated
by FCA and PRA and prior to the Listing, the
governance practices in place were enhanced
with the implementation of the policies and
procedures expected of a public limited
company following admission to the premium
segment of the London Stock Exchange. We
have continued to build these policies and
procedures during 2019.
The Board has worked hard to ensure
application of all of the main principles of the UK
Corporate Governance Code. The Company’s
strategy, culture and purpose, are aligned and
discussed at every Board meeting. The Board
remains committed to strong corporate
governance, and in support of this completed
an external Board Effectiveness Review during
2019. More information on the process, the
conclusions and the recommendations can be
found on page 46 of the report. In addition to
this, the Board decided to split the roles of Chief
Financial Officer and Chief Risk Officer to
ensure robust governance is upheld in all
aspects of the business.
40
Sabre Insurance Group plc Annual Report and Accounts 2019 The Board
The Board of Directors consists of seven
Directors who have the appropriate balance
of skills, experience, independence and
knowledge of the Company to oversee the
strategy of the Group, review management
performance and set the Company’s values
and standards to ensure that its obligations
to its shareholders and other stakeholders
are met. During the year, there were no
changes to the membership of the Board or
its Committees. I am pleased to confirm that
all of the Non-executive Directors who serve
on the Sabre Insurance Group plc Board are
independent, in line with good corporate
governance.
Further information about our Directors and
the experience they bring to the Company
is set out on pages 42 and 43 of this
Annual Report.
IPO award vesting
In recognition of the important role employees
play in the success of Sabre, at the time of the
Company’s Listing, the Board granted share
awards, without performance conditions, to
employees, based primarily on their length
of service with the Company. I am pleased
to announce that during 2019 these awards
partially vested, allowing the vast majority
of our people to benefit from membership
of the Group’s share register. I would like to
express my thanks to all employees for their
continued hard work, time and commitment
to the Company.
2020 Annual General Meeting
The Company’s 2020 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 Notice of
Meeting will be sent to shareholders and the
result of the AGM voting on all resolutions will
be published on the Company’s website.
We look forward to engaging with you in the
future and to meeting shareholders at our
forthcoming AGM, which will be held at
9:30am on 21 May 2020 at the Company’s
offices at Old House, 142 South Street,
Dorking, RH4 2EU.
PATRICK SNOWBALL
Chairman
6 April 2020
41
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 BOARD OF DIRECTORS
REBECCA SHELLEY
PATRICK SNOWBALL
ANDY POMFRET
ADAM WESTWOOD
IAN CLARK
GEOFF CARTER
CATHERINE BARTON
42
Sabre Insurance Group plc Annual Report and Accounts 2019
PATRICK SNOWBALL
Chairman
GEOFF CARTER
Chief Executive Officer,
Executive Director
ADAM WESTWOOD
Chief Financial Officer,
Executive Director
ANDY POMFRET
Senior Independent Director,
Non-Executive Director
Experience
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.
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 10 years’
experience of the insurance sector.
Adam holds a BSc (Hons) degree in
Physics and Business Studies from
the University of Warwick.
Experience
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
December 2015. Geoff joined as
Chief Operating Officer in November
2015 and became Chief Executive
Officer in May 2017.
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. He also
spent seven years at Churchill Insurance,
both prior to and following its acquisition
by Royal Bank of Scotland plc (“RBS”),
and was subsequently seconded to
TescoCompare.com to launch a joint
venture between Tesco plc and RBS.
He is a Chartered Insurer and holds a
Master of Business Administration
degree from Sheffield Business School
and a Postgraduate Diploma in Marketing
from the Chartered Institute of Marketing.
Experience
Patrick Snowball was appointed a
Non-executive Director of Sabre
Insurance Group plc in September 2017.
He joined the Board in September 2017
and became Chairman in November
2017. In 2018 Patrick was appointed as
Non-executive Chairman of Provident
Financial plc and served as Chairman of
IntegraFin Holdings plc from 2017
to 2018.
Patrick has extensive experience of the
insurance industry and has gained a
wealth of knowledge of many different
aspects of the sector acquired over a
30-year career in financial services.
His last executive role was as Chief
Executive Officer of Suncorp Group
Limited, an ASX20 Australian financial
services group, from 2009 until 2015.
Prior to that, he was Group Executive
Director at Aviva plc from 2001 until
2007 (as well as holding various other
positions in the Aviva group and its
predecessor companies). He also has
significant boardroom experience and
was a non-executive director of Jardine
Lloyd Thompson Group plc from 2008
to 2009 and Deputy Chairman at
Towergate Partnership between 2007
and 2009. He was also a member of the
FSA Practitioner Panel from 2006 to
2008. He holds an LL.D from the
University of East Anglia and a Masters
degree in History and Economics from
the University of Oxford.
Committee membership
CATHERINE BARTON
Non-executive Director
IAN CLARK
Non-executive Director
REBECCA SHELLEY
Non-executive Director
Experience
Catherine Barton was appointed
a Non-executive Director of Sabre
Insurance Group plc in October 2017.
Catherine has extensive insurance
and actuarial experience. She began
her career with Bacon & Woodrow,
becoming a fellow of the Institute of
Actuaries in 1999, before moving to
Deloitte LLP, where she became a
partner in 2005 and led the UK and
overseas markets retail insurance
actuarial team. Between 2010 and 2015,
she was a partner within the general
insurance actuarial team of Ernst &
Young LLP. Catherine’s most recent
executive experience is from Bupa
where she worked as Commercial and
Finance Director of the UK business from
2015 to 2017 and as General Manager
for Bupa Dental Care in 2018. She has
significant and relevant financial
experience gained from these roles
and she holds a MA (Hons) degree in
Mathematics from the University
of Oxford.
Experience
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.
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 at Deloitte LLP
between 2001 and 2014, where he
led the Strategy and Corporate Finance
practice for the insurance sector. Prior
to that, he was an Insurance Partner at
Bacon & Woodrow, during which time
he spent three years as an independent
UK Government appointee on the
Insurance Brokers Registration Council,
then the regulator of insurance broking
in the UK. Ian is Chairman of Mighty
Quin Consulting Limited, a company
through which he provides strategic
advice within the insurance industry.
Committee membership
Committee membership
Experience
Rebecca Shelley was appointed a
Non-executive Director of Sabre
Insurance Group plc in October 2017.
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 to 2000,
Rebecca moved to Prudential plc in
2000, where she held a number of senior
positions, starting as Investor Relations
Director, and then becoming 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.
Rebecca was also at TP ICAP plc as
Group Corporate Affairs Director from
2016 to 2019. Rebecca will be appointed
Non-executive Director of Hilton Food
Group plc with effect 1 April 2020.
She holds a BA (Hons) in Philosophy
and Literature from the University of
Warwick, and an MBA in International
Business and Marketing from Cass
Business School.
Committee membership
Experience
Andy Pomfret was appointed Director
and Senior Independent Director of
Sabre Insurance Group plc in February
2018. Andy has extensive experience
of working in the financial services sector
and with UK listed companies both as
an executive and non-executive director.
After qualifying as an accountant with
KPMG he spent over 13 years with
Kleinwort Benson as a corporate
financier, venture capitalist and finance
director of the investment management
and private banking division. In 1999 he
joined Rathbone Brothers plc as Finance
Director, and served as Chief Executive
from 2004 until 2014.
Andy has been a non-executive director
of several companies (both quoted and
unquoted). Previously Andy was
Non-executive Director at Beazly plc for
eight years, during which he chaired the
Audit and Remuneration Committees
and served as senior Independent
Director. He is currently a director of
Sanne Group plc and two investment
trusts (Aberdeen New Thai and Miton
Micro-cap). He was also a founder
member of the Prudential Regulation
Authority Practitioner Panel.
Andy holds an MA from Queens’
College, Cambridge.
Committee membership
KEY TO COMMITTEES
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair of Committee
43
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019
GOVERNANCE REPORT
Committed to high standards
of corporate governance
Governance Code compliance
The Board is committed to the high standards
of corporate governance across the Group and
supports the principles laid down in the UK
Corporate Governance Code (the “Code”), as
issued by the Financial Reporting Council. The
Board considers that the Company were
compliant with all of the principles and
provisions of the Code during the financial year
ended 31 December 2019. To ensure the
Group was fully compliant with the principles
of the Code, the Board reviewed and
addressed its training and development needs
by attending various seminars and teach-ins
from advisers at Board meetings, and an
external Board Effectiveness Review, which
evaluated the performance of the Board, its
Committees, and the Company Chair was
completed.
A copy of the Code is available on the
Financial Reporting Council’s website at
www.frc.org.uk/directors/corporate-
governance-and-stewardship/uk-
corporate-governance-code.
Leadership
The current Board members, details of their
experience and the date of their appointment
are set out on page 43.
As at 31 December 2019, the Board comprised
seven Directors: the Chairman, two Executive
Directors, and four Non-executive Directors
(“NEDs”), all of whom were independent.
During the year there were no changes to
the Board.
The independence of the NEDs is reviewed
annually in accordance with the criteria set
out within the Code. The Board considers
Catherine Barton, Ian Clark, Andy Pomfret
and Rebecca Shelley to be independent in
accordance with Provision 10 of the Code.
Accordingly, over half the Board excluding
the Chair was independent as at 31 December
2019.
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.
The Board
The Board is collectively responsible for
setting the Company’s strategic aims and
providing the leadership to put them into
effect through the management of the
Group’s business within the Company’s
governance framework. It does this by
setting Group strategy and then ensuring that
appropriate standards, controls and resources
are in place for the Company to meet its
obligations, and reviewing management’s
performance. This includes a Code of Conduct
setting 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 (available
www.sabreplc.co.uk/about-us/code-of-
conduct/). Board members recognise
the need and importance of acting with
integrity, and does so in their roles as
Directors of the Company.
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 specifically
reserved for its decision which is reviewed
on an annual basis. These reserved matters
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
this schedule of reserved matters.
The Board meets six times a year with
supplementary meetings as required. There is
a planned cycle of activities, managed through
a schedule of matters, and a formal agenda for
each meeting. Minutes and a follow-up list of
matters arising from each meeting are
maintained. Verbal updates are provided by
each Committee Chair at the following Board
meeting. The Company Secretary acts as
Secretary to the Board and to all of its
Committees. The appointment or removal
of the Company Secretary is a matter for the
Board as a whole. The Company Secretary
assists the Chairman in ensuring that the
Board and Directors have the appropriate
policies, processes, information, time and
resources they need to fulfil their duties and
in order to function effectively and efficiently.
Chairman and Chief Executive Officer
The Company considered that Patrick
Snowball was independent on his
appointment as Chairman.
The roles of the Chairman and the Chief
Executive Officer (“CEO”) are different and
their separate responsibilities are set out in
writing, recognised and approved by the Board.
The Chairman’s key responsibilities include:
– Providing strong and effective leadership
to the Board
– Ensuring the Board as a whole plays a full
and constructive part in the development
and determination of the Group’s strategy
and overall commercial objectives
– Facilitating the effective contribution
of the NEDs
– Retaining and building an effective and
complementary Board with an appropriate
balance of skills and, as Chair of the
Nomination Committee, considering
succession planning for Board appointments
– In conjunction with the CEO and Company
Secretary, ensuring that members of the
Board receive accurate, timely and clear
information
– Ensuring that the performance of individual
Directors and of the Board as a whole and
its Committees is evaluated regularly
– Ensuring the Company maintains effective
communication with shareholders and
other stakeholders
– Promoting the highest standards of
integrity, probity and corporate governance
throughout the Group and particularly at
Board level.
The CEO’s key responsibilities include:
– Running the Group’s business within the
authority delegated by the Board
– Proposing and developing the Group’s
strategy and overall commercial objectives,
in close consultation with the Chairman and
the Board, and with regard to the Group’s
44
Sabre Insurance Group plc Annual Report and Accounts 2019
responsibilities to its shareholders,
customers, employees and other
stakeholders
– Chairing the Nomination Committee when it
is considering succession to the role of
Chairman of the Board
During the financial year ended 31 December
2019 the Board met nine times, during which
it reviewed and approved:
– Implementing the decisions of the Board
and its Committees
– Consulting regularly with the Chairman and
Board on matters which may have a material
impact on the Group
– Ensuring the development needs of the
Group’s Senior Management Team are met
and that succession planning meets the
needs of the Group
– In conjunction with the Chairman and
Company Secretary, ensuring the Board
receives accurate, timely and clear
information
– Promoting and conducting the affairs of the
Group with the highest standards of
integrity, probity and corporate governance.
The CEO is supported by a strong and
experienced Executive Committee chaired
by the CEO.
Non-executive Directors
Along with the Chairman and Executive
Directors, the NEDs are responsible for
ensuring the Board and its Committees fulfil
their responsibilities. The NEDs 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.
Senior Independent Director
Andy Pomfret was appointed as Senior
Independent Director (SID) in February 2018.
In addition to acting as a sounding board for
the Chairman, the role and responsibilities of
the SID include:
– Being available to shareholders if they have
concerns which contact through the normal
channels of Chairman, CEO or CFO has
failed to resolve or for which such contact
is inappropriate
– Meeting with the NEDs at least once a year
to appraise the Chairman’s performance and
on such other occasions as are deemed
appropriate.
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 performance of the Company
– The announcement relating to the financial
year ending 31 December 2018
– The 2018 Annual Report and Accounts,
including the Committee reports, viability
and going concern statements
– The Notice of Meeting and Proxy Form for
the 2019 AGM
– The Half Year Results and Trading
– The Audit and Risk Committee
Statements
– The Nomination Committee
– The Company’s strategy
– The Remuneration Committee
– The payment of the interim dividend
– The Disclosure Committee.
– The results of the Company’s Board
The terms of reference of these Committees
were 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 48 to 68. It is noted that the Disclosure
Committee did not meet during the year and
does not have a Committee Report.
Board and Committee meetings
The attendance of Directors at Board and
Committee meetings held in the financial year
ended 31 December 2019 are illustrated in the
table below.
The activities of the Board during the year are
set out below and the reports from each of
these Committees (other than the Disclosure
Committee) are set out on pages 48 to 68 of
this Annual Report.
Effectiveness Review
– The 2020 budget.
In addition to the above, the Board regularly
received updates, reports and presentations
from other senior employees including the
Chief Actuary, the Claims Director, the Head of
IT and Business Systems and the Head of HR.
Board effectiveness
Board composition
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.
Attendance by Directors at Board and Committee meetings
Director
Catherine Barton
Geoff Carter
Ian Clark
Andy Pomfret
Rebecca Shelley
Patrick Snowball
Adam Westwood
Board
Audit and Risk
Committee
Nomination
Committee
Remuneration
Committee
9/9
9/9
9/9
9/9
9/9
9/9
9/9
5/5
n/a
5/5
5/5
5/5
n/a
n/a
3/3
n/a
3/3
3/3
3/3
2/3
n/a
4/4
n/a
4/4
4/4
4/4
n/a
n/a
45
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 GOVERNANCE REPORT
CONTINUED
Decisions at Board meetings are taken by a
majority of the Directors and in the case of an
equality of votes the Company’s Articles of
Association (“Articles”) provide that the
Chairman has a second or casting vote. The
Board considers that no single Director can
dominate or unduly influence decision-making.
During the year, the Chairman and the NEDs
met without the Executive Directors at the
end of each Board meeting, and the NEDs
met without the Chairman present.
Time commitment
As part of the appointment process and their
annual review the NEDs 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 Board meetings, relevant Committee
meetings, the AGM and any general meeting
of the Company. The other commitments of
the Chairman and the other Directors are as
indicated in their profiles on page 43.
The Board is aware that it currently does not
meet best practice regarding the percentage
of females on the Board. The Board intends to
take steps where possible to rectify this as its
refreshment programme progresses.
Induction and ongoing
professional development
The Board has developed an induction
programme which all new Directors participate
in upon joining the Board. This programme is
monitored by the Chairman and is the
responsibility of the Company Secretary.
Depending upon their qualifications and
experience, the programme will include
presentations and briefings, meetings with
Board members, senior management and
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 Chairman will review and
agree 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 a week in advance of each
Board and Committee meeting. The Company
uses an online platform to distribute its Board
and Committee papers. All Directors have
access to the advice and services of the
Company Secretary for information and
guidance, who 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 may be required in the
furtherance of their duties. No such advice
was sought by any Director during the year.
Each Director is required to advise the
Chairman as early as possible and to seek the
agreement of the Board before accepting
additional commitments that might affect the
time that Director is able to devote to his or
her role as a NED of the Company.
The Board is satisfied that the Chairman and
each NED 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,
Chairman and individual Directors. During
the year a formal annual review of the
performance of the Board, its Committees,
the Chairman and individual Directors was
completed. This year the process consisted
of an externally facilitated exercise led by
Independent Audit, sponsored by the
Chairman and assisted by the Company
Secretary. Independent Audit is an
independent board evaluator, and has no
other connection with the Company. The
questionnaire used as part of the process
consisted of questions covering the Board,
the Committees and Chairman’s performance
and was completed by all of the Directors of
Sabre Insurance Group plc and Sabre
Insurance Company Ltd (the Group’s operating
subsidiary). The individual Director
performance was reviewed by the Chairman.
It is confirmed that all plc Directors, and the
Directors of Sabre Insurance Company Limited
fully engaged with the process. The appraisal
confirmed that the Board, its Committees and
the Chairman were operating effectively. The
feedback was discussed with the Board and
the Chairman. It was agreed that although the
Board and Committees were effective, time
during 2020 would be set aside to discuss
how best to utilise the Board and Directors’
time during Board and Committee meetings.
46
Sabre Insurance Group plc Annual Report and Accounts 2019
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 following AGM of the Company after
their appointment and is then eligible for
election by the shareholders. The Articles
require that each Director shall retire at the
third AGM held after they were last elected
(and annually when they have been in office
for nine years or more), and retiring Directors
are eligible to stand for re-election. However,
the Board through the Nomination Committee
has reviewed and adopted the Code
recommendation that all Directors should be
subject to annual re-election (in compliance
of Code provision 18).
Further details regarding the terms of
appointment and remuneration for the
Executive Directors and NEDs are set out
in the Directors’ Remuneration Report (on
pages 61 to 68) 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.
Conflicts of interest
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.
Accountability
The Board, through the Audit and Risk
Committee, receives reports regarding the
Company’s risk management and internal
control systems and has reviewed the
Company’s financial and business reporting,
the effectiveness of the Group’s systems of
risk management and internal control, and the
Company’s relationship with its auditors, the
details of which are set out in the Audit and
Risk Committee Report on pages 48 to 51.
The share register is managed on the Group’s
behalf by Equiniti who can be contacted at
Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA or by telephone on
0371 384 2030 or, if dialling internationally,
on +44 121 415 7047.
The Company’s 2020 AGM Notice will be
issued separately. 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 AGM voting on all resolutions will be
published on the Company’s website.
Modern Slavery Act 2015
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 Board.
In addition to this Sabre has considered the
Modern Slavery Act 2015. 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 Company’s Modern Slavery Statement is
reviewed and approved by the Board on an
annual basis and can be found on the
Company’s website https://www.sabreplc.
co.uk/about-us/corporate-governance/
modern-slavery-statement/.
Anti-Bribery and Corruption
The Company operates an anti-bribery and
corruption policy to prevent and prohibit
bribery, in line with the Bribery Act 2010. The
Company will not tolerate any form of bribery
by, or of, its employees, agents or consultants
or any person or body acting on its behalf,
and no such incidents occurred in the financial
year ending 31 December 2019. Senior
management is committed to implementing
effective measures to prevent, monitor and
eliminate bribery. The policy covers:
– the main areas of liability under the
Bribery Act 2010;
– the responsibilities of employees and
associated persons acting for, or on
behalf of, the Company; and
– the consequences of any breaches
of the policy.
Whistleblowing arrangements
The Company has a policy which enables and
encourages employees to report in confidence
any possible improprieties in either financial
reporting or other matters.
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 Directors’ Remuneration
Report on pages 61 to 68.
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 CEO, CFO and
Company Secretary continue to engage with
shareholders through investor presentations,
conferences and roadshows, ensuring they are
up to date with the views of the Company’s
shareholders. These views are regularly
shared with the Board, and the Chairman and
the SID remain available to meet shareholders
separately to discuss any issues or concerns
they may have. In addition to this, the
Chairman hosted a dinner for shareholders
during the year, and met with the Company’s
top shareholders. The Remuneration
Committee Chair also met and spoke with the
Company’s largest shareholders and the Proxy
Report Providers regarding the Company’s
Remuneration Report and Policy.
The Board keeps shareholders informed
primarily by way of the Annual Report, Half
Year Results, Trading Statements and the
AGM. 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/.
The holdings of our major shareholders can be
found on page 71 of this Annual Report.
47
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 AUDIT AND RISK
COMMITTEE REPORT
The Committee
The Audit and Risk Committee was in place
throughout the financial year ending
31 December 2019, was chaired by
Catherine Barton, and comprises the four
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 were
independent as required under the UK
Corporate Governance Code (the “Code”).
The Board considers that Catherine Barton has
the appropriate financial expertise, as required
by the Code, as Catherine is a Fellow of the
Institute of Actuaries and has held executive
roles, including Commercial and Finance
Director in another company. In addition to
this, both Andy Pomfret and Ian Clark have
recent and relevant financial experience, and
the make-up of the Committee ensures that
it is able to fulfil its duties. Details of the
experience of all members of the Committee
are included on page 43.
Members of the Committee are appointed by
the Board, on the recommendation of the
Nomination Committee and the Chair of the
Audit and Risk Committee. Appointments are
made for an initial period of three years, which
can then be followed by an additional two
further three-year periods. There were
no changes made during the year to the
membership of the Committee.
The Company Chair, Chief Executive Officer
and Chief Financial Officer are invited to attend
meetings, unless they have a conflict of
interest. In addition, the External Audit Partner,
the Internal Audit Partner, the Chief Risk
Officer, the Compliance Manager, 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 Company may also be invited to attend all
or part of a meeting to provide deeper insight
into the Company and its issues. 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 separately met with both internal and
external Audit partners outside of the
Committee meetings.
The Committee Chair also held regular
individual meetings with Adam Westwood,
who is the Chief Financial Officer and was the
Chief Risk Officer for the majority of the year,
and Anneka Kingan, who is the Company
Secretary and Head of Internal Audit, and
was appointed as the Chief Risk Officer in
October 2019.
The Chair of the Committee reports to
subsequent meetings of the Board and the
Board receives a copy of the minutes of each
Committee meeting once these have been
approved by the Committee.
The Company Secretary acts as the Secretary
to the Committee. The terms of reference of
the Committee can be found on the
Company’s website www.sabreplc.co.uk/
about-us/corporate-governance/ or
obtained from the Company Secretary.
During the year, the Committee reviewed its
effectiveness, as part of the Group’s Board
Effectiveness Review. The Committee agreed
that the Committee was effective.
CATHERINE BARTON
Audit and Risk Committee Chair
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
2019 are set out below:
Committee members
Catherine Barton (Chair)
Appointed October 2017
Ian Clark
Appointed October 2017
Andy Pomfret
Appointed May 2018
Rebecca Shelley
Appointed October 2017
Committee meetings in 2019
JAN
FEB
MAR
APR MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Meeting attendance
Catherine Barton (Chair)
Ian Clark
Andy Pomfret
Rebecca Shelley
5/5
5/5
5/5
5/5
48
Sabre Insurance Group plc Annual Report and Accounts 2019
– External audit – this includes considering
and making recommendations to the Board
on the appointment of the external auditors
(including approving the remuneration and
terms of appointment) as well as reviewing
the external auditor’s annual audit
programme and the results therefrom,
reviewing the quality and effectiveness of
the audit and reviewing and confirming the
policy on non-audit services carried out by
the external auditors and auditor
independence.
The Committee has a planned cycle of
activities to ensure that it addresses its
responsibilities in the current financial year.
Activities during the year
During the financial year, the Committee held
five meetings. During the year, the Committee
focused on:
– Financial developments in the business
including election to apply IFRS 9 from
1 January 2020
– The External Audit Plan
– A review of the external auditor’s work for
Half Year, Full Year and regulatory reporting
– Key areas of focus in advance of the
commencement of the year-end audit
– The Internal Audit Plan
– Reviewing the Company’s risk and
compliance functions.
During the year, the Committee addressed its
responsibilities by:
– 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.
– Compliance – this includes reviewing the
Group’s compliance policies and procedures
to ensure that the Group complies with
relevant regulatory and legal requirements,
including the arrangements in place for the
reporting and investigation of concerns and
for ensuring fair customer outcomes.
– Reviewing the external auditor’s plan for the
audit of the Group’s financial statements,
which included key areas of scope of work,
key risks on the financial statements,
confirmation of auditor independence and
the proposed audit fee
– Internal audit – this includes monitoring the
role and effectiveness of the Group’s
Internal Audit function including approving
the annual programme of internal audit
work, monitoring the reports arising from
internal audits and the status of actions
resulting therefrom and the appointment or
removal of the Head of Internal Audit.
– Whistleblowing – reviewing arrangements
by which employees may in confidence
raise concerns about possible improprieties
regarding financial reporting and other
matters.
– 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 risk and internal audit
assessments.
– Reviewing the accounting issues and
significant judgements related to the
financial statements
– Reviewing the process and stress testing
undertaken to support the Group’s viability
and going concern statements
– Reviewing the appropriateness of the
Group’s accounting policies
– Reviewing reports regarding risk
management, compliance and internal audit
including the procedures and plan relating to
each area
– Reviewing and approving the risk
management framework and risk appetite,
the corporate risk register and the Group’s
principal risks and uncertainties
– Reviewing appropriateness of key
accounting judgements including the
sufficiency of insurance liabilities
49
Committee’s role and responsibilities
The Audit and Risk Committee in line with its
terms of reference meets at least four times
a year, and as and when required. The
Committee is responsible for monitoring the
integrity of the financial statements of the
Company, for providing effective governance
over the appropriateness of the Group’s
financial reporting and advising the Board
on the Group’s overall risk appetite.
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:
– Financial and narrative reporting –
this area of responsibility includes
monitoring the integrity and compliance of
the Company’s financial statements and any
formal announcements or publications
relating to the Group’s financial performance
as well as reviewing significant financial
reporting issues and judgements made in
connection with them.
– 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 is assessed by
the Group’s actuaries on a quarterly basis.
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 AUDIT AND RISK
COMMITTEE REPORT
CONTINUED
– Reviewing reports from the Company’s Data
Protection Officer
– Reviewing the Group’s system of controls
and its effectiveness using information
drawn from a number of different sources
including management, compliance and risk
management reports, and independent
assurance provided by internal audit
(through its annual audit plan) and the
external auditors
– Reviewing regulatory correspondence
– Approving external audit and internal
audit fees
– Review and recommend to the Board the
Company’s ORSA
– Review and recommend to the Board the
Company’s accounts
– Approving the policy on non-audit services
carried out by the Group’s external auditors
– Recommending to the Board, which
agreed to recommend to shareholders,
the reappointment of Ernst & Young (“EY”)
as the Group’s external auditor
– Recommending to the Board, which
adopted the recommendation, the
reappointment of BDO as the Group’s
outsourced internal audit service provider
– Reviewing and confirming to the Board that,
based on its review of the Annual Report
and Accounts and internal controls that
support the disclosures, 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 Company’s
position and performance and its business
model and strategy
– Reviewing the external auditor
effectiveness review
– Reviewing the ongoing professional
development of Committee members
– The appointment of a new Chief Risk Officer
– The appointment of a new Compliance
Manager
– Reviewing the Committees terms of
reference and its Effectiveness Review.
During the year the Financial Reporting
Council (FRC) provided the Company with its
review of the Company’s Report and Accounts
for the year ending 31 December 2018. The
Committee reviewed the letter and the
Company responded accordingly. All relevant
comments from the FRC’s letter have been
incorporated into this Annual Report. The
Committee pays particular attention to matters
it considers to be important by virtue of their
impact on the Group’s results, the internal
control environment or the level of complexity,
and matters of judgement or estimation
involved in their application to the
Consolidated Financial Statements. The main
areas of focus for the period under review are
set out below:
1. Valuation of insurance liabilities
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
Company’s policy to hold sufficient reserves
to meet insurance liabilities as they fall due,
plus a risk margin reflective of the uncertainty
within such calculation.
The Committee reviewed the Chief Actuary’s
annual and quarterly reserving report and
challenged the appropriateness of the
process, key judgements and assumptions
supporting the projection of the best estimate
claims expense. The Committee also
discussed such matters with the Group’s
external auditor. The Chair of the Committee
met with the Group’s Chief Actuary without
other members of management present. The
Committee noted the inherent uncertainty
associated with the estimation of claims costs,
in particular with reference to the changes in
the legal environment and the impact of
historically high levels of claims inflation.
2. COVID-19
While not directly pertaining to the period
under review, the Committee has discussed in
detail the potential impacts of the recent
outbreak of COVID-19, on both the viability of
the business and the valuation of its assets
and liabilities at the reporting date. The
Committee is satisfied that there is no material
impact on the valuation of assets or liabilities,
and that the outbreak, while presenting
operational challenges across the industry,
does not currently have a material impact on
our conclusion as to the viability and going
concern of the business.
3. Other matters
The Committee reviewed certain matters
which were individually less significant to the
financial statements such as the upcoming
implementation of new and updated
accounting standards, which will impact the
recognition, measurement and disclosure of
insurance contracts and financial investments.
Extract from FRC letter with respect to
the scope and limitation of their review
Our review is based on your annual report and
accounts and does not benefit from detailed
knowledge of your business or an
understanding of the underlying transactions
entered into. It is, however, conducted by staff
of the FRC who have an understanding of the
relevant legal and accounting framework. We
support continuous improvement in the quality
of corporate reporting and recognise that
those with more detailed knowledge of your
business, including your audit committee and
auditors, may have recommendations for
future improvement, consideration of which
we would encourage.
This, and any subsequent letter, provides no
assurance that your report and accounts are
correct in all material respects; the FRC’s role
is not to verify the information provided but to
consider compliance with reporting
requirements.
Our letters are written on the basis that the
FRC (which includes the FRC’s officers,
employees and agents) accepts no liability for
reliance on them by the company or any third
party, including but not limited to investors and
shareholders.
Risk management, compliance
and internal controls
The Board has delegated to the Committee
responsibility for monitoring and reviewing
the Group’s risk management and compliance
frameworks, the risks that the Group should
be willing to take in achieving its strategic
objectives, and the controls in place within
this framework to ensure that the Group has
robust procedures for financial reporting and
preparing its consolidated accounts. The
Committee has reviewed the effectiveness
of the Group’s risk management, compliance
management and internal control systems,
and reported on such to the Board. In
conducting its review the Committee focused
on material risks, including the determination
of the nature and extent of the principal risks,
and controls in the context of reports it
received regarding risk management,
compliance and internal audit as well as
reports from the Company’s external auditor.
Details of the Group’s principal risks and
uncertainties are set out on pages 20 to 24
together with information about the
management and mitigation of such risks.
50
Sabre Insurance Group plc Annual Report and Accounts 2019
The Committee also reviewed EY’s
engagement letter and determined its
remuneration in accordance with its
obligations under the Code, such
remuneration being considered appropriate
by the Committee.
EY have been the auditors of Sabre Insurance
Company Limited and of the previous parent
companies of Sabre Insurance Company
Limited since 2001. Given that Sabre
Insurance Company Limited, the principal
subsidiary of the Group, is considered a Public
Interest Entity (“PIE”), the transitional rules
under EU legislation require Sabre Insurance
Company Limited to run a tender process for
the external audit by 2023, after which Sabre
Insurance Company Limited will be required to
change its external auditors. Under these
regulations, the external audit engagement
partner is now required to rotate every five
years. The current external audit engagement
partner is Stuart Wilson, who was appointed
to lead the audit of Sabre Insurance Company
Limited in 2016. The Committee has
considered the length of time for which EY
has carried out the audit of the main trading
subsidiary of the Group and concluded that a
competitive tender process should be carried
out during 2020.
On behalf of the Audit and Risk Committee
CATHERINE BARTON
Chair of the Audit and Risk Committee
6 April 2020
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. Certain services
cannot be provided by the external auditor or
members of its network without the possibility
of compromising its independence and as
such are not permitted to be provided by the
external auditor. These prohibited non-audit
services include, but are not limited to, certain
tax services, bookkeeping and payroll
services, designing and implementing internal
control and risk management procedures or
the design or implementation of information
technology systems relating to the production
of financial statements, valuation services,
actuarial valuation services, and the provision
of certain legal services, HR services and
financing, capital structuring and investment
strategy services.
Other types of non-audit work can be
undertaken by the external auditors, subject to
the implementation of adequate safeguards
and the total fees for these non-audit services
must not exceed 70% of the average audit
fees billed to the Company by the external
auditor in the past three years. During the year,
EY and its subsidiaries charged the Group
£264,000 (2018: £175,000) for audit and
audit-related services, and received a total fee
during the financial year of £342,000
(2018: £250,000). A summary of fees paid to
the external auditors is set out in Note 9 to the
Consolidated Financial Statements. In the
financial year ending 31 December 2019, the
external auditors did not undertake any
material non-audit work for the Company.
External audit appointment
and tendering
The Committee has concluded that the
external auditors have demonstrated
appropriate qualifications and expertise and
have remained independent of the Group.
Accordingly, the Committee recommended to
the Board that EY be reappointed as the
Group’s auditors for a further year. The Board
has accepted this recommendation and a
resolution to shareholders proposing the
reappointment of EY will be set out in the
AGM Notice which will be sent separately
to shareholders.
Internal audit
The Group has a formal process of internal
audit, and in 2018 appointed BDO to run the
Group’s internal audit programme. BDO
perform audits on a rolling basis across the
Group over a three-year period. The reports
are made available to the Committee, the
Chief Executive Officer, Chief Financial Officer,
Chief Risk Officer, the Company Secretary and
Head of Internal Audit, and relevant members
of management. BDO re-confirm their
independence on an annual basis.
The primary objective of the function is to
systematically and objectively assess: (i) the
effectiveness of the business controls over
the Group’s operations, financial reporting, risk
and compliance areas and (ii) the adequacy of
these systems of control to manage business
risk and safeguard the Group’s assets and
resources. The Committee reviewed and
approved the internal audit role and risk-based
internal audit plan, and received updates on
the internal audit activity and engagement
results to help form a view on internal audit
effectiveness. Feedback after each audit is
obtained from those involved in the audit and
fed back to the internal auditor with concerns
being raised with the Committee as needed.
External audit effectiveness
and independence
The Committee is also responsible for
managing the relationship with the Company’s
external auditor, EY, on behalf of the Board.
Overall effectiveness of the external audit
process is dependent upon communication
between the Group and the auditor, which
allows each party to raise potential accounting
and financial reporting issues as and when
they arise, rather than limiting this exchange to
only during regularly scheduled meetings.
The effectiveness of the financial year ended
31 December 2018 external audit process was
formally assessed during the year by the
Committee. Feedback was sought from
various participants in the process (primarily
the Committee, Chief Financial Officer, Chief
Executive Officer and the Company’s Senior
Accountant). The effectiveness of the audit
partner, the audit team, their approach to
audits, including planning and execution,
communication, support and value were
assessed and discussed. Overall the
effectiveness of the external audit process
was assessed as performing as expected.
The Committee has reviewed and approved
a policy regarding non-audit work and fees
which requires all non-audit work proposed
to be carried out by the external auditors
to be pre-authorised by the Committee or,
51
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 NOMINATION COMMITTEE
REPORT
The Committee
The Committee was in place throughout the
financial year ended 31 December 2019, was
chaired by the Company Chairman, Patrick
Snowball, and comprises the four 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 were
independent as required under section 17 of
the 2018 UK Corporate Governance Code.
Three Committee meetings were held in the
year ended 31 December 2019.
The Chief Executive Officer (“CEO”) may also
be invited to attend meetings, unless this
presents a conflict of interest. During the year,
the CEO either attended partially or fully all of
the Committee meetings. The Company
Secretary and Head of HR may be invited, but
only as appropriate and only if this does not
present a conflict of interest. The Committee
is supported by executive search consultants
as and when required.
The Chair of the Committee reports to
subsequent meetings of the Board and the
Company Secretary acts as the secretary to
the Committee.
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.
Committee’s roles and responsibilities
The Committee meets a minimum of twice
a year and as required.
The Committee leads the process for:
– reviewing the structure and composition
of the Board
– overseeing succession planning for the
Directors and other senior executives
– reviewing the Company’s policy on diversity
A formal, rigorous and transparent procedure
using independent external search consultants
or firms is undertaken before candidates are
recommended to the Board. The Committee
recognises the importance of diversity and,
when recruiting, ensures that there are no
obstacles to the Committee having visibility of
suitable candidates for possible appointment
to the Board and, in particular, that such
appointments are based on merit regardless
of gender, social and ethnic backgrounds.
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.
Activities during the year
During the financial year ending 31 December
2019, the Committee held three meetings.
During these meetings, the Committee:
– Reviewed the position regarding succession
planning and talent management for the
Executive Directors and senior management
of the Company and its principal subsidiary
Sabre Insurance Company Limited
– Approved the Nomination Committee
Report in the Annual Report for the year
ended 31 December 2018
– Reviewed the ongoing professional
development of Committee members and
the induction of new Directors
– Discussed the balance of skills and
experience on the Board and considered
if any changes were necessary
– Reviewed and approved the Committee’s
terms of reference and schedule of matters
– Reviewed and recommended the election of
Directors at the Company’s 2019 Annual
General Meeting
– Reviewed the Board’s 360 degree feedback
– Reviewed the annual Committee’s
evaluation responses.
PATRICK SNOWBALL
Nomination Committee Chair
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
2019 are set out below:
Committee members
Patrick Snowball (Chair)
Appointed October 2017
Catherine Barton
Appointed October 2017
Ian Clark
Appointed October 2017
Andy Pomfret
Appointed May 2018
Rebecca Shelley
Appointed October 2017
Committee meetings in 2019
JAN
FEB
MAR
APR MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
candidates to join the Board and
– identifying, evaluating and recommending
On behalf of the Nomination Committee
– making recommendations regarding their
election and re-election by shareholders.
PATRICK SNOWBALL
Chair of the Nomination Committee
6 April 2020
Meeting attendance
Patrick Snowball (Chair)
Catherine Barton
Ian Clark
Andy Pomfret
Rebecca Shelley
2/3
3/3
3/3
3/3
3/3
52
Sabre Insurance Group plc Annual Report and Accounts 2019
REMUNERATION
COMMITTEE REPORT
On behalf of the Board, I am pleased to
present to you the Remuneration Committee’s
Report for the year ended 31 December 2019.
Against a backdrop of competitive market
conditions, Sabre’s Senior Management Team
has delivered on the Group’s strategy,
generating a creditable underwriting result and
continuing to build a solid foundation for
profitable growth in future years.
Introduction
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 Committee’s role is to ensure that Senior
Management is appropriately incentivised to
deliver sustainable growth to shareholders
over the long term. The Committee has
supported 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.
What is in this report?
The report is presented in three sections:
– Remuneration Committee Report and
the Remuneration Committee Chair’s
Annual Statement
– The Directors’ Remuneration Policy
(the “Policy”)
– The Annual Report on Remuneration –
this sets out the remuneration outcomes
for 2019 and how the Policy will be
implemented during 2020. This report will
be subject to an advisory shareholder vote at
the 2020 AGM.
The Remuneration Committee
The Remuneration Committee was in
place throughout the financial year ended
31 December 2019, was chaired by
Rebecca Shelley, and comprises the four
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 were
independent as required under Provision 32
of the UK Corporate Governance Code. Four
Committee meetings were held in the year
ended 31 December 2019.
The CEO may also be invited to attend
meetings, unless this presents a conflict of
interest, for example when his own
remuneration is discussed. 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 his
or her own remuneration. During the year, the
CEO either attended partially or fully all of the
Committee meetings. The Company
Secretary and Head of Human Resources may
be invited, but only as appropriate and only if
this does not present a conflict of interest.
The Chair of the Committee also meets
separately with the Chief Executive Officer
and the Company Secretary.
The Chair of the Committee reports to
subsequent meetings of the Board and the
Board receives a copy of the minutes of each
meeting once these have been approved by
the Committee. The Company Secretary acts
as the secretary to the Committee.
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.
53
REBECCA SHELLEY
Remuneration Committee Chair
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
2019 are set out below:
Committee members
Rebecca Shelley (Chair)
Appointed October 2017
Catherine Barton
Appointed October 2017
Ian Clark
Appointed October 2017
Andy Pomfret
Appointed May 2018
Committee meetings in 2019
JAN
FEB
MAR
APR MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
Meeting attendance
Rebecca Shelley (Chair)
Catherine Barton
Ian Clark
Andy Pomfret
4/4
4/4
4/4
4/4
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 REMUNERATION
COMMITTEE REPORT
CONTINUED
Role of the Committee
The Committee meets a minimum of twice
a year and as required. 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 Committee is responsible for setting the
Remuneration Policy for all Executive
Directors, senior employees, the Company
Secretary and the Company’s Chairman,
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. The fees of the
Non-executive Directors are approved by the
Company Chairman and the Executive
Directors. The Committee also reviews all
employee pay arrangements periodically.
Activities during the year
During the financial year ending 31 December
2019, the Committee held four meetings.
During these meetings, the Committee:
– Approved the prior year Directors’
Remuneration Report, and reviewed
shareholder comments and AGM feedback
on the report
– Set the grant levels and the financial and
individual performance conditions for the
awards made under the 2019 Short Term
Incentive Plan
– Set the financial performance conditions and
grant levels for the awards under the 2019
Long Term Incentive Plan
– Reviewed and approved the payment of
bonuses under the 2018 Short Term
Incentive Plan, including 50% of the vested
award being deferred to the Company’s
Deferred Bonus Plan
– Reviewed the salaries of the Executive
Team and the fees for the Chairman
– Reviewed the Company’s Save As You Earn
employee contribution levels
– Reviewed the Company’s Share
Incentive Plan
– Reviewed and approved the Committee’s
terms of reference
– Reviewed and agreed to publish the
Company’s Gender Reporting Gap Report
– Reviewed and agreed a revised and more
transparent approach to the non-financial
measures on which the 2020 Short Term
Incentive Plan awards will be partially
determined.
Committee advisers
Deloitte LLP (“Deloitte”) is the appointed
Committee remuneration adviser, and was
reappointed by the Committee during the year.
Advisers attend the Committee meetings as
appropriate, and provide advice on executive
remuneration, best practice and market
updates. The Committee evaluates the
support provided by its advisers annually and
is comfortable that the advisers detailed did
not have any connection with the Company
that may have impaired their independence.
The total fees paid to Deloitte in relation to the
remuneration advice provided to the
Committee during the year were £55,100,
excluding VAT (2018: £126,250). 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.
Deloitte is a founder member of the
Remuneration Consultants Group and
voluntarily operates under the 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 Remuneration Policy
Following the Company’s admission to the
premium listing segment of the official list on
11 December 2017 (“Admission”) the
Committee designed the Company’s
Remuneration Policy to embed the corporate
governance principles shareholders expect of
a quoted company. The Policy was approved
by over 99% of shareholders at the 2018
Annual General Meeting (“AGM”), and will
remain in force for the financial year ending
31 December 2020.
The Policy’s key features are:
– Salaries, benefits and pensions at a level to
attract, incentivise and retain high-calibre
employees
– Annual Bonus Plan to incentivise and reward
the delivery of annual corporate and
individual, financial and non-financial targets
– Bonus Deferral to ensure the alignment of
Executive Directors with shareholders’
interests. A portion of the annual bonus is
deferred into shares, which are released two
years post their grant
– Long Term Incentive Plan (“LTIP”) to reward
Executive Directors and Senior
Management for the creation of long-term
and sustainable shareholder value
– Shareholding requirements for Executive
Directors to further align Executive Directors
with shareholders’ interests
– Malus and clawback provisions applied to
awards made under the Annual Bonus Plan
and LTIP to further embed pay for
performance.
Executive remuneration in 2019
The Group has a well-defined strategy,
whereby the profitability of business written is
prioritised under all market conditions. During
2019, the motor insurance market remained a
highly competitive environment, with premium
increases being lower than claims inflation.
Under these conditions, Sabre’s strategy is to
maintain pricing discipline in order to optimise
margins and build a strong base to allow
growth when market prices start to increase.
In 2019, as anticipated, Sabre achieved a
premium level of 6% below the prior year
while keeping the combined operating ratio on
business written within our preferred range.
The Remuneration Committee discussed and
approved the remuneration outcomes in
respect of 2019 shortly after the year end.
Whilst the Committee has the ability to use
discretion to adjust awards made under both
the Long Term and Short Term Incentive
Plans, the Committee considered the
outcomes under the Short Term Incentive Plan
for 2019 were aligned with the Company’s
performance, so the use of discretion was not
necessary. Further details and the
performance conditions for the awards made
under the Company’s LTIP and STIP can be
found on pages 62 to 64.
Executive remuneration in 2020
When determining the remuneration
arrangements for the coming year, the
Committee, whilst mindful that base salaries
should remain competitive, also took into
consideration the strong individual performance
of the Executive Directors over the year.
The Committee has reviewed the salary levels
of the Executive Directors and concluded that
an increase of 2.3% should be made, which is
in line with the average employee salary
increase to both the Chief Executive Officer
(“CEO”) and Chief Financial Officer (“CFO”)
with effect 1 April 2020.
Reflecting the Committee’s commitment
to a remuneration framework which aligns
Executive Directors interests with long-term
value creation, as in prior years, the grants
under the 2020 LTIP for the CEO will be 125%
of salary, and for the CFO will be 100% of
salary. The performance conditions for these
awards can be found on page 68.
54
Sabre Insurance Group plc Annual Report and Accounts 2019
The Committee has implemented a two-year
post-vesting holding period for the awards
made to the Executive Directors under the
LTIP, for awards made from 1 January 2019,
aligning the Company with the UK Corporate
Governance Code. The maximum potential
award under the 2020 bonus will remain in
line with 2019 levels at 125% of salary.
During 2018, the Committee reviewed the
bonus levels for 2019 under the Company’s
Short Term Incentive Plan and concluded
that both the CEO and CFO’s maximum
bonus for 2019 should be increased, within
policy limits, to 125% of their salary. The
Committee determined that this level
remains appropriate. Whilst the performance
conditions for these awards are deemed to
be commercially sensitive, the Committee is
satisfied that they are appropriately stretching,
and they will be disclosed in the 2020 Annual
Remuneration Report.
The Committee regularly monitors
developments in corporate governance,
the evolution of best practice and updates
to regulatory guidance to ensure that its
approach remains appropriate.
During 2020, the Committee will undertake
a review of the Executive Directors’
Remuneration Policy and approach, including
the consideration of simplicity, risk and
alignment to our corporate culture. The
Committee has already made a number of
changes to the current executive remuneration
policies to reflect the revised Corporate
Governance Code, such as the alignment of
pension contributions with that of employees
for any newly appointed Executive Directors
and the introduction of a two-year post vesting
holding period on LTIP awards. As we review
our policy, the Committee will consider further
enhancements. In doing so, we will be
cognisant of shareholder views and developing
market practice, in particular in relation to
pension contributions for incumbent Executive
Directors and a formal post-employment
shareholding policy.
I look forward to sharing the outcomes of our
review and consulting with shareholders over
the course of the current year, with a view to
seeking approval for a new Directors’
Remuneration Policy at the 2021 AGM.
Wider considerations
The Committee believes in the engagement
and motivation of the workforce. As a result, in
2018 the Committee decided to increase the
maximum employee monthly contribution to
the Company’s Save As You Earn Plan from
£250 to £500. It also expanded the
Company’s Share Incentive Plan to allow for
employee contributions and employer
Statement of shareholder voting
The following table shows the results of shareholder voting relating to the approval of the
Remuneration Policy and Remuneration Report at the 2018 AGM, and the approval of the
remuneration report at the 2019 AGM:
2018 AGM resolution to approve the Directors’ Remuneration Policy
2018
Total number
of votes % of votes cast
For (including discretionary)
Against
Total votes cast (excluding withheld votes)
Votes withheld
Total votes cast (including withheld votes)
150,130,716
1,214,214
151,344,930
665,223
152,010,153
AGM resolution to approve the Directors’ Remuneration Report
2019
99.20
0.80
100
n/a
n/a
2018
Total number
Total number
of votes % of votes cast
of votes % of votes cast
For (including discretionary)
Against
Total votes cast
(excluding withheld votes)
Votes withheld
Total votes cast
(including withheld votes)
201,014,779
17,196,996
218,211,775
–
92.12
7.88
100
n/a
150,021,694
58,822
150,080,516
1,929,636
218,211,775
n/a
152,010,152
99.96
0.04
100
n/a
n/a
Shareholder engagement
Sabre and the Remuneration Committee
are committed to maintaining an ongoing
dialogue with shareholders on the issues of
remuneration and welcome any feedback
you may have, via the Company Secretary.
We look forward to your support on the
resolution relating to remuneration at the
Company’s Annual General Meeting on
21 May 2020 and to discussing our proposals
for a new Directors’ Remuneration Policy over
the course of the year ahead.
On behalf of the Remuneration Committee
REBECCA SHELLEY
Chair of the Remuneration Committee
6 April 2020
matched shares, at a ratio of 3:1, where for
every three shares an employee purchases,
the Company matches with one free share.
These increases came into effect during 2019.
In line with best practice, the Committee
previously appointed Ian Clark as the
designated Non-executive Director to
represent employees, with the intention of
building a greater communication channel for
employees to the Board. An engagement
programme of meetings and lunches with Ian
for employees was held throughout 2019.
From these meetings employees’
recommendations for improvements in
communication have been implemented. In
2019 the Company introduced a new ‘Ask
Sabre’ email facility, inviting employees to
email their questions to management; rebuilt
the Company’s Intranet, to ensure clear
communication with employees; increased
the maternity and paternity pay with effect
from 1 January 2020; and increased the notice
periods of some senior employees.
Whilst 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, during 2019 the Company released
its Gender Pay Gap Report, which is available
on the Company’s website https://www.
sabreplc.co.uk/about-us/corporate-
governance/gender-pay-gap-report-2019/.
The report will be updated annually.
55
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 DIRECTORS’ REMUNERATION POLICY
This section of the Directors’ Remuneration Report contains the
Directors’ Remuneration Policy (the “Policy”).
Our approach
The Executive Directors’ remuneration has five main components:
a base salary, benefits, employer pension contributions, a performance-
related annual bonus (Short Term Incentive Plan) and awards made
under the Company’s Long Term Incentive Plan. 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 following policy table.
In proposing the structure of the Executive Directors’ remuneration,
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, whilst also aligning the interests
of employees with those of shareholders and, where appropriate, other
key stakeholders.
2 Pay for performance
Performance-related pay will, potentially, make up a significant
proportion of the Executive Directors’ remuneration packages and will
be assessed based on stretching targets.
3 Long-term alignment
There will be an appropriate balance of remuneration to the delivery of
longer-term performance targets. In determining the Company’s
Remuneration Policy, the Committee has taken into account the
relevant regulatory and governance principles.
The Policy governing each element of the Executive Directors’ pay is outlined below:
Policy table
Element and
link to strategy
Salary
To attract, incentivise and
retain Executive Directors
of a high calibre.
Operation
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 incumbent Executive Director and the
individual’s total remuneration package.
The Committee has decided not to set an overall
maximum monetary opportunity or increase. However,
the Committee intends that Executive Directors’ salary
increases will normally be in line with salary increases
offered to the wider employee population.
None.
Account will also be taken of remuneration
arrangements at Sabre’s peer companies (and
other companies of an equivalent size and
complexity) and for other Group employees.
There are however 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.
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.
Current salaries for the Executive Directors are set out in
the Annual Report on Remuneration.
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.
None.
The amount of payments made by the Group will not
exceed 17% of the individual’s salary, less Employer
National Insurance Contribution without shareholder
approval.
Details of the current contribution levels are set out in the
Annual Report on Remuneration.
None.
Benefits
To provide a benefits
package to recruit and
retain Executive Directors
of a high calibre.
The Committee’s policy is to provide Executive
Directors with competitive levels of benefits,
taking into consideration the benefits provided to
Sabre’s employees and the external market.
Benefits currently include (but are not limited to)
life insurance and private medical insurance.
If an Executive Director is required to relocate as
a result of his/her duties the Company may
provide the Executive Director with additional
benefits such as assistance with relocation,
travel, accommodation or education allowances
or professional tax advice, along with any
associated tax liabilities.
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.
Pension
To support the
Company’s strategy of
recruiting and retaining
Executive Directors of a
high calibre for the
long term.
56
Sabre Insurance Group plc Annual Report and Accounts 2019
Element and
link to strategy
Operation
Opportunity
Performance measures
Short Term Incentive Plan (“STIP”) – Annual bonus and Deferred Bonus Plan (“DBP”)
To incentivise and reward
the delivery of annual
corporate and/or
individual financial and
non-financial targets.
To align the interests of
Executive Directors with
shareholders through the
deferral of a portion of
the bonus into shares.
The Committee will set the performance
measures and targets (as well as the weighting
of the performance targets) for each financial
year of the Company. Annual bonus outcomes
will be determined by the Committee after the
end of each financial year. In exceptional
circumstances the Committee may use its
discretion to adjust the formulaic outcome of the
performance targets to reflect corporate and
individual performance during the year.
The Committee may defer a proportion of any
bonus award (no more than 50%) into a share
award under the DBP. DBP awards will normally
vest on the second anniversary of grant (or such
other date as the Committee determines
on grant).
Malus and clawback provisions will apply (see
section below for further details).
Long Term Incentive Plan (“LTIP”)
To incentivise and reward
delivery of the Group’s
longer-term strategic
objectives for the
business.
The vesting of awards will be subject to the
satisfaction of performance conditions set by
the Committee measured over a performance
period of at least three years.
The Committee may determine that awards
may be subject to a post-vesting holding period
before any underlying shares may be sold.
Malus and clawback provisions will apply to
unvested and vested awards respectively (see
section below for further details).
For awards made under the LTIP, with
effect 1 January 2019, the Committee
has implemented a two-year post-vesting
holding period for awards made to the
Executive Directors.
The maximum bonus opportunity for
Executive Directors is 125% of base salary.
Actual awards made each year to Executive
Directors will be set out in the Annual Report on
Remuneration in respect of that year.
The maximum award in respect of any financial
year will be 175% of salary.
Actual awards made each year to Executive
Directors will be set out in the Annual Report on
Remuneration in respect of that year.
Bonuses will be subject to
a mixture of financial and
non-financial performance
targets set by the Committee at
the start of the financial year to
incentivise delivery of the
Company’s strategy.
At least half of the annual
bonus will be based on
financial measures.
Performance measures may
include strategic and/or personal
objectives.
No payments will be made under
each performance element of
the bonus for less than threshold
performance, at which 25% of
bonus is payable.
The majority of performance
measures used to assess
performance under the LTIP will
be financial. A portion will be
based on relative Total
Shareholder Return.
No payments will be made under
each performance condition of
the LTIP for less than threshold
performance, at which 25% of
the award vests, rising to 100%
for maximum performance.
All-employee share plans
To align the Executive
Directors with the wider
workforce.
Executive Directors are eligible to participate in
any all-employee share plans in place, which are
operated in line with HMRC guidance.
Participation in the Group’s all-employee share
plans will be subject to any applicable maximum
limits as set by HMRC.
None.
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.
Non-executive Directors
Approach to fees
Operation
Opportunity
Other items
Fees paid to the Chairman and Non-executive Directors
To attract Non-executive
Directors of an
appropriate calibre and
with sufficient
experience to ensure the
effective management of
the Company.
Fee levels will normally be reviewed (though not
necessarily increased) annually. Fees will be set
with reference to the time commitment and
responsibilities of the position.
The fee for the Chairman will be determined
by the Committee. Fees for Non-executive
Directors will be determined by the Chairman
and the Executive Directors.
Details of the current fee of the Chairman and the
fee levels for the Non-executive Directors are set
out in the Annual Report on Remuneration.
There is no prescribed maximum fee or annual
increase. Total fees will not exceed the limit set
out in the Company’s Articles of Association.
Further fees may be paid for additional
responsibilities (such as being a member of or
chairing a Board Committee or acting as the
Senior Independent Director) or for an increased
time commitment during the year.
Each Non-executive Director will
be entitled to be reimbursed for
all reasonable costs incurred in
the course of his/her duties,
including travel and
accommodation expenditure,
along with any related
tax liabilities.
57
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 DIRECTORS’ REMUNERATION POLICY
CONTINUED
Notes to the policy table
Prior arrangements
The Board reserves the right to make any remuneration payments and/
or payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that
they are not in line with the Policy set out on the prior pages where the
terms of the payment were agreed (i) before the Policy came into
effect; or (ii) at a time when the relevant individual was not a Director of
the Group and, in the opinion of the Committee, the payment was not
in consideration for the individual becoming a Director of the Group. For
these purposes “payments” includes the Committee satisfying awards
of variable remuneration and, in relation to an award over shares, the
terms of the payment are “agreed” at the time the award is granted.
Selection of performance conditions
For the Short Term Incentive Plan (“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 Long Term Incentive Plan (“LTIP”), the Committee believes
that awards should be linked to the value created for shareholders over
the period. Therefore, the majority of performance measures used to
assess performance under the LTIP will be financial, with a portion
based on relative Total Shareholder Return (“TSR”).
Terms common to the DBP and LTIP
Awards under the DBP and LTIP may:
– be granted as conditional share awards or nil-cost options or in
such other form that the Committee determines has the same
economic effect
– have any performance conditions applicable to them amended or
substituted by the Committee if an event occurs which causes the
Committee to determine an amended or substituted performance
condition would be more appropriate and not materially less difficult
to satisfy
– incorporate the right to receive an amount (in cash or additional
shares) equal to the value of dividends which would have been paid
on the shares under an award that vests up to the time of vesting
(or, where the award is subject to a holding period, the end of that
holding period). This amount may be calculated assuming that the
dividends have been reinvested in the Company’s shares on a
cumulative basis
– be settled in cash at the Committee’s discretion
– be adjusted in the event of any variation of the 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 applies to all awards granted under the STIP and
LTIP. These provisions may be invoked at the Committee’s discretion at
any time prior to the third anniversary of the grant of a cash bonus or
DBP award, or to the fifth anniversary of the grant of an LTIP award. In
these circumstances, the Committee may reduce or impose additional
conditions on an award or require that the participant returns some or
all of the value acquired under the award.
The Committee has the discretion to invoke these provisions where
there has been:
– A material misstatement of any Group member’s audited accounts
– 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, the start of the performance period 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 three scenarios: minimum, maximum
and on-target, based on the following assumptions:
Pay scenario
Basis of calculation
Minimum
On-target
Maximum
Fixed pay only consisting of salary, benefits and pension
Fixed pay, plus the potential value of the annual bonus at
target (60% of the maximum for 2020) and the LTIP award
vesting at threshold (25% of the maximum)
Fixed pay, plus the maximum potential opportunity for the
annual bonus (100% of the maximum) and the LTIP award
vesting (100% of the maximum)
Remuneration scenario graph for illustrative purposes, based on the
remuneration package of the Executive Directors:
CEO’s remuneration package:
2019 (£’000)
Minimum
On-target
Maximum
2020 (£’000)
Minimum
On-target
Maximum
£490
£936
£506
£965
£1,538
£1,587
FIXED
SHORT TERM INCENTIVE PLANS
LONG TERM INCENTIVE PLANS
58
Sabre Insurance Group plc Annual Report and Accounts 2019
CFO’s remuneration package:
2019 (£’000)
Minimum
On-target
Maximum
2020 (£’000)
Minimum
On-target
Maximum
£268
£512
£298
£552
£817
£870
FIXED
SHORT TERM INCENTIVE PLANS
LONG TERM INCENTIVE PLANS
All scenarios exclude share price growth and dividends.
These graphs are for illustrative purposes. They include the LTIP grants,
which will be made in 2020 but will not vest until 2023.
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 recognition of the changes in the corporate governance
environment, the Committee will align the Company’s pension
contributions for any newly appointed Executive Director with those of
the average employee. For the financial year ended 31 December 2019,
the average Company employee pension contribution was 7.47%.
When determining the design of the total package in a recruitment
scenario, the Committee will consider the size and scope of the role,
the candidate’s skills and experience and the market rate for such a
candidate, in addition to the importance of securing the preferred
candidate. In some circumstances, the Board may be required to take
into account common remuneration practices in another country and,
if applicable, may consider awarding payments in respect of relocation
costs. In line with the Policy, in relation to annual bonus and LTIP
awards, maximum variable remuneration will not exceed 300%
of salary.
In the event that Sabre wishes to hire a candidate with unvested
long-term incentives accrued at a previous employer which would be
forfeited on the candidates leaving that company, the Committee
retains the discretion to grant awards with vesting on a comparable
basis to the likely vesting of the previous employer’s award. The LTIP
rules have been drafted to permit the grant of recruitment awards on
this basis to an individual on one occasion (which will not be counted
towards the annual 175% LTIP limit and which will be subject to such
vesting schedules and performance conditions (if any) as the
Committee may determine). If it is not possible or practical to grant
recruitment awards under the LTIP, the Committee may rely on the
provisions of Listing Rule 9.4.2 to grant the awards. For internal
candidates, LTIP awards granted in respect of the prior role would be
allowed to vest according to their original terms, or adjusted if
appropriate to take into account the appointment.
For the appointment of a new Chairman or Non-executive Director, the
fee would be set in accordance with the Policy. The length of service
and notice periods would be set at the discretion of the Committee,
taking into account market practice, corporate governance
considerations and the skills and experience of the particular candidate
at that time.
Service agreements and exit payment policy
In line with the UK Corporate Governance Code Provision 18, all
Directors are subject to re-election annually at the Company’s Annual
General Meeting.
Director
Geoff Carter
Adam Westwood
Patrick Snowball
Andy Pomfret
Catherine Barton
Ian Clark
Rebecca Shelley
Date of
appointment
21/09/2017
21/09/2017
21/09/2017
28/02/2018
04/10/2017
21/09/2017
04/10/2017
Notice period
Unexpired term
12 months
12 months
3 months
3 months
3 months
3 months
3 months
–
–
9 months
14 months
9 months
9 months
9 months
Shareholders may inspect the Executive Directors’ contracts or the
Non-executive Directors’ terms of appointment at the Company’s
registered office.
Both Geoff Carter and Adam Westwood have written service contracts
with the Company with no fixed end date but which are terminable by
either the Company or the Executive Director on not less than
12 months’ notice.
In the event notice is given to terminate an Executive Director’s
contract, the Company may make a payment in lieu of notice equal to
the value of the Executive 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 Group, entitlement they have to any
variable pay will be determined in accordance with the relevant
incentive plan rules.
The Chairman and each of the independent Non-executive Directors
have a notice period of three months and may receive fees in respect
of any notice period.
Short Term Incentive Plan (“STIP”) –
Annual Bonus and Deferred Bonus Plan (“DBP”)
Executive Directors will not have any automatic entitlement to a bonus
for the financial year in which they leave the Group. The Committee
may however pay a bonus if it considers it appropriate, which will
normally be time pro-rated to reflect the proportion of the financial year
served. Any such bonus may be paid out in such proportions of cash
and share awards as the Committee considers appropriate.
Unvested DBP awards will normally lapse when an Executive Director
leaves the Group. However, if an Executive Director’s departure is a
result of their ill-health, injury, disability or redundancy or their
employing company or business being sold out of the Group, or in such
other circumstances as the Committee may determine (excluding gross
misconduct) (known as “Good Leaver Reasons”), 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.
59
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 DIRECTORS’ REMUNERATION POLICY
CONTINUED
Consideration of shareholder views
The terms of the Policy are in line with those set out in the Company’s
Prospectus which was issued on 23 November 2017.
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.
Consideration of employment conditions at Sabre
In setting the Policy which would apply for Executive Directors, 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 – Following Admission, in line with our
philosophy of encouraging our workforce to be investors in the
Group, all eligible employees were offered an award of free shares
under the Share Incentive Plan. The Company operates both a
Save As You Earn (“SAYE”) Plan and a Share Incentive Plan (“SIP”) to
further facilitate employee investment in the Group and their
long-term alignment.
Although the Committee has not formally consulted employees on the
Policy, the Committee appreciates the importance of an appropriate
relationship between the remuneration levels of the Executive
Directors, senior executives, managers and other employees within
the Group.
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.
In addition, 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. The Company has
also appointed Ian Clark as the designated Non-executive Director to
represent employee opinions at the Board.
Long Term Incentive Plan (“LTIP”)
Unvested LTIP awards will also normally lapse when an Executive
Director leaves the Group. 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 have, in its opinion, been satisfied (over the
original performance period, where the vesting of the award is not
being accelerated) and, unless the Committee determines otherwise,
the proportion of the performance period that has elapsed at the time
the Executive Director leaves.
If an Executive Director leaves the Group holding vested LTIP awards
which are subject to a holding period, these awards will normally be
released at the end of the original holding period, unless the Committee
allows the holding period to be shortened. However, if the Executive
Director is dismissed for gross misconduct, all his or her LTIP awards
will lapse.
If an Executive Director dies, their DBP and LTIP awards will normally
vest (and be released from any holding periods) as soon as reasonably
practicable after their death. The extent to which unvested LTIP awards
vest in these circumstances will be determined by the Committee in
the same way as for other Good Leaver Reasons described above.
The Committee reserves the right to make any other payments in
connection with a 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.
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 have been satisfied at the time, and,
unless the Committee determines otherwise, the proportion of the
performance period that has elapsed. DBP awards will normally vest
in full.
Alternatively, the Board may permit an Executive Director to exchange
their awards for equivalent awards of shares in a different company
(including the acquiring company). If the change of control is an internal
reorganisation of the Group or in other circumstances where the
Committee considers it appropriate, Executive Directors may be
required to exchange their awards.
If other corporate events occur such as a winding-up of the Company,
demerger, delisting, special dividend or other event which, in the
opinion of the Committee, may materially affect the current or future
value of the Company’s shares, the Committee may determine that
awards will vest and be released on the same basis as for a change
of control.
60
Sabre Insurance Group plc Annual Report and Accounts 2019
ANNUAL REPORT ON DIRECTORS’ REMUNERATION
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 2019.
This section of the Directors’ Remuneration Report sets out the
remuneration paid to Sabre’s Directors in respect of the year ending
31 December 2019.
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 2019
– Share plan awards granted during the year ended 31 December 2019
– Directors’ external appointments
– 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.
Individual
Executive Directors
Geoff Carter
Adam Westwood
Executive Director Total
Non-executive Directors
Patrick Snowball
Andy Pomfret
Catherine Barton
Ian Clark
Rebecca Shelley
Non-executive Director Total
Total
Salary
Taxable
benefits
Pension
Short Term
Incentive Plan1
Long Term
Incentive Plan 2
Total
remuneration
2019
2018
2019
2018
2019
2018
20193
2018
2019
2018
2019
2018
£’000s
419
244
663
400
225
625
150
150
70
70
806
70
440
59
70
60
70
409
1,103
1,034
2
1
3
–
–
–
–
–
–
3
15
2
17
–
–
–
–
–
–
69
24
93
–
–
–
–
–
–
53
20
73
–
–
–
–
–
–
330
192
522
292
165
457
–
–
–
–
–
–
–
–
–
–
–
–
17
93
73
522
457
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
820
461
760
412
1,281
1,172
150
150
70
70
80
70
59
70
60
70
440
409
1,721
1,581
1 Awards made under the STIP will be subject to recovery and withholding provisions in line with the Company’s Remuneration Policy.
2 Awards made under the LTIP will be subject to recovery and withholding provisions in line with the Company’s Remuneration Policy. There were no awards under the Company’s LTIP due
to vest during the financial year ended 31 December 2019.
3 Awards made under the STIP are paid for performance over the relevant financial year. Details of the performance targets and performance against the targets for the 2019 STIP awards are
detailed on pages 62 and 63. Consistent with the terms of the 2018 Remuneration Policy, 50% of the bonus earned in relation to the financial year ended 31 December 2019 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.
4 Taxable benefits include private medical insurance and payment in lieu of holiday not taken.
5 The Company operates a Share Incentive Plan (SIP) which is open to all employees. “Other” is the value of matching SIP shares attributable to the year. In 2019 Geoff Carter participated in
the SIP up to the maximum extent permitted by HMRC. The Company offers a 1:3 match for partnership shares purchased by employees and this amounted to £301.08.
6 The amount paid to Mr Clark in 2019 includes £10,000 in back pay in respect to 2018.
61
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 ANNUAL REPORT ON DIRECTORS’ REMUNERATION
CONTINUED
Adam Westwood
Objective
Reviewing the deployment of the Group’s
capital resources to ensure optimal return
and risk profile for the Group’s shareholders,
including new investment strategy agreed
with Board and newly-appointed asset
manager.
Developing further automation within the
Group’s Finance function in order to increase
efficiency and reduce cost. New enhanced
BACS-based processing of claims delivered to
plan to support risk/fraud reduction and faster
processing of claims payments.
Building good relationships with all covering
and potential investment analysts, and engage
with analysts to ensure consensus remains
appropriate.
Weighting as a
% of personal/
strategic bonus
opportunity
Actual
performance
45%
85%
45%
85%
10%
90%
Total % of personal/strategic objectives
100%
86%
Committee Chair commentary on Executive Directors’
personal performance
Sabre is predominantly a technical underwriting and claims
management business. The Company strategy is therefore centred on
maintaining a Combined Operating Ratio between 70% and 80%
throughout all market conditions, treating volume as an output not a
target. The strategy does not currently envisage material product
development, merger and acquisition activity or territorial expansion.
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, 2019 was a challenging year for motor
insurers, with a number of regulatory reviews and ongoing competitive
market conditions. Within this context, the Committee considers the
2019 results to be creditable, with particular reference to COR targets
being achieved whilst accepting that this would deliver lower premium
levels.
Management have been forthright in assessing a claims inflation rate
of around 7-8% throughout 2019, with many competitors only latterly
referencing these levels. In a similar manner Sabre has maintained, and
publicised, a prudent position on the ongoing civil liability reforms which
at the time of writing appears to be correct.
The individual performance objectives detailed above for both Geoff
Carter and Adam Westwood were determined by the Committee to
have been achieved at 85% and 86% respectively. The Committee
reviewed its ability to use discretion on the achievement of the awards,
and felt that based on the Company and individuals’ performance, that
the awards made were in line with expectations. The Committee
concluded that awards of 63.1% to the CEO and 63.2% to the CFO of
the maximum opportunity of 125% should be made.
Awards under the STIP for 2020 will be based on a combination of
financial and non-financial measures as described on page 68.
Base salary
The annual salary paid to the Executive Directors, with effect from
1 April 2019, is shown in the table below. During the year, the
Committee reviewed Executive Director salaries, taking into account
the individual’s role and experience and pay for the broader employee
population. The Committee has decided to increase Executive Director
base salaries for the year ending 31 December 2020 in line with the
average employee increase, with effect 1 April 2020. Details of the
salaries that will apply in 2020 are provided on page 67.
Base salary
Geoff Carter
Adam Westwood
Annual salary (£) with effect 1 April 2019
£425,000
£250,000
2019 Short Term Incentive Plan
Framework and outcomes for the financial year ended
31 December 2019
For the financial year ended 31 December 2019, the Executive
Directors were eligible to participate in the Company’s Short Term
Incentive Plan (“STIP”) with performance conditions aligned with
Sabre’s strategic priorities. The maximum annual bonus opportunity
was 125% of salary for Geoff Carter and 125% for Adam Westwood.
The STIP was based 60% on financial targets and 40% on non-financial
targets. Awards were made subject to the maintenance of a
satisfactory risk, compliance and internal control environment during
the performance period.
The range of personal targets set for Geoff Carter and Adam
Westwood and the Committee’s assessment of their performance
against them are detailed below.
Geoff Carter
Objective
Weighting as a
% of personal/
strategic bonus
opportunity
Actual
performance
25%
85%
75%
85%
Continued development of governance
processes and investor relations. Evidenced
by a positive annual IR survey outcome and
enhanced risk and compliance approach.
Progress against strategic objectives,
including:
– Maintaining focus on the core principles
underlying the Company’s strategy in
challenging market conditions, and
reviewing underwriting processes to ensure
appropriateness as the Company evolves.
– Monitoring and responding appropriately to
civil liability/Ogden reforms.
– Enhancement in core car product through
expansion of the quotability footprint,
utilising new data sets and implementing
additional fraud controls.
– Progressing opportunities to develop the
business such as the Saga agreement
which was signed in November 2019.
– Responding effectively to the FCA pricing
review through extensive analysis and
engagement with the regulator and trade
bodies.
– Development of an agreed medium-term
capital plan and more effective investment
approach with appointment of new
investment manager for 2020.
– Review and optimisation of expenses in the
post-IPO environment.
Total % of personal/strategic objectives
100%
85%
62
Sabre Insurance Group plc Annual Report and Accounts 2019
The range of financial targets set and actual performance against the targets is detailed below:
Financial measure
Adjusted Profit After Tax
Return on tangible equity (“ROTE”)
Weighting
as a % of total
bonus
opportunity
40%
20%
Threshold
£42.5m
37.47%
Target
£50m
44.08%
Stretch
£57.5m
50.69%
Actual
performance
£45.9m
42%
Actual bonus
payable as a %
of total bonus
opportunity
16%
9.37%
The range of non-financial targets set and actual performance against the targets is detailed below:
Non-financial measure
Customer
Individual
Weighting
as a % of total
bonus
opportunity
25
15
Threshold
Target
Stretch
>9/12 months
standards
achieved
10/12 months
standards
achieved
12/12 months
standards
achieved
Actual
performance
Actual bonus
payable as a %
of total bonus
opportunity
12
25%
Page 62
Page 62
Page 62
Page 62
Page 62
Long Term Incentive Plan (“LTIP”)
Vesting of awards under the LTIP in the financial year ended 31 December 2019
Shortly prior to Admission, shareholders approved the introduction of the Sabre 2017 LTIP. No awards under the LTIP were due to vest in 2019
because the first LTIP award was granted in 2018 and is due to vest in 2021.
Granting of awards under the LTIP in the financial year ended 31 December 2019
In line with the Company’s Directors’ Remuneration Policy, both Geoff Carter and Adam Westwood were granted awards (125% and 100% of
salary respectively) under the Company’s LTIP during the financial year ended 31 December 2019.
The performance conditions applicable to these awards are detailed below. 50% of the award is subject to a challenging cumulative underlying
Earnings Per Share (“EPS”) target to be achieved in the financial year ended 31 December 2021. 50% of the award is subject to a performance
target comparing the Company’s Total Shareholder Return (“TSR”) against the TSR of the companies of the FTSE 250, excluding investment
trusts and companies in the extractive industries over the three years commencing 1 January 2019. The awards were granted as nil cost
conditional awards.
Details of awards granted on 11 April 2019:
Executive Director
Basis of award
Face value
Shares over
which awards
were granted1
Threshold
vesting (% of
award)
Performance
period
Performance measure
Geoff Carter
125% of salary
£531,250
183,575
Adam Westwood
100% of salary
£250,000
86,388
25% 1 January 2019
to 31 December
2021
Cumulative underlying EPS (50%)
and relative TSR performance
condition (50%)
25% 1 January 2019
to 31 December
2021
Cumulative underlying EPS (50%)
and relative TSR performance
condition (50%)
1 The number of shares granted was calculated on the average share price of the five working days immediately preceding the date of grant of £2.894.
63
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 ANNUAL REPORT ON DIRECTORS’ REMUNERATION
CONTINUED
The performance targets for the 2019 LTIP are detailed below:
EPS
Vesting %
Threshold – 25%
Target – 60%
Maximum – 100%
Straight line basis
TSR
Vesting %
Threshold – 25%
Maximum – 100%
Straight line basis
Cumulative underlying EPS
54.5 pence
60.6 pence
66.7 pence
Between Threshold and Target and
Target and Maximum
Sabre TSR vs TSR comparators
Median
Upper quartile
Between Threshold
and Maximum
Awards will be subject to malus and clawback provisions.
With regards to the choice of metrics, EPS aligns the Executive
Directors with delivering key long-term profitable growth, with TSR
providing alignment with shareholders in that vesting will only take
place for creating above median returns.
External appointments (audited)
Neither of the Executive Directors currently holds a paid external
appointment.
Long Term Incentive Plan (“LTIP”)
Payments to past Directors (audited)
There were no payments to past Directors in the year.
Payments for loss of office (audited)
There were no payments to Directors for loss of office in the year.
Sourcing of shares (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 Save As You Earn
(“SAYE”) Plan, the Share Incentive Plan 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 10-year period on discretionary
plans. As at 31 December 2019, Sabre was operating within
these limits.
Share awards and other outstanding share awards granted
during the year ending December 2019 (audited)
Details of awards granted during the year are detailed below.
The LTIP is subject to performance targets, which are detailed
to the left of this page.
Holding
on
1 January
2019
Granted
during
the year
Option
price
(£)
Exercised
during
the year
Lapsed
Director
Geoff
Carter
2018
186,289
0
n/a
2019
0
183,575
n/a
Total
186,289
183,575
2018
83,830
0
n/a
n/a
Adam
Westwood
2019
0
86,388
n/a
Total
83,830
86,388
n/a
Deferred Bonus Plan (“DBP”)
Director
Geoff Carter
Adam Westwood
0
0
0
0
0
0
0
0
0
0
0
0
Market
price at
exercise
date
(£)
Holdings on
31 December
2019
n/a
186,289
n/a
183,575
n/a
n/a
369,864
83,830
n/a
86,388
Share
price on
date of
grant
(£)
Vesting date
Gain on
exercise
(£’000)
Date of
grant
21 June
2018
11 April
2019
2.67 After the release of
the results for the
year ended
31 December 2020
2.884 After the release of
the results for the
year ended
31 December 2021
–
–
–
21 June
2018
11 April
2019
2.67 After the release of
the results for the
year ended 31
December 2020
2.884 After the release of
the results for the
year ended
31 December 2021
n/a
n/a
n/a
n/a
n/a
n/a
170,218
–
–
–
n/a
Number
of shares
granted
during
the year
50,421
Share price
used at date
of grant1
(£)
Face value
of award
at grant2
(£)
Date of grant
Release date
£2.894
£145,918
11/4/19
11/4/21
28,362
£2.894
£82,080
11/4/19
11/4/21
1 The share price of £2.894 represents the average share price of the five working days immediately prior to the date of grant.
2 Represents 50% of the 2018 bonus award that was deferred into shares.
64
Sabre Insurance Group plc Annual Report and Accounts 2019
Save As You Earn (“SAYE”) Plan
Holding
on
1 January
2019
Granted
during
the year
Option
price
(£)
Exercised
during
the year
Lapsed
Market
price at
exercise
date
(£)
31 December
2019
Director
Geoff Carter
2018
4,293
–
2.096
2019
–
3,174
2.268
Total
Adam Westwood
2018
4,293
4,293
Total
4,293
Share Incentive Plan (“SIP”)
3,174
–
–
n/a
2.096
n/a
–
–
–
–
–
–
–
–
–
–
Date of
grant
24 May
2018
4,293
3,174
30 April
2019
Share
price on
date of
grant
(£)
Exercisable
period
Gain on
exercise
(£’000)
2.650 1 July 2021 to
31 December
2021
2.660 1 July 2022 to
31 December
2022
n/a
n/a
n/a
n/a
7,467
4,293
–
–
–
24 May
2018
2.650 1 July 2021 to
31 December
2021
n/a
4,293
–
–
–
n/a
n/a
n/a
n/a
n/a
Director
Geoff Carter
Total
Purchased
during
the year
Granted during the
year in the form of
matching shares
Exercised
during
the year
Lapsed
31 December
2019
318
318
108
108
–
–
–
–
426
426
Vesting date
Shares can be exercised
with effect from the third
anniversary of their grant
Gain on
exercise
(£’000)
n/a
n/a
Directors’ shareholdings and share interests (audited)
To further align Executive Directors with shareholders, the Committee has shareholding requirements for the Executive Directors. Executive
Directors will be expected to build and hold shareholding having a value of at least 200% of their base salary. To support the implementation of
this measure Executive Directors will be required to retain 50% of any share awards vesting (after settling any tax liability) until the 200%
requirement is met.
Shareholding requirements and the number of shares held by Directors during the year and as at 31 December 2019 are set out in the table below:
Number of
unvested
shares subject
to performance
as at
31 December
2019
Number of
unvested
shares not
subject to
performance
as at
31 December
20191
Number of
shares held
under the
Deferred Bonus
Plan as at
31 December
2019
Number of
shares held
as at
31 December
2019
Number of
shares held
as at
31 December
2018
Shareholding
requirement as
a % of salary
Shareholding
as a % of salary
achieved at
31 December
20192
369,864
170,218
n/a
n/a
n/a
n/a
n/a
7,785
4,293
n/a
n/a
n/a
n/a
n/a
50,421
28,362
n/a
n/a
n/a
n/a
n/a
1,545,372
1,965,372
652,303
105,288
43,478
7,312
265,761
7,309
842,303
105,288
43,478
–
265,761
–
200%
200%
n/a
n/a
n/a
n/a
n/a
1134%
822%
n/a
n/a
n/a
n/a
n/a
Director
Current Directors
Geoff Carter
Adam Westwood
Patrick Snowball
Andy Pomfret
Catherine Barton
Ian Clark
Rebecca Shelley
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 £3.075 (as at 31 December 2019).
65
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 ANNUAL REPORT ON DIRECTORS’ REMUNERATION
CONTINUED
Company performance – relative Total Shareholder Return
The graph below shows Sabre’s relative Total Shareholder Return
(“TSR”) performance from Admission to 31 December 2019 against
the TSR performance of the FTSE 250 Index (excluding investment
trusts and extractive industries). This is a broad equity market index,
which the Committee considered to be the most appropriate
comparator.
Percentage change in Chief Executive Officer’s
remuneration
The graph below shows the change in CEO annual cash, defined as
salary, taxable benefits, and annual bonus, compared to the average
employee for 2018 and 2019.
CHIEF EXECUTIVE OFFICER £’000
TSR PERFORMANCE VS FTSE 250 EXCLUDING INVESTMENT TRUSTS SINCE IPO
150
140
130
120
110
100
90
80
11 Dec
2017
31 Mar
2018
30 Jun
2018
30 Sep
2018
31 Dec
2018
31 Mar
2019
30 Jun
2019
30 Sep
2019
31 Dec
2019
Sabre Insurance
FTSE 250 (Excluding investment trusts)
The following table shows the Chief Executive Officer’s remuneration
for current and prior years:
Single figure of remuneration
Annual bonus pay out (as a % of
maximum opportunity)
LTIP vesting (as a % of maximum
opportunity)
2019
(£)
820K
2018
(£)
760K
63.1%
73.0%
n/a
n/a
2017
(£)
251K
n/a
n/a
EMPLOYEE £’000
£760k
£820k
£54k
£58k
2018
2019
CEO annual cash
Salary and pension
Taxable benefits
Annual variable
Total
2019
£’000
2018
£’000
% Change
(annualised)
488
2
330
820
453
15
292
760
7.67%
(86.67%)
13.01%
7.86%
Average for
other
employees
% change
3.41%
6.32%
18.99%
6.02%
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. In 2018 the Committee increased the maximum
monthly contribution under the SAYE Plan and expansion of the SIP to
include employee contributions, which is matched by the Company at a
3:1 ratio. These changes came into effect in the financial year ended
31 December 2019. All employees receive a salary at or above the
National Living Wage, and all full time employees are eligible to receive
a performance-related bonus.
66
Sabre Insurance Group plc Annual Report and Accounts 2019
CEO 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 employee, as well as
employees in the lower and upper quartiles. We will build up our
reporting of these figures over time to cover a ten-year rolling basis.
The ratios were calculated using the Option A methodology, which
uses the pay and benefits of all UK employees. The employee pay data
used was based on the total remuneration of all of Sabre’s full time
employees as at 31 December 2019. The CEO’s pay is as per the single
total figure of remuneration for 2019, as disclosed on page 66.
The Committee has considered the pay data and believes that the
pay of the CEO fairly reflects pay at the relevant quartiles among
Sabre’s employees.
2018
Pay ratio
Remuneration
values
2019
Pay ratio
Remuneration
values
CEO’s
remuneration
(£’000)
25th
percentile
50th
percentile
75th
percentile
760
29.4: 1.0
19.5: 1.0
13.2: 1.0
£25,849
£39,107
£57,667
CEO’s
remuneration
(£’000)
25th
percentile
50th
percentile
75th
percentile
820
33.2:1
21.8:1
13.2:1
£24,719
£37,561
£62,020
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
Shareholder distributions
Total employee remuneration1
2019
£32m
£11.5m
2018
£50.1m3
£11.5m
1 Total personnel cost.
2
Includes the interim and final dividends declared in respect of the financial year ended
31 December 2019.
Includes the interim, special and final dividends declared in respect of the financial year
ended 31 December 2018.
3
RELATIVE IMPORTANCE OF SPEND ON PAY £’000
2018
2019
£11.5m
£11.5m
SHAREHOLDER DISTRIBUTIONS
TOTAL EMPLOYEE REMUNERATION
£32m
£50.1m
Andy Pomfret
Catherine Barton
Ian Clark
Rebecca Shelley
Implementation of the Policy in 2020
It is intended that during 2020 remuneration arrangements will continue
to be implemented in line with our Remuneration Policy.
Salaries
The Executive Directors’ salaries were reviewed during the year.
The Committee decided to increase the salaries for Geoff Carter and
Adam Westwood in line with the average increase given to employees
across the Group. The revised salaries, with effect from 1 April 2020,
are £434,775 for Geoff Carter, and £255,750 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.
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.
Geoff Carter
Adam Westwood
Salary as at
1 April
2020
Salary as at
31 December
2019
£434,775
£255,750
£425,000
£250,000
Increase
2.3%
2.3%
Chairman and Non-executive Director fees
During the year, the Committee reviewed the Chairman’s fee in light of
the time commitment required of the role, and agreed to no change
in 2020.
During the year the Chairman, Chief Executive Officer and Chief
Financial Officer reviewed the Non-executive Directors’ fees in light of
the time commitment required of the role, and agreed to no change
in 2020.
The fees which will apply in 2020 are as follows:
Role
Fee (£)
2020
Fee (£)
2019
Chairman fee (all-inclusive fee)
£150,000
£150,000
Non-executive Director base fee
Senior Independent Director fee
Committee Chairman fee
Designated Employee Representative
Non-executive Director
Committee member fee
£60,000
£10,000
£10,000
£10,000
None
£60,000
£10,000
£10,000
£10,000
None
The Chairman and Non-executive Directors’ fees for the financial year
ended 31 December 2020 are therefore:
Director
Reason for fee
Patrick Snowball
Company Chairman
Total annual
fee
(£)
150,000
Non-executive Director
Senior Independent Director
Non-executive Director
Audit and Risk Committee Chair
Non-executive Director
Designated Non-executive Director
for Employee Engagement
Non-executive Director
Remuneration Committee Chair
70,000
70,000
70,000
70,000
67
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019
ANNUAL REPORT ON DIRECTORS’ REMUNERATION
CONTINUED
Pension
The maximum employer contribution is 17% of salary. For 2020, the
Chief Executive Officer will receive cash in lieu of pension equal to 17%
of salary less Employer National Insurance Contributions, and the Chief
Financial Officer will receive a contribution of 10% of salary as a
combination of plan contribution and cash in lieu. The Committee will
keep under review the contribution levels to Executive Directors in
comparison to the workforce, as part of a wider review of the Directors’
Remuneration Policy ahead of the next Policy vote at the 2021 AGM.
Benefits
These will be awarded in line with the Policy.
Annual bonus
The Chief Executive Officer and the Chief Financial Officer will be
entitled to a maximum annual bonus equal to 125% of salary for 2020.
This is within the Company’s Remuneration Policy. The award for
on-target performance will be 60% of maximum. The Committee
considers it appropriate to maintain the maximum and on-target awards
for 2020 as the bonus targets are appropriately stretching. Although
performance conditions are deemed commercially sensitive, they will
be disclosed in the 2020 Annual Remuneration Report.
The performance measures approved by the Committee at the
beginning of the performance period will be as follows:
Element
Financial
Measure
Adjusted profit after tax
Return on Tangible Equity
Non-financial Assessment of performance against key
Weighting
40%
20%
25%
corporate objectives to include:
– Strategic objectives
– Customer and partners
– Environmental, social and governance objectives
– Risk & Compliance
– People
– Development of the business
Personal performance objectives
15%
The Committee considers that by using a combination of financial and
broad ranging non-financial performance measures, it is incentivising
the Executive Directors to drive sustainable growth.
Having reviewed the customer measures which have previously
determined 25% of annual bonus outcomes, the Committee concluded
that these measures were not rigorous enough. Taking into account
investor expectations and the other key elements which are important
to the business and its strategy, the Committee has decided to
incorporate other key performance indicators and increase the level of
transparency. The Committee has determined that the Company-
focused non-financial objectives for the 2020 award will be Strategy,
Customer and Partners, Risk and Compliance, ESG, People and
Development of the Business.
Long Term Incentive Plan
The maximum LTIP opportunity under the Policy is 175% of salary.
The Committee intends to award shares of 125% of salary to the
Chief Executive Officer and 100% of salary to the Chief Financial
Officer in 2020.
We recognise that the share price has declined recently due to factors
which the Remuneration Committee believe are not specific to Sabre
Insurance Group plc but rather events relating to COVID-19. It is noted
that under the LTIP rules for Executive Directors, the Committee has
full discretion to ensure that the final outcomes are warranted based on
the performance of the Group in light of all relevant factors and that
there have not been any windfall gains.
The vesting of the awards will be assessed against a combination of
cumulative underlying EPS growth and relative TSR. The conditions will
operate independently. Awards will vest after three years and will be
further subject to a two-year holding period post-vesting to align with
the UK Corporate Governance Code. In order for awards to vest under
the LTIP, the Committee must be satisfied that a satisfactory risk and
control environment has been maintained.
The EPS condition will be measured based on total EPS for the three
years ending 31 December 2022 with the TSR condition measuring
Sabre’s relative performance versus the companies in the FTSE 250
(excluding investment trusts and extractive industries). The EPS
condition (50% of the award) approved by the Committee at the
beginning of the performance period will be as follows:
Vesting % of EPS element
EPS at 31 December 2022
Threshold – 25%
Target – 60%
Maximum – 100%
Straight line basis
48.6p
54p
59.4p
Between Threshold and Target
And Target and Maximum
The TSR condition (50% of the award) approved by the Committee at
the beginning of the performance period will be as follows:
Vesting % of TSR element
Threshold – 25%
Maximum – 100%
Straight line basis
Three-year TSR relative to the
FTSE 250 (excluding investment
trusts and extractive industries)
constituents at 31 December 2022
Median
Upper quartile
Between Threshold and Maximum
With regards to the choice of metrics, EPS aligns the Executive
Directors with delivering key long-term profitable growth, with TSR
providing alignment with shareholders in that vesting will only take
place for creating above median returns.
In respect of personal performance, each individual Executive will be
assessed against their own personal objectives covering a wide range
of priorities such as specific strategic developments, automation and
enhancement of the Executive Team and Board effectiveness.
REBECCA SHELLEY
Chair of the Remuneration Committee
6 April 2020
The details of the performance targets are commercially sensitive
and will be disclosed retrospectively in the 2020 Directors’
Remuneration Report.
50% of any bonus earned will be deferred into shares under the
Deferred Bonus Plan, vesting on the second anniversary of the grant.
68
Sabre Insurance Group plc Annual Report and Accounts 2019
DIRECTORS’ REPORT
The Directors’ Report for the period ended 31 December 2019
comprises the report set out on pages 69 to 72 and the Directors’
and Officers’ Responsibility Statement on page 73 together with
the following sections of this Annual Report which are included
by reference:
The Strategic Report set out on pages 1 to 39 which includes:
– the Chairman’s Letter on pages 8 to 9;
– the CEO’s Review on pages 12 to 15; and
– the Principal Risks and Uncertainties on pages 20 to 24;
– the Viability Statement on page 25;
– the CFO’s Review on pages 26 to 29 and
– the Corporate Social Responsibility report on pages 30 to 39.
The Chairman’s Governance Letter and the Governance Report on
pages 40 to 47 and including the reports of the Audit and Risk,
Nomination and Remuneration Committees on pages 48 to 68.
Corporate structure and principal activity
The Company’s principal and only trading subsidiary is a motor
insurance underwriter. Sabre Insurance Group plc is a public company
limited by shares and was incorporated in England and Wales on
21 September 2017 with registered number 10974661. Its registered
office and principal place of business is at Sabre House, 150 South
Street, Dorking, Surrey RH4 2YY. The Company has no branches.
The Company is the holding company of the Sabre Group of
companies. Details of the Company’s subsidiaries are set out in Note
29 of the Parent Company Financial Statements contained in this
Annual Report.
Directors
The Directors who served throughout the year are as follows:
Executive Directors
Geoff Carter – Chief Executive Officer
Adam Westwood – Chief Financial Officer
Non-executive Directors
Patrick Snowball – Chairman
Catherine Barton
Ian Clark
Andy Pomfret
Rebecca Shelley
The members of the Board of Directors, their biographical details
and the dates of their appointment are set out on page 43 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 re-election at each AGM. 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 his period of office. The Nomination 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
is set out in the Governance and Nomination Committee reports on
pages 44 to 47 and page 52 of this Annual Report, respectively.
Powers
Subject to the provisions of the Articles, the Companies Act and related
legislation, and any directions given by special resolution of the
shareholders, the business of the 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.
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 Directors’ Remuneration Report on pages 56 to 68 and the
contracts are available for inspection by shareholders at the Company’s
registered office.
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 Directors’ Remuneration Report and the terms
of appointment are available for inspection by shareholders at the
Company’s registered office.
Directors’ indemnities
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.
Directors’ and Officers’ Liability Insurance
Directors’ and Officers’ liability insurance is provided for all Directors of
the Company.
Compensation for loss of office
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 Directors’ Remuneration
Report on pages 56 to 68 of this Annual Report. No such payments
were made during the financial year ended 31 December 2019.
69
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 DIRECTORS’ REPORT
CONTINUED
Articles of Association
The Company may alter its Articles by special resolution of the
shareholders at a general meeting of the Company. The Articles are
available on the Company’s website at www.sabreplc.co.uk.
Share capital
Shares
The Company has one class of ordinary voting shares in issue.
As at 31 December 2019, 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 lock up arrangements
described below; (ii) as set out in the Articles; and (iii) 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 Company require approval to deal in the ordinary
shares in accordance with the Company’s share dealing policies and
the Market Abuse Regulation.
Distributions
During the year to 31 December 2019, the Directors became aware
that the interim dividend of £17,951k paid during 2018 had been paid
in technical infringement of the Companies Act 2006 because interim
accounts showing the requisite level of distributable profits had not
been filed at Companies House prior to payment. At the upcoming
Annual General Meeting of the Company’s shareholders, to be held
on 21 May 2020, a resolution will be proposed which ratifies, and
authorises the appropriation of distributable profits to, the payment of
that interim dividend and releases any right for the Company to pursue
shareholders or Directors for repayment of that unlawful dividend. This
constitutes a related party transaction under IAS 24. It is intended that
by passing the resolution, all parties will be returned to the position they
would have been in had the dividend been paid in full compliance with
the Act.
Power to allot and purchase shares
By a resolution passed at the Annual General Meeting (the “Meeting”)
of the Company on 23 May 2019, the Company was granted a general
authority to allot 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)). The Company also received
authority to allot shares for cash on a non pre-emptive basis up to the
lower of (i) an aggregate nominal amount of £12,500 and (ii) 5% of the
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 2020 AGM and, accordingly, the
Board is proposing to renew these authorities at that AGM.
The Company was granted authority by its shareholders at the General
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 2020 AGM. No shares have been bought under this
authority. The Board is proposing to renew this authority at the 2020
AGM, however the Company does not have any current intention to
purchase any of its own ordinary shares.
Directors’ interests in shares
The Directors who held office as at 31 December 2019 had the
following interests (including family interests) in the ordinary shares
of the Company:
Name of Director
Catherine Barton
Geoff Carter
Ian Clark
Andy Pomfret
Rebecca Shelley
Patrick Snowball
Adam Westwood
31 December
2019
31 December
2018
7,312
–
1,545,372
1,965,372
265,761
43,478
7,309
105,288
652,303
265,761
n/a
–
105,288
842,303
The Directors, as employees and potential beneficiaries, have an
interest in 631,051 shares held by the Sabre Insurance Group Employee
Benefit Trust (offshore) and the Company’s SIP Trust (onshore) as at
31 December 2019. As at 31 December 2019, the Sabre Insurance
Group Employee Benefit Trusts held 726,344 shares and the
Company’s SIP Trust held 209,826 shares. It is anticipated that these
ordinary shares 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 Directors’
Remuneration Report on pages 56 to 68 of this Annual Report.
There were no changes in the interests of Directors between
31 December 2019 and 6 April 2020. In line with the Company’s
Remuneration Policy, half of the value received under the Group’s
Bonus Plan by Geoff Carter and Adam Westwood for the year ended
31 December 2019 will be deferred into shares, held in the Sabre
Insurance Group Employee Benefit Trust.
70
Sabre Insurance Group plc Annual Report and Accounts 2019
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/.
Employees and communities
Less than 250 individuals were employed by the Company in each
week during the financial year to which this Annual Report relates
(further details regarding the Company’s employees are set out in
the Corporate Social Responsibility report on pages 30 and 39 of
this Annual Report).
At 31 December 2019, 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.
Shareholder
Aviva plc and its subsidiaries
AXA Investment Managers
Companies owned by Old Mutual
Number of
ordinary
shares
23,709,427
12,597,136
12,870,464
Kayne Anderson Rudnick Investment Management 16,277,574
M&G plc
14,953,230
% of voting
rights
9.48%
5.04%
5.14%
6.51%
5.98%
During the period between 31 December 2019 and 6 April 2020, being
the latest practicable date prior to publication of this Annual Report,
there were no reported changes to the above table.
Results and dividends
The audited accounts for the year ended 31 December 2019 are set out
on pages 78 to 113. The Group profit for the year after tax was £45.7m
(2018: £49.6m).
The Directors recommend a final dividend of 8.1 pence (2018: 6.8
pence). The total dividend for the year, including the proposed final
is 12.8 pence (2018: 20 pence).
Significant agreements and change of control
The Group is not a party to any material agreements that would take
effect, alter or terminate upon a change of control of the Group
following a takeover bid.
Environment and emissions
Information on the Group’s greenhouse gas emissions is set out in
the Corporate Social Responsibility report on page 35 of this Annual
Report. During the year the Board appointed Adam Westwood as
the Executive Director responsible for Environmental, Social and
Governance issues.
Research and development
The Group does not undertake any material activities in the field of
research and development.
Financial instruments and risk management
The Group’s financial risk management objective and policies, including
information about its use of financial instruments, are contained in
Note 3 to the Consolidated Financial Statements on page 87 of this
Annual Report.
Events after the balance sheet date
Refer to Note 32 of the Consolidated Financial Statements on page 109
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 34 of this Annual Report amounted, in aggregate, to £15,698.40
(2018: £4,512). The Group made no political donations during the year
(2018: £0).
The Annual General Meeting (the “AGM”)
The 2020 AGM will be held at 9:30am on Thursday 21 May 2020.
Full details about the 2020 AGM, including the venue and explanatory
notes, will be contained in the Notice of AGM which will be sent to
shareholders in a separate document. The Notice of AGM will set out
the resolutions to be proposed at the AGM and an explanation of each
resolution. All documents relating to the AGM will be available on the
Company’s website at www.sabreplc.co.uk/investors/annual-
general-meeting/
The AGM is the Company’s principal forum for communication with
shareholders and the Directors will be available to answer shareholders’
questions at the meeting.
71
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019 DIRECTORS’ REPORT
CONTINUED
Independent auditor
The auditor of the Company, Ernst & Young LLP (“EY”), has indicated
their willingness to continue in office, and resolutions to appoint EY and
to authorise the Directors to fix their remuneration will be proposed at
the 2020 AGM.
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.
Requirements of Listing Rule 9.8.4
Information to be included in the Annual Report and Accounts under
Listing Rule 9.8.4 mar be found as follows:
Listing Rule
Description
9.8.4 (4)
9.8.4 (12)
9.8.4 (13)
Details of long term incentive schemes required by
Listing Rule 9.4.3
Details of dividends waived
Page
63
96
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 2019 were 23 days
(2018: 21 days) purchases, 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 and, on the basis of
these considerations, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operation for at least
the next 12 months from the date of this report and that therefore it is
appropriate to adopt a going concern basis for the preparation of the
financial statements.
By order of the Board
ANNEKA KINGAN
Company Secretary
6 April 2020
72
Sabre Insurance Group plc Annual Report and Accounts 2019
DIRECTORS’ AND OFFICERS’
RESPONSIBILITIES STATEMENT
Responsibility and accountability
The Directors are responsible for preparing the Annual Report, the
Directors’ Remuneration Report and the financial statements,
comprising the Consolidated Financial Statements and the Company
financial statements, in accordance with applicable law and regulations.
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’s financial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted by the
European Union and applicable law.
Under company law the 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 the Company and of the profit or
loss of each of the Group and the Company for that period. In preparing
these financial statements, the Directors are required to:
Responsibility statement
Each of the Directors, whose names and functions are listed
on page 43 of this Annual Report, confirms that, to the best of
their knowledge:
– The Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and loss of the Group
– The Strategic Report and Directors’ Report contained in this Annual
Report include a fair review of the development and performance
of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces.
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
performance and position, business model and strategy.
– Select suitable accounting policies and then apply them consistently
– Make judgements and accounting estimates that are reasonable
This responsibility statement was approved by the Board of Directors
on 6 April 2020 and is signed on its behalf by:
GEOFF CARTER
Chief Executive Officer
ADAM WESTWOOD
Chief Financial Officer
and prudent
– State whether applicable IFRSs as adopted by the European Union
and applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial
statements
– prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and the Group and enable them to ensure that the
financial statements and the Directors’ Remuneration Report comply
with the Companies Act 2006 and that the Group financial statements
comply with Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the Company and the Group, including
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are also responsible for the maintenance and integrity
of the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
73
GOVERNANCESabre Insurance Group plc Annual Report and Accounts 2019
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF SABRE INSURANCE GROUP PLC
Opinion
In our opinion:
– Sabre Insurance Group plc’s Group financial statements and parent
company financial statements (the “financial statements”) give a true and
fair view of the state of the Group’s and of the parent company’s affairs as
at 31 December 2019 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
– the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union as applied in
accordance with the provisions of the Companies Act 2006; and
– the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006, and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements of Sabre Insurance Group plc
which comprise:
Group
Parent company
Consolidated Statement of
Comprehensive Income for
the year then ended
Consolidated Statement of Financial
Position as at 31 December 2019
Statement of Financial Position
as at 31 December 2019
Consolidated Statement of Changes
in Equity for the year then ended
Statement of Changes in Equity for
the year then ended
Consolidated Statement of Cash
Flows for the year then ended
Statement of Cash Flows for the year
then ended
Related notes 1 to 32 to the financial
statements, including a summary of
significant accounting policies
Related notes 1 to 9 to the financial
statements, including a summary of
significant accounting policies
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union and, as regards the
parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for
the audit of the financial statements section of our report below. We are
independent of the Group and parent company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standards as applied to
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and
viability statement
We have nothing to report in respect of the following information in the
annual report, in relation to which the ISAs (UK) require us to report to
you whether we have anything material to add or draw attention to:
– the disclosures in the annual report set out on page 20 that describe the
principal risks and explain how they are being managed or mitigated;
– the Directors’ confirmation set out on page 22 in the annual report that
they have carried out a robust assessment of the principal risks facing the
entity, including those that would threaten its business model, future
performance, solvency or liquidity;
– the Directors’ statement set out on page 72 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 entity’s ability to continue to do so over a
period of at least 12 months from the date of approval of the financial
statements;
– whether the Directors’ statement in relation to going concern required
under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge obtained in the audit; or
– the Directors’ explanation set out on page 25 in the annual report as to
how they have assessed the prospects of the entity, over what period
they have done so and why they consider that period to be appropriate,
and their statement as to whether they have a reasonable expectation
that the entity will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or
assumptions.
Overview of our audit approach
Key audit matters
– Valuation of insurance liabilities (gross and net)
– Adequate consideration of COVID-19 in respect of the
Group and as an event after the reporting period
Audit scope
– We performed an audit of the complete financial
information of the whole Group function and Sabre
Insurance Company Limited.
– The components where we performed full audit
procedures accounted for 100% of Profit before tax,
100% of Revenue and 100% of Total assets.
Materiality
– Overall Group materiality of £2.8m which represents
5% of profit before tax (“PBT”).
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our 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) that we identified. These
matters included 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 were addressed in the context
of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
74
Sabre Insurance Group plc Annual Report and Accounts 2019
Risk
Risk
Valuation of insurance liabilities (£212.2m gross and £135.8m net,
PY comparative £242.4m gross and £139.4m net of reinsurance value).
Adequate consideration of COVID-19 in respect of the Group and as an
event after the reporting period.
Refer to the Audit and Risk Committee Report (page 48); Accounting policies
(page 84); and Note 22 of the Consolidated Financial Statements (page 99).
Management is required to make an estimation of insurance liabilities (which
includes both IBNR and outstanding loss reserves.)
This estimate consists of a provision for additional development of the insurance
liabilities reported by insureds, as well as a provision for claims which have
occurred but which have not yet been reported.
There is a risk that inappropriate assumptions or projections are used in
determining the insurance liabilities. This could lead to these liabilities not falling
within a reasonable range of possible estimates, resulting in a misstatement in
the financial statements.
Furthermore, insurance liabilities are subject to manipulation, as up until the
closure of a case reserve, an element of estimation is required to account for
these liabilities. Additionally there is a risk of using f inaccurate underlying data.
These balances, by nature, are also subject to a risk of management
manipulation. Given the magnitude of the balance, a small manipulation of an
assumption could have a significant impact on the financial statements.
Our response to the risk
Utilising EY actuarial specialists as part of our team, we performed
the following procedures:
This is a new Key Audit Matter for the current year. Refer to the Viability
Statement (page 25); Audit and Committee Report (page 48); Going Concern
(page 72) and Note 32 of the Consolidated Financial Statements (page 109)
The unprecedented events of the recent weeks in respect of COVID-19 mean
that it is important that due consideration is given by management and the
Board on how these events should be reflected in their disclosures.
In particular, in accordance with Provision 31 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 2022, taking into account the Group’s
current position and the potential impact of the principal risks. Additionally, in
preparing the financial statements, the Directors are required to consider if it is
appropriate to adopt the going concern basis of accounting in preparing them,
and make a statement on going concern in accordance with Listing Rule
9.8.6R(3).
Additionally, the Group also need to consider how the situation that has
developed in respect of COVID-19 since 31 December 2019 should be reflected
in the financial statements. The Group has determined that the valuation of
assets and liabilities at 31 December 2019 are not altered since the current
conditions in the UK did not exist at the end of the reporting period. It is still
necessary to consider the adequacy of disclosures regarding COVID-19 as a
non-adjusting event after the reporting period.
Our response to the risk
Control design and implementation: We gained a detailed understanding of
the end to end reserving and case reserve process and assessed the design and
implementation of key controls within the process, in respect of initiation and
setting of case reserves. We tested the operational effectiveness of the key
controls over the claims management process.
To assess the robustness of Management’s viability and going concern
assessments we performed the following:
– We obtained the forecast used by management in assessing the Group’s
viability for the three-year period to 31 December 2022
Market knowledge and benchmarking: We evaluated management’s
methodology against market practice and challenged management’s
assumptions and their assessment of major sensitivities, based on our market
knowledge and industry data where available.
Independent re-projections and sensitivity analysis: We independently
re-projected the Insurance liabilities on both a gross and net of reinsurance
basis, we investigated differences between our projections and those of
management and we then considered whether the insurance liabilities held
as at 31 December 2019 fall within a reasonable range of possible estimates.
Additionally, we have reviewed management’s potential exposure to Periodic
Payment Orders, we have assessed the potential impact of differences in the
inflation and claimant longevity changes to the assumptions used.
Test of details: To assess the completeness and accuracy of the paid,
reinsurance recoveries and incurred claims data used to project insurance
liabilities. We re-performed reconciliations between the claims paid, reinsurance
recoveries and outstanding data recorded in the policy administration systems
and the data used in the actuarial calculations.
For a sample of paid and outstanding claims we corroborated the gross and net
of reinsurance claims to supporting 3rd party evidence. For paid claims this
included claim notifications, which we traced back to bank payment. For
reinsurance we agree recoveries calculation back to the underlying Reinsurance
contract terms and for a sample of outstanding claims we obtained supporting
calculations and 3rd party correspondence to corroborate the year-end balances.
We also held discussions with claims handlers to further understand the
background of the claims.
Key observations communicated to the Audit Committee
We consider that management’s judgements in respect of the valuation of
insurance liabilities are reasonable. The Group’s booked insurance liabilities lie
within what we consider to be a reasonable range of estimates.
In addition we consider that the disclosures made are satisfactory, and they
provide information that assists in understanding the uncertainty inherent in the
valuation of insurance liabilities.
– We assessed the reasonableness of management’s forecast and
appropriateness of the inputs and key assumptions used in the model. As
part of this assessment, we re-projected our own assessment using different
key assumptions for the three- year period to 31 December 2022
– We requested that management performed an additional assessment
considering plausible severe downside stresses as a result of COVID-19. We
considered the appropriateness of the revised key assumptions used in the
model and requested that management performed further, more extreme
scenario.
– Independent of the model used by management we considered further
alternative stresses to the viability of the Group for the three-year period to 31
December 2022.
– Furthermore, in addition to our stress testing of assumptions used in
management’s forecast, with support from our EY actuarial specialists, we
considered the potential impact of COVID-19 specifically on the insurance
liabilities and capital requirements of the Group.
– We recommended additional clarifying disclosures on COVID-19 in the Annual
Report, including the viability statement, which were made.
In respect of the financial statements, we considered the requirements of IAS
10 Events after the Reporting Period.
Key observations communicated to the Audit Committee
We have nothing material to add or draw attention to in respect of the published
viability statement and going concern statement.
We are satisfied that the valuation of assets and liabilities at 31 December 2019
do not need to be revised as a result of the developments regarding COVID-19
since the year end date. We are satisfied that the subsequent events
disclosures in respect of COVID-19 are adequate.
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for each
entity within the Group. Taken together, this enables us to form an
opinion on the consolidated financial statements.
In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, we have selected Sabre
Insurance Company Limited, which is the principal trading entity within
the Group, and Group function. We performed an audit of the complete
75
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF SABRE INSURANCE GROUP PLC
CONTINUED
financial information of Sabre Insurance Company Limited and Group
function (“full scope components”), which were selected based on their
size or risk characteristics, representing 100% of profit before tax,
revenue and assets.
Our application of materiality
We apply the concept of materiality in planning and performing the audit,
in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £2.8 million (2018:
£3.1 million): which is 5% of profit before tax. We base our materiality on
Profit before tax as this is the key metric used by management in measuring
and reporting on the performance of the business. This provided a basis for
determining the nature, timing and extent of risk assessment procedures,
identifying and assessing the risk of material misstatement and determining
the nature, timing and extent of further audit procedures.
During the course of our audit, we reassessed initial materiality and
concluded that materiality assessed at the planning stages of our audit
remained appropriate.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 75% (2018: 75%) of our planning materiality, namely
£2.1 million (2018: £2.3 million). Our objective in adopting this approach is to
ensure that total uncorrected and undetected audit difference do not exceed
our materiality of £2.8 million for the financial statements as a whole.
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them
all uncorrected audit differences in excess of £0.1 million (2018:
£0.2 million), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted reporting on
qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual
report set out on pages 1 - 73, other than the financial statements and our
auditor’s report thereon. Other information in the annual report comprises
the Strategic Report and the Governance Report, the latter of which
includes:
– Chairman’s Governance Letter
– Board of Directors
– Governance Report
– Audit & Risk Committee Report
– Nomination Committee Report
– Directors’ Remuneration Report
– Directors’ Report and Responsibilities Statement
The Directors are responsible for the other information.
76
Sabre Insurance Group plc Annual Report and Accounts 2019
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion 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 such material inconsistencies or
apparent material misstatements, we are required to determine whether
there is a material misstatement in 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 the
other information, we are required to report that fact.
We have nothing to report in this regard. In this context, we also have
nothing to report in regard to our responsibility to specifically address the
following items in the other information and to report as uncorrected
material misstatements of the other information where we conclude that
those items meet the following conditions:
– Fair, balanced and understandable set out on page 73 – the
statement given by the Directors that they consider the annual report and
financial statements taken as a whole is fair, balanced and understandable
and provides the information necessary for shareholders to assess the
Group’s performance, business model and strategy, is materially
inconsistent with our knowledge obtained in the audit; or
– Audit and Risk Committee reporting set out on page 48; or
– Directors’ statement of compliance with the UK Corporate
Governance Code set out on page 44 – the parts of the Directors’
statement required under the Listing Rules relating to the company’s
compliance with the UK Corporate Governance Code containing
provisions specified for review by the auditor in accordance with Listing
Rule 9.8.10R(2) do not properly disclose a departure from a relevant
provision of the UK Corporate Governance Code.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
– the Strategic Report and the Directors’ Report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the Strategic Report or
the Directors’ Report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in
our opinion:
– adequate accounting records have not been kept by the parent company,
or returns adequate for our audit have not been received from branches
not visited by us; or
– the parent company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not
made; or
– we have not received all the information and explanations we require for
our audit.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set
out on page 73, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors 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 and parent 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 parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial 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 auditor’s 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.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
– The objectives of our audit, in respect to fraud, are: to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud, through designing and
implementing appropriate responses; and to respond appropriately to fraud
or suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with both
those charged with governance of the entity and management.
– In respect of irregularities – considered to be non-compliance with laws
and regulations – our objective is to obtain sufficient appropriate audit
evidence regarding compliance with the provisions of those laws and
regulations generally recognised to have a direct effect on the
determination of material amounts and disclosures in the financial
statements (‘direct laws and regulations’), and perform other audit
procedures to help identify instances of non-compliance with other laws
and regulations that may have a material effect on the financial
statements. We are not responsible for preventing non-compliance with
laws and regulations and our audit procedures cannot be expected to
detect non-compliance with all laws and regulations.
Our approach was as follows:
– We obtained a general understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that the
direct laws and regulations related to elements of company law and tax
legislation, and the financial reporting framework. Our consideration of
other laws and regulations that may have a material effect on the financial
statements included permissions and supervisory requirements of the
Prudential Regulation Authority (‘PRA’), the Financial Conduct Authority
(‘FCA’), and the UK Listing Authority Rules.
– We obtained a general understanding of how the Group complies with
these legal and regulatory frameworks by making enquiries of
management, internal audit, and those responsible for legal and
compliance matters. We also reviewed correspondence between the
Group and UK regulatory bodies; reviewed minutes of the Board and
Executive Risk Committee; and gained an understanding of the
Company’s approach to governance, demonstrated by Board’s review of
the Group’s risk management framework and internal control processes.
– For direct laws and regulations, we considered the extent of compliance
with those laws and regulations as part of our procedures on the related
financial statement items.
– For both direct and other laws and regulations, our procedures involved:
making enquiry of those charged with governance and senior
management for their awareness of any non-compliance of laws or
regulations, inquiring about the policies that have been established to
prevent non-compliance with laws and regulations by officers and
employees, inquiring about the Group’s methods of enforcing and
monitoring compliance with such policies, inspecting significant
correspondence with the FCA and PRA.
– The Group operates in the insurance industry which is a highly regulated
environment. As such the Senior Statutory Auditor considered the
experience and expertise of the engagement team to ensure that the
team had the appropriate competence and capabilities, which included
the use of specialists where appropriate.
– We assessed the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur, by considering
the controls that the Group has established to address risks identified by
the entity, or that otherwise seek to prevent, deter or detect fraud. We
also considered areas of significant judgement, complex transactions,
performance targets, economic or external pressures and the impact
these have on the control environment. Where this risk was considered to
be higher, we performed audit procedures to address each identified
fraud risk. These procedures included testing manual journals and were
designed to provide reasonable assurance that the financial statements
were free from fraud or error.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Other matters we are required to address
– We were appointed by the company on 8 March 2018 to audit the financial
statements for the year ending 31 December 2017 and subsequent financial
periods. The period of total uninterrupted engagement including previous
renewals and reappointments is three years, covering the years ending 31
December 2017 to 31 December 2019.
– The non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Group or the parent company and we remain independent
of the Group and the parent company in conducting the audit.
– The audit opinion is consistent with the additional report to the Audit and
Risk Committee.
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company and the company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
STUART WILSON (SENIOR STATUTORY AUDITOR)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
6 April 2020
1. The maintenance and integrity of the Sabre Insurance plc website is the responsibility of
the Directors; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may have
occurred to the financial statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
77
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
Gross earned premium
Reinsurance premium ceded
Net earned premium
Investment return
Instalment income
Other operating income
Total income
Insurance claims
Insurance claims recoverable from reinsurers
Net insurance claims
Finance cost
Commission expenses
Operating expenses
Total expenses
Operating profit before amortisation of intangible assets
Amortisation of intangible assets
Profit before tax
Tax charge
Profit for the year attributable to the equity holders of the parent
Other comprehensive Income
Items that will not be reclassified to profit and loss
Revaluation gain on owner-occupied property
Tax charge on other comprehensive income
Total other comprehensive income for the year
Total comprehensive income for the year attributable to the equity holders of the parent
Basic earnings per share (pence per share)
Diluted earnings per share (pence per share)
The attached notes on pages 82 to 109 form an integral part of these financial statements.
Notes
4
4
5
6
7
7
8
9
10
13
10
30
30
2019
£’k
203,680
(20,442)
183,238
2,405
4,093
1,240
190,976
(110,301)
8,311
(101,990)
(18)
(15,741)
(16,748)
(32,507)
56,479
–
56,479
(10,768)
45,711
–
–
–
45,711
18.35
18.22
2018
£’k
208,622
(20,387)
188,235
777
4,143
1,761
194,916
(72,245)
(25,616)
(97,861)
–
(16,429)
(18,762)
(35,191)
61,864
(501)
61,363
(11,795)
49,568
620
(118)
502
50,070
19.90
19.77
78
Sabre Insurance Group plc Annual Report and Accounts 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2019
Notes
2019
£’k
2018
£’k
Assets
Goodwill
Property, plant and equipment
Right-of-use asset
Reinsurance assets
Deferred tax assets
Deferred acquisition costs
Insurance and other receivables
Prepayments, accrued income and other assets
Financial investments
Cash and cash equivalents
Total assets
Equity
Issued ordinary share capital
Own shares
Merger reserve
Share-based payments reserve
Retained earnings
Total equity
Liabilities
Insurance liabilities
Unearned premium reserve
Lease liability
Trade and other payables including insurance payables
Current tax liabilities
Accruals
Total liabilities
Total equity and liabilities
The attached notes on pages 82 to 109 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 6 April 2020.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
20
13
23
14
11
15
16
17
18
19
21
28
22
22
23
24
25
156,279
4,568
189
83,931
210
16,211
37,785
3,627
263,629
31,791
598,220
250
(1,061)
48,525
1,362
218,341
267,417
212,167
99,877
194
12,475
4,884
1,206
330,803
598,220
156,279
4,370
–
82,435
217
15,761
37,788
4,538
287,142
22,823
611,353
250
(1)
48,525
1,036
215,338
265,148
215,757
106,517
–
13,623
5,798
4,510
346,206
611,353
79
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31 December 2019
Ordinary
shareholders’
equity
£’k
Share
premium
account
£’k
Notes
Own
shares
£’k
Merger
reserve
£’k
Share-based
payment
reserve
£’k
Retained
earnings
£’k
250
205,241
(1)
48,405
As at 1 January 2018
Profit for the year
Other comprehensive income
Total comprehensive income
Charge in respect of share-based payment
Capital reduction
Dividends
At 31 December 2018
Effect of adoption of IFRS 16 ‘Leases’
Adjusted total equity at 1 January 2019
Profit for the period
Other comprehensive income
Total comprehensive income
Charge in respect of share-based payments
Settlement of share-based payments
Own shares purchased
Share scheme transfer to retained earnings
Dividends
At 31 December 2019
12
23
28
28
28
12
–
–
–
–
–
–
250
–
250
–
–
–
–
–
–
–
–
250
–
–
–
–
(205,241)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1)
–
(1)
–
–
–
–
–
(1,060)
–
–
–
–
–
–
120
–
48,525
–
48,525
–
–
–
–
–
–
–
–
(1,061)
48,525
1,362
–
–
–
–
1,036
–
–
1,036
–
1,036
–
–
–
1,106
(780)
–
–
–
(21,902)
49,568
502
50,070
–
205,121
(17,951)
215,338
–
215,338
45,711
–
45,711
–
780
–
135
(43,623)
218,341
Total
equity
£’k
231,993
49,568
502
50,070
1,036
–
(17,951)
265,148
–
265,148
45,711
–
45,711
1,106
–
(1,060)
135
(43,623)
267,417
The attached notes on pages 82 to 109 form an integral part of these financial statements.
80
Sabre Insurance Group plc Annual Report and Accounts 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2019
Net cash generated from operating activities before investment of insurance assets
Cash generated from/(used by) investment of insurance assets
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Net cash used by investing activities
Cash flows from financing activities
Payment of principal portion of lease liabilities
Net cash used in acquiring and disposing of own shares
Dividends paid
Net cash used by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The attached notes on pages 82 to 109 form an integral part of these financial statements.
Notes
27
2019
£’k
28,208
25,919
54,127
(365)
(365)
(246)
(925)
(43,623)
(44,794)
8,968
22,823
31,791
2018
£’k
48,744
(42,334)
6,410
(61)
(61)
–
–
(17,951)
(17,951)
(11,602)
34,425
22,823
81
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2019
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. The Group’s parent company’s
principal activity is that of a holding company.
Accounting policies
Basis of preparation
1.
1.1
The financial statements of the Group have been prepared in
accordance and fully comply with International Financial Reporting
Standards (“IFRSs”), as issued by the International Accounting
Standards Board (“IASB”) and adopted by the EU.
The financial statements have been prepared on an historical cost
basis, except for investment properties and 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 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 settled
the liabilities simultaneously.
As permitted by IFRS 4 ‘Insurance Contracts’, the Group continues to
apply the existing accounting policies that were applied prior to the
adoption of IFRS, with certain modifications allowed by the standard
effective subsequent to adoption for its insurance contracts. The Group
has applied UK GAAP.
1.2
New and amended standards and interpretations
adopted by the Group
The Group has adopted the new accounting pronouncements which
have become effective for its annual reporting period commencing 1
January 2019 and are as follows:
IFRS 16 – Leases
The Group has changed its accounting policies as a result of adopting
IFRS 16. The Group elected to adopt the modified retrospective
approach and therefore the comparative information has not been
restated and continues to be reported under IAS 17 ‘Leases’ and IFRIC
4 ‘Determining whether an Arrangement contains a Lease’. The details
of accounting policies under IAS 17 and IFRIC 4 are disclosed
separately if they are different from those under IFRS 16 and the impact
of changes is disclosed below. The cumulative effect of adopting IFRS
16 is being recognised in equity as an adjustment to the opening
balance of retained earnings for the current period. Prior periods have
not been restated.
The adoption of this new Standard has resulted in the Group
recognising a right-of-use asset and related lease liability in connection
with all former operating leases except for those identified as low-value
or having a remaining lease term of less than 12 months from the date
of initial application.
82
Sabre Insurance Group plc Annual Report and Accounts 2019
For contracts in place at the date of initial application, the Group has
elected to apply the definition of a lease from IAS 17 and IFRIC 4 and
has not applied IFRS 16 to arrangements that were previously not
identified as leases under IAS 17 and IFRIC 4.
The Group has elected not to include initial direct costs in the
measurement of the right-of-use asset for operating leases in existence
at the date of initial application of IFRS 16, being 1 January 2019. At this
date, the Group has also elected to measure the right-of-use assets at
an amount equal to the lease liability adjusted for any prepaid or
accrued lease payments that existed at the date of transition.
Instead of performing an impairment review on the right-of-use assets
at the date of initial application, the Group has relied on its historic
assessment as to whether leases were onerous immediately before
the date of initial application of IFRS 16.
On transition, for leases previously accounted for as operating leases
with a remaining lease term of less than 12 months and for leases of
low-value assets the Group has applied the optional exemptions not to
recognise the right-of-use assets but to account for the lease expense
on a straight-line basis over the remaining lease term.
The Group had no finance leases at the date of initial application.
On transition to IFRS 16 the weighted average incremental borrowing
rate applied to lease liabilities recognised under IFRS 16 was 5.36%.
The Group has benefited from the use of hindsight for determining the
lease term when considering options to extend and terminate leases.
The lease liabilities as at 1 January 2019 can be reconciled to the
opening lease commitments as of 31 December 2018 as follows:
Operating lease commitments as at 31 December 2018
476
1 January 2019
£’k
Less:
Commitments relating to assets not qualifying as leases
under IFRS 16
Add:
Adjustments on adoption of IFRS 16
Total lease commitments under IFRS 16 as at 31 December
2018
Weighted average incremental borrowing rate as at 1
January 2019
Lease liabilities as at 1 January 2019
The effect of adopting IFRS 16 as at 1 January 2019 is:
Assets
Right-of-use-assets
Total assets
Equity
Retained earnings
Total equity
Liabilities
Lease liabilities
Total liabilities
(14)
–
462
5.36%
440
1 January 2019
£’k
440
440
–
–
440
440
There is no impact on the consolidated statement of comprehensive
income.
1.3
New standards, amendments and interpretations
not yet effective and not early adopted
At the date of authorisation of these financial statements, the following
Standards and Interpretations were assessed to be relevant and are
effective for annual periods beginning on or after 1 January 2020:
Description
IFRS 9 Financial Instruments
Effective date
(period beginning)
1 January 2021*
(Early adopting – 1 January 2020)
IFRS 17 Insurance Contracts
1 January 2021
The table below presents an analysis of the fair value of classes of
financial assets as at the end of the 2019 reporting period. The
movement in the year represents the change in fair value during the
reporting period. The financial assets are divided into two categories:
– Assets for which their contractual cash flows represent solely
payments of principal and interest (SPPI)
– All financial assets other than those specified in SPPI
Fair value
£’k
Fair value
change
£’k
* = Effective 1 January 2018, deferred under IFRS 4 till 1 January 2021. (IASB proposal for
effective date 1 January 2022 has not been endorsed by the EU)
Financial assets managed and evaluated
on a fair value basis
With the exception of IFRS 9, the Group intends to adopt the Standards
and Interpretations in the reporting period when they become effective.
The Board does not anticipate that the adoption of these Standards and
Interpretations in future periods will materially impact the Group’s
financial results in the period of initial application although there will be
revised presentations to the financial statements and additional
disclosures.
IFRS 9 – Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9 Financial
Instruments that replaces IAS 39 Financial Instruments: Recognition
and Measurement and all previous versions of IFRS 9, and which was
endorsed by the EU in 2016. IFRS 9 addresses the classification,
measurement and recognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment
model for financial assets and is effective for annual periods beginning
on or after 1 January 2018. The Board does not anticipate that the
introduction of this standard will have a material impact on the Group’s
financial results.
In September 2016, the IASB published amendments to IFRS 4
Insurance Contracts that address the accounting consequences of
the application of IFRS 9 to insurers prior to the adoption of IFRS 17,
the forthcoming accounting standard for insurance contracts. The
amendments to IFRS 4 include a deferral approach that provides an
entity, if eligible, with a temporary exemption from applying IFRS 9.
The Group is eligible to apply the temporary exemption from IFRS 9
because its activities are entirely connected with insurance. The Group
has previously elected to defer the implementation of IFRS 9. As at 31
December 2015, all the Group’s gross liabilities arising from contracts
were within the scope of IFRS 4. Since 31 December 2015 there has
been no change in the activities of the Group that requires
reassessment of the use of the temporary exemption.
During 2019 the Group has revisited its investment policy and
appointed a new Asset Manager in January 2020. As part of the new
investment mandate, a decision was taken to waive the deferral of the
implementation of IFRS 9 in line with IFRS 4. The effective
implementation date of IFRS 9 is 1 January 2020. The Group does not
expect material impact on opening balances upon implementation.
Corporate
Sovereign
Total financial assets managed and
evaluated on a fair value basis
–
263,629
(7)
(5,728)
263,629
(5,735)
Financial assets meeting the SPPI test
Cash and cash equivalents
Total financial assets meeting SPPI test
31,791
31,791
–
–
IFRS 17 – Insurance Contracts
The effective date for IFRS 17 is 1 January 2021. IFRS 17 will
fundamentally 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.
It is not currently known what impact the new requirements will have
on the Group’s profit and financial position, but it is expected that the
timing of profit recognition will be altered. During 2019, the Group
continued to undertake a number of tasks in preparation for IFRS 17.
These tasks included completing various modelling exercises to
understand the data requirements needed under IFRS 17. As part of
this process various decisions have also been made such as unit of
account and the model to use for recognising insurance contracts.
A more detailed update will be provided after the full assessment has
been completed.
Summary of significant accounting policies
1.4
(a) Premiums
Insurance and reinsurance written premiums comprise all amounts
during the financial year in respect of contracts entered into regardless
of the fact that such amounts may relate in whole or in part to a later
financial year. All premiums are shown gross of commission payable to
intermediaries (where applicable) and are exclusive of taxes, duties and
levies thereon. Insurance and reinsurance premiums are adjusted by an
unearned premium provision which represents the proportion of
premiums that relate to periods of cover after the balance sheet date
as described in (b) overleaf.
83
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Accounting policies continued
1.
(b) Insurance liabilities
Claims incurred include all losses occurring through the year, whether
reported or not, related handling costs and any adjustments to claims
outstanding from previous years. Significant delays are experienced in
the notification and settlement of certain claims, particularly in respect
of liability claims, the ultimate cost of which cannot be known with
certainty at the balance sheet date. Reinsurance recoveries (or
amounts due from reinsurers) are accounted for in the same period as
the related claim.
(i)
Unearned premiums are those proportions of the premiums written
in a year that relate to the periods of risk subsequent to the balance
sheet date. They are computed principally on a daily pro-rata basis.
(ii) The provision for claims outstanding includes the following:
– individual case estimates;
– an incurred but not reported (“IBNR”) provision; and
– a provision for related claims handling costs.
Individual case estimates
When claims are initially reported, case estimates are set at fixed
levels based on previous average claims settlements. As soon as
sufficient information becomes available, the case estimate is
amended by a claim handler within the Claims Department to
reflect the expected ultimate settlement cost of the claim,
including external claims handling costs. The case estimate will be
amended throughout the life of a claim as further information
emerges. Case estimates generally do not allow for possible
reductions in our liability due to contributory negligence, favourable
court judgments or settlements until these are known to a high
probability. Because of this, the outstanding case reserve recorded
is generally greater than the probability-weighted likely settlement
amount of the claim.
Incurred But Not Reported (“IBNR”) / Incurred But Not
Enough Reported (“IBNER”)
IBNR consists of two elements:
– IBNR – An amount in respect of claims incurred but not yet
recorded on the policy administration system (“pure” IBNR),
which is typically a “positive” and
– IBNER – An adjustment to open case reserves, booked at a
portfolio level, which converts the open reserve recorded on our
underwriting system to a true ‘best estimate’ basis. If the case
reserves held are in excess of a ‘best estimate’ basis, this will
result in a ‘negative’ IBNER. If the case reserves are below a
‘best estimate’ basis, this will result in a ‘positive’ IBNER.
The Company refers to these collectively as “IBNR” and unless
stated otherwise, when referring to IBNR this always includes
both elements.
These reserves are calculated using standard actuarial modelling
techniques such as Chain Ladder and Bornhuetter–Ferguson
methods. The adjustment is set after considering the results of these
statistical methods based on, inter alia, historical claims development
trends, average claims costs and expected inflation rates.
Claims handling costs
A provision for claims handling costs is estimated based on the number
of outstanding claims at the balance sheet date and the estimated
average internal cost of settling claims.
The provision for claims outstanding is based on information available
at the balance sheet date. Significant delays are experienced in the
notification and settlement of certain claims and accordingly the
ultimate cost of such claims cannot be known with certainty at the
balance sheet date. Subsequent information and events may result
in the ultimate liability being less than, or greater than, the amount
provided. Any differences between provisions and subsequent
settlements are dealt with in the consolidated statement of
comprehensive income. Claims provisions are not discounted, with the
exception of PPOs (periodic payment orders), which are discussed
more fully in Note 2.1.
(iii) Provision is made for unexpired risks when, after taking account of
an element of attributable investment income, it is anticipated that
the unearned premiums will be insufficient to cover future claims
and expenses on existing contracts. The expected claims are
calculated having regard to events which have occurred prior to the
balance sheet date. Unexpired risk surpluses and deficits are offset
when business classes are managed together and a provision is
made if an aggregate deficit arises.
At each reporting date, a liability assessment is performed to
ensure the adequacy of the claims liabilities net of Deferred
Acquisition Costs and unearned premium reserves. In performing
this assessment, current best estimates of future contractual cash
flows and claims handling expenses. Any deficiency is immediately
charged to the statement of profit or loss, initially by writing off
DAC and subsequently by establishing a provision for losses arising
from the liability assessments (“unexpired risk provision”). There is
currently no unexpired risk provision.
(c) Deferred acquisition costs
Deferred acquisition costs represent a proportion of commission and
other acquisition costs that relate to policies that are in force at the year
end. Deferred acquisition costs are amortised over the period in which
the related premiums are earned. Such costs are identified as being
directly attributable to the acquisition of business, or are indirectly
attributed to acquisition activity through an allocation exercise.
(d) Investment income, realised and unrealised
investment gains and losses
Investment income consists of interest receivable for the year. Income
is credited to the statement of comprehensive income at the amounts
receivable, with no associated tax credit for income from the United
Kingdom. Interest receivable is accounted for on an accruals basis.
Net realised gains / (losses) on investments are calculated as the
difference between net sales proceeds and the cost of acquisition.
Unrealised gains and losses on investments represent the difference
between the carrying value at the year end and the carrying value at the
previous year end or purchase value during the year. Net movements in
the year are taken to the statement of comprehensive income and
disclosed as unrealised gains / (losses) on investments.
(e) Investment expenses and charges
Investment expenses and charges consist of the expenses relating to
the management of the investment portfolio.
84
Sabre Insurance Group plc Annual Report and Accounts 2019
(f) Taxation
The taxation charge in the statement of comprehensive income is
based on the taxable profits for the year. It is Company policy to relieve
profits where possible by the surrender of losses from Group
companies with payment for value.
(j) Pensions
For staff who were employees on 8 February 2002, the Group operates
a non-contributory defined contribution Company personal pension
scheme. The contribution by the Group depends on the age of the
employee.
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.
Deferred tax is measured on an undiscounted basis at the tax rates that
are expected to apply in the periods in which timing differences
reverse, based on tax rates and laws enacted or substantively enacted
at the balance sheet date.
(g) Valuation of investments
Listed securities and equities are shown in the balance sheet at market
bid price at the date of the statement of financial position less accrued
interest where applicable.
Financial investments are classified according to their nature and use.
All financial investments held by the Group are classified as being held
at fair value through profit and loss. While it is the Group’s intention to
hold the bonds within its portfolio to maturity, the Group recognises
that certain assets may be sold in the normal course of business in
order to enhance short-term liquidity. The Group invests only in financial
assets which are quoted on liquid markets, therefore all investments
are classified as “Level 1” under the IFRS hierarchy.
(h) Property, plant and equipment
Expenditure on computer equipment and fixtures and fittings is
capitalised and depreciated over five years, the estimated useful
economic lives of the assets on a straight line basis. Depreciation is
charged to the consolidated statement of comprehensive income and is
included in administrative expenses. Owner-occupied property is held
at fair value, with subsequent revaluation gains taken through 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. Owner-occupied property is also revalued by an
external qualified surveyor, at least every three years.
Owner-occupied land is not depreciated. As the depreciation of
owner-occupied buildings is immaterial and properties are revalued every
three years, no depreciation is charged on owner-occupied buildings.
(i) Goodwill
Goodwill only arises upon a business combination and is initially
measured as the residual cost of the business combination after
recognising the acquiree’s identifiable assets, liabilities and contingent
liabilities. After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Group’s cash generating units that are
expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquiree are assigned to
those units.
For employees joining since 8 February 2002, the Group operates a
matched contribution Company 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
statement of comprehensive income in the period in which they
become payable.
(k) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits with banks together with short-term highly liquid investments
that are readily convertible to known amounts of cash and subject to
insignificant risk of change in value.
(l) Insurance and other receivables
Insurance and other receivables are recognised when due and
measured on initial recognition at the fair value of the consideration
received or receivable. Subsequent to initial recognition, insurance
receivables are measured at amortised cost, using the effective interest
rate method. The carrying value of insurance receivables is reviewed
for impairment whenever events or circumstances indicate that the
carrying amount may not be recoverable, with the impairment loss
recorded in the statement of comprehensive income.
(m) Trade and other payables, including insurance payables
Trade and other payables consist primarily of reinsurance balances and
indirect taxes due. Reinsurance payables represent premiums payable
to reinsurers in respect of contracts which have been entered into at
the date of the financial position.
(n) Instalment income
Instalment income comprises the interest income earned on
policyholder receivables, where outstanding premiums are settled by a
series of instalment payments. Interest is earned over the term of the
policy and accounted for under the effective interest method.
(o) Other operating income
Other operating income consists of marketing fees, commissions
resulting from the sale of ancillary products connected to the Group’s
direct business, and other non-insurance income such as administrative
fees charged on direct business. Such income is recognised once the
related service has been performed. Typically, this will be at the point of
sale of the product.
(p) Basis of consolidation
The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity. Subsidiaries
are entities over which the Group has control. Subsidiary companies are
consolidated using the acquisition method. Subsidiaries are fully
consolidated from the date of acquisition, being the date on which the
Group obtained control, and continue to be consolidated until the date
when such control ceases. In preparing these consolidated financial
statements, any intra-group balances, unrealised gains and losses or
income and expenses arising from intra-group trading are eliminated.
Where accounting policies used in individual financial statements of a
subsidiary company differ from Group policies, adjustments are made
to bring these policies in line with Group policies.
85
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Accounting policies continued
1.
(q) 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. 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 statement of comprehensive income, 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.
(r) Earnings per share
Basic earnings per share are calculated by dividing profit after tax
attributable to equity shareholders of the parent company by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share requires that the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. These arise from awards made under share-
based incentive schemes. Share awards with performance conditions
attaching to them are not considered to be dilutive unless these
conditions have been met at the reporting date. Shares held in employee
share trusts are excluded from the weighted average number of shares
in issue until they have vested unconditionally with the employees.
(s) Leases – new accounting policy applicable from
1 January 2019
Right-of-use assets
The Group recognises a right-of-use asset and a lease liability at the
lease commencement date. The right-of-use asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of costs to dismantle
and remove the underlying assets or to restore the underlying asset or
the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-
line method from the commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of right-of-use assets are determined on the
same basis as property and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted
for certain remeasurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability
comprises the following:
– fixed payments, including in-substance fixed payments;
– variable lease payments that depend on an index or a rate, initially
measured using the index or rate as at the commencement date;
– amounts expected to be payable under a residual value guarantee; and
– the exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional renewal
period if the Group is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Group
is reasonably certain not to terminate early.
86
Sabre Insurance Group plc Annual Report and Accounts 2019
The lease liability is measured at amortised cost using the effective
interest method. It is remeasured when there is a change in future
lease payments arising from a change in an index or rate, if there is a
change in the Group’s estimate of the amount expected to be payable
under a residual value guarantee, or if the Group changes its
assessment of whether it will exercise a purchase, extension or
termination option.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases of machinery that have a lease term of
12 months or less and leases of low-value assets, including IT
equipment. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
Critical accounting estimates and judgements
Valuation of insurance contracts
2.
2.1
For the valuation of insurance contracts, estimates are made both for
the expected ultimate cost of claims reported at the reporting date,
consisting of a claims reserve and estimate of the sufficiency of these
reserves (through the calculation of an Incurred But Not Enough
Reported estimate, and for the expected ultimate cost of claims
incurred, but not yet reported, at the reporting date. It can take a
significant period of time before the ultimate claims cost can be
established with certainty.
The ultimate cost of outstanding claims is estimated by using a range
of standard actuarial claims projection techniques, such as Chain Ladder
and Bornhuetter-Ferguson methods. The main assumption underlying
these techniques is that the Group’s past claims development
experience can be used to project future claims development and
hence ultimate claims costs. As such, these methods extrapolate the
development of paid and incurred losses, average costs per claim and
claim numbers based on the observed development of earlier years
and expected loss ratios. Historical claims development is analysed
by accident years and types of claim. In most cases, no explicit
assumptions are made regarding future rates of claims inflation or loss
ratios. Instead, the assumptions used are those implicit in the historical
claims development data on which the projections are based. Additional
qualitative judgement is used to assess the extent to which past trends
may not apply in 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 likely outcome from the range of possible
outcomes, taking account of all the uncertainties involved.
The gross carrying value at the reporting date of insurance liabilities is
£212,167k (2018: £215,757k).
Liability claims may be settled through a Periodic Payment Order,
established under the Courts Act 2003, which allows a UK court to
award damages for future loss or any other damages in respect of
personal injury. The court may order that the damages either partly or
fully take the form of a PPO. To date, the Group has two PPOs within
its outstanding claims reserve. Reinsurance is applied at the claim level,
and therefore as PPOs generally result in a liability in excess of the
Group’s reinsurance retention, the net liability on acquisition of a PPO is
not significantly different to that arising in a non-PPO situation.
Management will continue to monitor the level of PPO activity. Once
the level of projected PPO activity, and the volume of historical data
available for modelling, becomes sufficient the firm will apply statistical
modelling in respect of PPOs within the IBNR reserve.
Risk management
Risk and capital management
3.
3.1
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. From 1 January 2016, the Group has considered its
capital position to be its net assets on a Solvency II basis and monitors this in the context of the Solvency II SCR. As at 31 December 2019, the
Group holds significant excess Solvency II capital.
The Group’s IFRS capital comprised:
Equity
Issued ordinary share capital
Own shares
Merger reserve
Share-based payments reserve
Retained earnings
Total
The Solvency II position of the Group is given below:
Total tier 1 capital
SCR
Excess capital
Solvency coverage ratio (%)
The following table sets out a reconciliation between IFRS net assets and Solvency II net assets:
Adjusted IFRS net assets
Unearned premium reserve
Deferred acquisition costs
Solvency II premium provision
IFRS risk margin (1)
Discount claims provision
Solvency II risk margin
Change in deferred tax
Solvency II net assets
As at
31 December
2019
£’k
As at
31 December
2018
£’k
250
(1,061)
48,525
1,362
218,341
267,417
250
(1)
48,525
1,036
215,338
265,148
As at
31 December
2019
£’k
As at
31 December
2018
£’k
127,086
59,495
67,591
214%
130,019
60,995
69,024
213%
As at
31 December
2019
£’k
As at
31 December
2018
£’k
111,138
99,877
(16,211)
(69,493)
12,003
1,769
(8,255)
(3,742)
108,869
106,517
(15,761)
(71,092)
12,550
3,134
(9,237)
(4,961)
127,086
130,019
(1) In line with industry practice, the IFRS risk margin is an explicit additional reserve in excess of the actuarial best estimate which is designed to create a margin held in reserves to allow
for adverse development in open claims.
The adjustments set out above have been made for the following reasons:
– Adjusted IFRS net assets: Equals Group net assets on an IFRS basis, less goodwill and intangibles.
– Removal of unearned premium reserve and deferred acquisition costs: The unearned premium reserve must be added back as premium
and deferred acquisition costs must be removed as they are not deferred under Solvency II.
– Solvency II premium provision: A premium reserve reflecting the future cash in and out flows in respect of insurance contracts is calculated
and this must be discounted under Solvency II.
– IFRS risk margin: Solvency II reserves must reflect a true “best estimate” basis. Therefore, the IFRS risk margin is removed from the
claims reserve.
87
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Risk management continued
3.
– Discount claims provision: The provision held against future claims expenditure for claims incurred is discounted in the same way as the
Solvency II premium provision.
– Solvency II risk margin: The Solvency II risk margin represents the premium that would be required were the Group to transfer its technical
provisions to a third party, and essentially reflects the SCR required to cover run-off of claims on existing business. This amount is calculated by
the Group through modelling the discounted SCR on a projected future balance sheet for each year of claims run-off.
– Change in deferred tax: As the move to a Solvency II basis balance sheet increases the net asset position of the Group, a deferred tax liability
is generated to offset the increase.
The Group’s SCR, expressed on a risk module basis, is set out in the following table:
Interest rate risk
Equity risk
Property risk
Spread risk
Currency risk
Concentration risk
Correlation impact
Market risk
Counterparty risk
Underwriting risk
Correlation impact
Basic SCR
Operating risk
Loss absorbing effect of deferred taxes
Total Solvency Capital Requirement
As at
31 December 2019
£’k
£’k
£’k
1,019
–
1,014
–
470
–
(840)
As at
31 December 2018
£’k
£’k
£’k
484
–
1,014
83
240
–
(555)
1,663
2,211
55,149
(2,395)
56,628
6,609
(3,742)
59,495
1,265
2,682
57,633
(2,305)
59,275
6,681
(4,961)
60,995
The Group’s capital management objectives are:
– to ensure that the Group will be able to continue as a going concern; and
– 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 historical period.
Principal risks from insurance activities and the use of financial instruments
3.2
Detailed below is the Group’s risk exposure arising from its insurance activities and use of financial instruments specifically in respect of insurance
risk, market risk and counterparty risk.
Underwriting
3.2.1
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 12 months’ 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.
88
Sabre Insurance Group plc Annual Report and Accounts 2019
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 £1 million, 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
certain assumptions such as legislative changes or uncertainty in the estimation process.
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.
The table shows the impact of a 10% increase in the net loss ratio applied to all underwriting years which have a material outstanding claims
reserve, a 10% increase in net outstanding claims across all underwriting years, taking into account the impact of an increase in the operational
costs associated with handling those claims.
A substantial increase in individually large claims which are over our reinsurance retention limit generally will have no impact on profit before tax.
At 31 December
Insurance risk
Impact of a 10% increase in net loss ratio
Impact of a 10% increase in net outstanding claims and claims provision
Increase/(decrease)
in profit before tax
Increase/(decrease)
in total equity
2019
£’k
(13,422)
(11,309)
2018
£’k
(13,899)
(11,713)
2019
£’k
(10,872)
(9,160)
2018
£’k
(11,258)
(9,488)
Financial risks
3.2.2
(1) Counterparty credit risk
Counterparty credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an
obligation. The two main sources of counterparty risk for the Group are investment counterparties and reinsurance recoveries.
The following policies and procedures are in place to mitigate the Group’s exposure to credit risk:
– A company 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 Audit and Risk Committee.
– Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is avoided by following policy guidelines in
respect of counterparties’ limits that are set each year by the Board of Directors and are subject to regular reviews. At each reporting date,
management performs an assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining suitable
allowance for impairment.
– The Group sets the maximum amounts and limits that may be advanced to corporate counterparties by reference to their long-term
credit ratings.
– The credit risk in respect of customer balances incurred on non-payment of premiums or contributions will only persist during the grace period
specified in the policy document or trust deed until expiry, when the policy is either paid up or terminated. Commission paid to intermediaries is
netted off against amounts receivable from them to reduce the risk of doubtful debts.
89
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Risk management continued
3.
The following tables demonstrate the Group’s exposure to credit risk in respect of overdue debt and counterparty creditworthiness.
Overdue debt
At 31 December 2019
Reinsurance assets
Deferred tax assets
Insurance and other receivables
UK government debt
Cash and cash equivalents
Total
At 31 December 2018
Reinsurance assets
Deferred tax assets
Insurance and other receivables
Corporate bonds
UK government debt
Cash at cash equivalents
Total
Exposure by credit rating
At 31 December 2019
Reinsurance assets
Deferred tax asset
Insurance and other receivables
UK government debt
Cash and cash equivalents
Total
At 31 December 2018
Reinsurance assets
Deferred tax assets
Insurance and other receivables
Corporate bonds
UK government debt
Cash and cash equivalents
Total
Neither past
due nor
impaired
£’k
Past due
1-90 days
£’k
Past due more
than 90 days
£’k
Assets that
have been
impaired
£’k
Carrying value
in the balance
sheet
£’k
83,931
210
37,700
263,629
31,791
417,261
–
–
85
–
–
85
–
–
–
–
–
–
–
–
–
–
–
–
83,931
210
37,785
263,629
31,791
417,346
Neither past
due nor
impaired
£’k
Past due
1-90 days
£’k
Past due more
than 90 days
£’k
Assets that
have been
impaired
£’k
Carrying value
in the balance
sheet
£’k
82,435
217
37,786
518
286,624
22,823
430,403
–
–
–
–
–
–
–
–
–
2
–
–
–
2
–
–
–
–
–
–
–
82,435
217
37,788
518
286,624
22,823
430,405
Total
£’k
83,931
210
37,785
263,629
31,791
417,346
Total
£’k
82,435
217
37,788
518
286,624
22,823
430,405
There were no material financial assets that would have been past due or considered for impairment at the year-end.
AAA
£’k
–
–
–
–
–
–
AA+ to AA-
£’k
62,492
–
–
263,629
18,840
344,961
AAA
£’k
AA+ to AA-
£’k
–
–
–
–
–
–
–
62,696
–
–
–
286,624
93
A+ to A-
£’k
21,439
–
–
–
–
21,439
A+ to A-
£’k
19,739
–
–
–
–
–
BBB+ to BBB-
£’k
BB+ and below
£’k
Not rated
£’k
–
–
–
–
12,951
12,951
–
–
–
–
–
–
–
210
37,785
–
–
37,995
BBB+ to BBB-
£’k
BB+ and below
£’k
Not rated
£’k
–
–
–
518
–
22,730
23,248
–
–
–
–
–
–
–
–
217
37,788
–
–
–
38,005
349,413
19,739
Credit rating is determined with reference to external credit rating agencies.
90
Sabre Insurance Group plc Annual Report and Accounts 2019
(2) 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.
The liquidity of the Group’s insurance liabilities and supporting assets is given in the tables below.
At 31 December 2019
Reinsurance assets
UK government debt
Cash and cash equivalents
Total
At 31 December 2019
Insurance liabilities
Lease liabilities
Trade and other payables including insurance payables
Total
At 31 December 2018
Reinsurance assets
Corporate bonds
UK government debt
Cash and cash equivalents
Total
At 31 December 2018
Insurance liabilities
Trade and other payables including insurance payables
Total
Total
£’k
Within 1 year
£’k
1 - 3 years
£’k
3 - 5 years
£’k
5 - 10 years
£’k
Over 10 years
£’k
83,931
263,629
31,791
379,351
43,034
154,079
31,791
228,904
29,428
78,340
–
107,768
9,653
22,640
–
1,816
8,570
–
32,293
10,386
–
–
–
–
Total
£’k
Within 1 year
£’k
270,568
120,203
1 - 3 years
£’k
96,846
3 - 5 years
£’k
42,492
5 - 10 years
£’k
Over 10 years
£’k
194
12,475
132,872
–
–
–
–
11,027
–
–
96,846
42,492
11,027
–
–
–
–
Within 1 year
£’k
1 - 3 years
£’k
3 - 5 years
£’k
5 - 10 years
£’k
Over 10 years
£’k
38,109
518
182,923
22,823
244,373
29,302
–
81,768
–
111,070
9,712
–
17,879
–
27,591
5,312
–
4,054
–
9,366
–
–
–
–
–
194
12,475
283,237
Total
£’k
82,435
518
286,624
22,823
392,400
Total
£’k
Within 1 year
£’k
1 - 3 years
£’k
3 - 5 years
£’k
5 - 10 years
£’k
Over 10 years
£’k
275,230
13,623
288,853
127,236
13,623
140,859
97,832
–
97,832
32,425
–
32,425
17,739
–
17,739
(2)
–
(2)
The above tables include the expected claims on unearned premiums within insurance liabilities. The maturity of insurance liabilities is based upon
an estimate of expected settlement date.
(3) 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.
The Group’s portfolio consists primarily of UK government debt, therefore the risk of government default does exist, however the likelihood is
extremely remote. The Group continues to monitor the strength and security of these government bonds.
The Group’s exposure by geographical area is outlined below.
At 31 December 2019
UK
Total
At 31 December 2018
UK
Total
Corporate
£’k
–
–
Corporate
£’k
518
518
Sovereign
£’k
263,629
263,629
Sovereign
£’k
286,624
286,624
Total
£’k
263,629
263,629
Total
£’k
287,142
287,142
91
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
(4) 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.
The analysis that follows is performed for reasonably possible movements in key variables with all other variables held constant, showing the
impact on profit before tax and equity. The correlation of variables will have a significant effect in determining the ultimate impact on interest
rate-risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that
movements in these variables are non–linear.
Note that the Group’s investment portfolio has been designed such that the cash flows yielded from investments match the projected outflows
inherent primarily within the claims reserve. While these insurance liabilities are shown on an undiscounted basis under IFRS, their economic
value will move broadly in line with the underlying assets.
At 31 December
Interest rate
Increase/(decrease) in profit
after tax
Increase/(decrease) in total
equity
2019
£’k
2018
£’k
2019
£’k
2018
£’k
Impact of a 100 basis point increase in interest rates on financial investments
(2,157)
(2,350)
(2,157)
(2,350)
Owner-occupied property
Impact of a 15% decrease in property markets
–
–
(493)
(493)
Operational risk
3.2.3
Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks
can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all
operational risks, but by initiating 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.
4.
Net earned premium
Gross earned premium
Gross written premium
Movement in unearned premium reserve
Reinsurance premium ceded
Premium payable
Movement in unearned premium reserve
Total
2019
£’k
2018
£’k
197,040
6,640
203,680
(19,780)
(662)
(20,442)
183,238
210,017
(1,395)
208,622
(21,129)
742
(20,387)
188,235
92
Sabre Insurance Group plc Annual Report and Accounts 2019
5.
Investment return
Statement of comprehensive income
Investment income
Interest income from debt securities
Cash and cash equivalent interest income
Investment fees
Net realised losses
Debt securities at fair value through profit and loss
Net unrealised gains/(losses)
Debt securities at fair value through profit and loss
Total
Other comprehensive income
Revaluation gain on owner-occupied property
Total
6.
Other operating income
Marketing fees
Fee income from the sale of auxiliary products and services
Administration fees
Total
7.
Net insurance claims
Current accident year claims paid
Prior accident year claims paid
Movement in insurance liabilities
Total
Gross
£’k
61,839
52,052
(3,590)
110,301
2019
Reinsurance
£’k
–
(6,153)
(2,158)
(8,311)
Net
£’k
61,839
45,899
(5,748)
101,990
Gross
£’k
52,429
46,447
(26,631)
72,245
2018
Reinsurance
£’k
–
(3,179)
28,795
25,616
Claims handling expenses for the year ended 31 December 2019 of £7,558k (2018: £6,536k) have been included in the above.
8.
Finance costs
Interest on lease liabilities (Note 23)
Total
2019
£’k
18
18
2019
£’k
2018
£’k
8,163
64
(87)
8,140
(8,403)
(8,403)
2,668
2,668
2,405
–
2,405
2019
£’k
1,061
123
56
1,240
7,992
91
(79)
8,004
(1,210)
(1,210)
(6,017)
(6,017)
777
620
1,397
2018
£’k
1,334
136
291
1,761
Net
£’k
52,429
43,268
2,164
97,861
2018
£’k
–
–
93
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
9.
Operating expenses
Staff costs
Property costs
IT expense including IT depreciation
Other depreciation
Industry levies
Policy servicing costs
Other operating expenses
Total
During the year a provision for industry levies was released. Refer to Note 25.
The table below analyses the average monthly number of persons employed by the Group’s operations.
Operations
Support
Total
The aggregate remuneration of those employed by the Group’s operations comprised:
Wages and salaries
Issue of share-based payments
Social security costs
Pension costs
Other staff costs
Total
2019
£’k
5,979
154
4,898
45
1,812
2,334
1,526
2018
£’k
6,219
152
4,334
46
3,224
2,759
2,028
16,748
18,762
2019
131
29
160
2019
£’k
3,845
1,106
662
253
113
5,979
2018
129
25
154
2018
£’k
4,199
1,036
594
246
144
6,219
Wages and salaries of £5,528k (2018: £4,199k) have been classified as part of claims handling expenses (Note 7). Wages and salaries include a
net movement in deferred acquisition costs (Note 15) of £1,072k (2018: £407k).
The table below analyses the auditor’s remuneration in respect of the Group’s operations.
Fees for audit services
Audit of these financial statements
Audit of financial statements of subsidiaries of the Group
Total audit fees
Fees for non-audit services
Audit related assurance services
Total non-audit fees
Total auditor remuneration
2019
£’k
56
208
264
78
78
342
2018
£’k
41
134
175
75
75
250
Amounts paid to Directors are disclosed within the Remuneration Committee Report on page 53 of the Annual Report and Accounts.
94
Sabre Insurance Group plc Annual Report and Accounts 2019
10.
Tax charge
Current taxation
Charge for the year
Deferred taxation (Note 11)
Origination and reversal of temporary differences
Over-provision in respect of the previous year
Current taxation
Deferred taxation (Note 11)
Tax charge for the year
Tax recorded in other comprehensive income is as follows.
Current taxation
2019
£’k
10,761
10,761
7
–
7
10,761
7
10,768
2019
£’k
–
–
2018
£’k
11,992
11,992
(197)
–
(197)
11,992
(197)
11,795
2018
£’k
118
118
The actual income tax charge differs from the expected income tax charge computed by applying the standard rate of UK corporation tax of 19%
(2018: 19.25%) as follows:
Profit before tax
Expected tax charge
Effect of
Expenses not deductible for tax purposes
Adjustment of deferred tax to average rate of 19%
Amortisation of intangible assets
Adjustment in respect of prior periods
Income/loss not subject to UK taxation
Other income tax adjustments
Tax charge for the year
Effective income tax rate
2019
£’k
56,479
10,731
14
22
–
–
10
(9)
2018
£’k
61,363
11,659
13
–
95
–
–
28
10,768
11,795
19.07%
19.22%
95
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Deferred tax
11.
The following are the deferred tax liabilities recognised by the Group, and the movements thereon, during the current and prior reporting years.
Provisions and
other temporary
differences
£’k
Depreciation in
excess of capital
allowances
£’k
Share-based
payments
£’k
At 1 January 2018
(Debit)/Credit to the statement of comprehensive income on continuing operations
At 31 December 2018
(Debit)/Credit to the statement of comprehensive income on continuing operations
At 31 December 2019
25
(8)
17
2
19
(5)
8
3
(44)
(41)
Per statement of financial position:
Deferred tax assets
Deferred tax liabilities
–
197
197
35
232
2019
£’k
251
(41)
210
Total
£’k
20
197
217
(7)
210
2018
£’k
217
–
217
Under current legislation, the UK corporation tax rate is due to reduce from 19% to 17% from 1 April 2020. All closing deferred tax attributes are
recognised with reference to the enacted tax rate of 17%. In March 2020, the Chancellor announced that he intends to cancel the reduction in
corporation tax rate from 19% to 17%. As this announcement was made after the end of the reporting period, deferred taxes at the balance sheet date
continue to be measured at the enacted tax rate of 17%. The impact of the corporation tax rate change on the closing deferred tax balance is immaterial.
12.
Dividends
Amounts recognised as distributions to equity holders in the period
Interim dividend in respect of the current year
Final dividend paid in respect of the prior year
Proposed dividends
Final dividend (2)
2019
Pence per
share(1)
2018
£’k
Pence per
share
4.7
12.8
17.5
8.1
11,710
31,913
43,623
20,250
7.2
–
7.2
–
£’k
17,951
–
17,951
–
1) The dividend per share calculation is based on the number of equity shares registered on the ex-dividend date.
2) Subsequent to 31 December 2019, the Directors declared a final dividend for 2019 of 8.1 pence per ordinary share. This dividend will be paid on 28 May 2020. It will be accounted for as an
appropriation of retained earnings in the year ended 31 December 2020 and is not included as a liability in the Consolidated Statement of Financial Position as at 31 December 2019.
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 2019 by £127k (2018: £49k).
13.
Property, plant and equipment
Cost / Valuation
At 1 January 2019
Additions
Disposals
Revaluation
At 31 December 2019
Accumulated depreciation and impairment
At 1 January 2019
Depreciation charge for the year
Disposals
Impairment losses on revaluation
At 31 December 2019
Carrying amount
As at 31 December 2019
96
Sabre Insurance Group plc Annual Report and Accounts 2019
Owner-
occupied
£k
Fixtures and
fittings
£k
Computer
equipment
£k
4,055
–
–
–
4,055
–
–
–
–
–
720
19
(504)
–
235
599
45
(504)
–
140
1,997
344
(1,528)
–
813
1,803
120
(1,528)
–
395
Total
£k
6,772
363
(2,032)
–
5,103
2,402
165
(2,032)
–
535
4,055
95
418
4,568
Cost / Valuation
At 1 January 2018
Additions
Disposals
Revaluation
At 31 December 2018
Accumulated depreciation and impairment
At 1 January 2018
Depreciation charge for the year
Disposals
Impairment losses on revaluation
At 31 December 2018
Carrying amount
As at 31 December 2018
Owner-
occupied
£k
Fixtures and
fittings
£k
Computer
equipment
£k
3,950
–
–
620
4,570
515
–
–
–
515
703
17
–
–
720
554
45
–
–
599
1,953
44
–
–
1,997
1,663
140
–
–
Total
£k
6,606
61
–
620
7,287
2,732
185
–
–
1,803
2,917
4,055
121
194
4,370
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 2018 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. Whilst 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 property of £4,055k (2018: £4,055k), 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:
Owner-occupied
At 31 December
Purchase
Revaluation
At 31 December
2019
£’k
4,055
–
–
4,055
2018
£’k
3,435
–
620
4,055
97
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
14.
Reinsurance assets
Reinsurers’ share of general insurance liabilities
Reinsurers’ share of UPR
Total
15.
Deferred acquisition costs
At 1 January
Net increase during the year
At 31 December
16.
Insurance and other receivables
Receivables arising from insurance and reinsurance contracts
Due from brokers and intermediaries
Due from policyholders
Impairment of broker and intermediary receivables
Other loans and receivables
Other debtors
Total
2019
£’k
76,361
7,570
83,931
2019
£’k
15,761
450
16,211
2019
£’k
15,328
22,526
(100)
31
37,785
2018
£’k
74,203
8,232
82,435
2018
£’k
14,673
1,088
15,761
2018
£’k
16,234
21,542
(100)
112
37,788
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.
17.
Prepayments, accrued income and other assets
Accrued interest
Prepayments and accrued income
Total
2019
£’k
2,445
1,182
3,627
2018
£’k
3,467
1,071
4,538
The carrying value of prepayments, accrued income and other assets approximates to fair value. There are no amounts expected to be recovered
more than 12 months after the reporting date.
18.
Financial investments
Debt securities held at fair value through profit and loss
Corporate
Sovereign
Total
2019
£’k
2018
£’k
–
263,629
263,629
518
286,624
287,142
All financial investments are classified as Level 1 under the fair value hierarchy. The fair value classification of owner-occupied property is
discussed in Note 13.
19.
Cash and cash equivalents
Cash and cash equivalents
Total
2019
£’k
31,791
31,791
2018
£’k
22,823
22,823
98
Sabre Insurance Group plc Annual Report and Accounts 2019
Goodwill
20.
On 3 January 2014 the Group acquired Binomial Group Limited, the parent of Sabre Insurance Company Limited, for 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. The recoverable amount of the insurance business unit is based on its fair value less cost to sell.
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 assessment as at 31 December 2019 and 31 December 2018. The Group considers the relationship
between its market capitalisation and its book value, among other factors, when performing its annual assessment. As at 31 December 2019 and
31 December 2018, the Group’s securities were traded on a liquid market, therefore market value could be used as a definitive indicator of market
capitalisation.
Key assumptions
The valuation uses fair value less costs to sell. The key assumption on which management have based this value is:
– Market capitalisation of the Group at 31 December 2019 of £770,000k (2018: £682,500k).
The Directors conclude 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 product or a significant
adverse change in the volume of claims and increase in other expenses, before the recoverable amount of the business units 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 2019.
21.
Share capital
Authorised
250,000,000 Ordinary shares of £0.001 each
Issued and fully paid: equity shares
250,000,000 Ordinary shares of £0.001 each
All shares are unrestricted and carry equal voting rights.
22.
Insurance liabilities, unearned premium reserve
Insurance liabilities
Gross insurance liabilities (including unearned premium reserve)
Gross insurance liabilities
Unearned premium reserve
Total
Reinsurers’ share of insurance liabilities (including unearned premium reserve)
Reinsurers’ share of insurance liabilities
Unearned premium reserve
Total
Net insurance liabilities (including unearned premium reserve)
Net insurance liabilities
Unearned premium reserve
Total
The development of gross and net general insurance liabilities is shown below.
2019
£’k
250
250
2018
£’k
250
250
2019
£’k
2018
£’k
212,167
99,877
312,044
(76,361)
(7,570)
(83,931)
135,806
92,307
228,113
215,757
106,517
322,274
(74,203)
(8,232)
(82,435)
141,554
98,285
239,839
99
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Insurance liabilities, unearned premium reserve continued
22.
Gross insurance liabilities
Accident year
Estimate of ultimate claims costs
2010
£’k
2011
£’k
2012
£’k
2013
£’k
2014
£’k
2015
£’k
2016
£’k
2017
£’k
2018
£’k
2019
£’k
Total
£’k
At the end of the accident year
77,415
98,735
103,139
84,939
75,649 103,599
111,518
165,707
120,077
126,981
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Current estimate of
cumulative claims
74,349
95,818 103,989
70,567
65,639
90,133 100,935
131,803
108,089
77,740
90,631
94,297
63,197
62,039
82,537
94,294
123,651
73,686
84,962
92,478
65,313
60,301
79,845
91,336
72,141
81,715
97,170
68,763
59,149
77,095
71,540
80,514
94,150
64,290
58,367
74,822
80,738
88,795
63,153
72,660
80,511
88,016
72,656
72,289
72,289
80,502
80,502
88,016
63,153
58,367
77,095
91,336
123,651 108,089
126,981
Cumulative payments to date
(69,323)
(80,203)
(82,861)
(59,592)
(56,075)
(71,777)
(76,324)
(70,715)
(71,583)
(54,216)
Liability recognised in
balance sheet
2009 and prior
Claims handling provision
Total
Net insurance liabilities
Accident year
Estimate of ultimate claims costs
2,966
299
5,155
3,561
2,292
5,318
15,012
52,936
36,506
72,765
196,810
11,588
3,769
212,167
2010
£’k
2011
£’k
2012
£’k
2013
£’k
2014
£’k
2015
£’k
2016
£’k
2017
£’k
2018
£’k
2019
£’k
Total
£’k
At the end of the accident year
61,912
94,171
89,901
77,316
74,609
97,288 104,808
106,478
111,433
115,011
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Current estimate of
cumulative claims
69,055
90,742
81,403
64,071
65,639
85,814
93,664
96,446
99,649
72,475
87,494
75,938
59,301
60,953
81,164
87,824
91,806
69,649
81,950
73,606
57,739
59,741
77,869
85,243
68,001
78,509
74,304
56,947
59,008
76,409
67,100
77,534
72,731
56,892
58,259
66,926
77,496
76,624
56,593
66,791
77,266
72,296
66,791
77,256
66,829
66,829
77,256
72,296
56,593
58,259
76,409
85,243
91,806
99,649
115,011
Cumulative payments to date
(65,641)
(76,957)
(72,101)
(54,333)
(56,075)
(71,689)
(76,225)
(70,715)
(71,583)
(54,216)
Liability recognised in
balance sheet
2009 and prior
Claims handling provision
Total
1,188
299
195
2,260
2,184
4,720
9,018
21,091
28,066
60,795
129,816
2,221
3,769
135,806
100
Sabre Insurance Group plc Annual Report and Accounts 2019
Movements in insurance liabilities, unearned premium reserve and reinsurance assets
At 1 January 2018
Cash paid for claims during the year
Increase/(decrease) in liabilities:
Arising from current-year claims
Arising from prior-year claims
At 31 December 2018
Claims reported
Incurred but not reported
Claims handling provision
At 31 December 2018
Cash paid for claims during the year
Increase/(decrease) in liabilities:
Arising from current-year claims
Arising from prior-year claims
At 31 December 2019
Claims reported
Incurred but not reported
Claims handling provision
At 31 December 2019
Gross
£’k
Reinsurance
£’k
242,388
(92,434)
122,100
(56,297)
215,757
284,491
(72,236)
3,502
215,757
(106,268)
129,155
(26,477)
212,167
290,964
(82,566)
3,769
212,167
(102,998)
3,177
(8,645)
34,263
(74,203)
(96,138)
21,935
–
(74,203)
6,153
(11,970)
3,659
(76,361)
(97,789)
21,428
–
(76,361)
Net
£’k
139,390
(89,257)
113,455
(22,034)
141,554
188,353
(50,301)
3,502
141,554
(100,115)
117,185
(22,818)
135,806
193,175
(61,138)
3,769
135,806
101
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Leases
23.
Company as a lessee
The Group has one lease contract for computer equipment used in its operations, with the exception of short-term leases and leases of low-value
underlying assets. This lease is reflected on the balance sheet as a right-of-use asset and a lease liability. The Group classifies its right-of-use
assets in a consistent manner to its property, plant and equipment (see Note 13).
Leases of computer equipment generally have lease terms between zero and five years. The lease payments are fixed and the lease is not linked
to revenue or annual changes in an index (either RPI or CPI).
The right-of-use asset can only be used by the Group and the Group cannot sub-lease the asset. The Group is prohibited from selling or pledging
the underlying assets as security. The lease may only be cancelled by incurring a termination fee. The Group’s obligations under the lease are
secured by the lessor’s title to the leased assets. No lease contracts require the Group to maintain certain financial ratios.
The table below describes the nature of the Group’s leasing activity by type of right-of-use asset recognised on balance sheet:
Right-of-use asset
Computer equipment
No of
assets
leased
Range of
remaining
term
Average
remaining
lease term
No of
leases with
extension
options
No of
leases with
option to
purchase
No of leases
with variable
payments
linked to an
index
No of
leases with
termination
options
1
0 to 1 years
0.75 years
1
–
–
1
Right-of-use assets
Additional information on the right-of-use assets by class of assets is as follow:
As at 1 January 2019 (adjusted)
Additions
Depreciation
As at 31 December 2019
Computer
equipment
£’k
440
–
(251)
189
Total
£’k
440
–
(251)
189
The right-of-use assets are included in the same line items as where the corresponding underlying assets would be presented if they were owned.
Lease liabilities
Lease liabilities are presented in the statement of financial position as follows:
As at 1 January (adjusted for 1 January 2019)
Additions
Accretion of interest
Payments
As at 31 December 2019
Current
Non-current
2019
£’k
440
–
18
(264)
194
194
–
2018
£’k
–
–
–
–
–
–
–
102
Sabre Insurance Group plc Annual Report and Accounts 2019
The following are the amounts recognised in the statement of comprehensive income:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases (included in IT expenses)
Expenses relating to low-value assets (included in other operating expenses)
Variable lease payments
Total
2019
£’k
251
18
6
14
–
289
2018
£’k
–
–
–
–
–
–
The Group had total cash outflows for leases of £284k in 2019 (2018: £284k). The Group had no non-cash additions to right-of-use assets or lease
liabilities. The Group has not entered into any lease agreements which have not yet commenced.
The Group has no lease contracts that contain variable payments.
The Group’s lease contract includes extension and termination options. These options are negotiated by management to provide flexibility in
managing the leased-asset portfolio and align with the Group’s business needs. Limited judgement is required in determining whether these
options are reasonably certain to be exercised.
Set out below are the undiscounted potential future rental payments relating to periods following the exercise date of extension and terminations
that are not included in the lease term:
Extension options expected to be exercised
Termination options expected to be exercised
Extension options expected not to be exercised
Termination options expected not to be exercised
Total
Within
five years
£’k
More than
five years
£’k
264
–
264
264
–
264
–
–
–
–
–
–
Total
£’k
264
–
264
264
–
264
The Group is not expected to exercise the termination option before the end of the current lease. If the lease is extended, the extended contract
will not contain a termination option.
24.
Trade and other payables, including insurance payables
Insurance creditors
Due to reinsurers
Trade and other creditors
Other taxes
Total
2019
£’k
1,073
4,936
1,053
5,413
2018
£’k
1,017
6,171
675
5,760
12,475
13,623
The carrying value of trade and other payables, including insurance payables, approximates to fair value. There are no amounts expected to be
settled more than 12 months after the reporting date.
103
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
25.
Accruals
Accruals
Total
2019
£’k
1,206
1,206
2018
£’k
4,510
4,510
All accruals are due to be paid within one year.
The Group makes provision for all industry levies, such as Motor Insurance Bureau and Financial Conduct Authority. During 2019 the accrual
in respect of the Motor Insurance Bureau levy was reduced by £3,325k, reflecting a decreased uncertainty over the level of future levies.
26.
Fair value
Fair value hierarchy
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. 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.
Disclosure of fair value measurements by level is according to the following fair value measurement hierarchy:
– Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities;
– Level 2: fair values measured using valuation techniques for all inputs significant to the measurement other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly or indirectly;
– Level 3: fair values measured using valuation techniques for any input for the asset or liability significant to the measurement that is not based
on observable market data (unobservable inputs);
There have been no transfers between levels during the year (2018: no transfers).
The following table summarises the classification of financial instruments:
As at 31 December 2019
Assets held at fair value
Financial investments
Owner-occupied land and buildings (Note 13)
Total assets
As at 31 December 2018
Assets held at fair value
Financial investments
Owner-occupied land and buildings (Note 13)
Total assets
Level 1
£’k
263,629
–
263,629
Level 1
£’k
287,142
–
287,142
Level 2
£’k
Level 3
£’k
–
–
–
–
4,055
4,055
Level 2
£’k
Level 3
£’k
–
–
–
–
4,055
4,055
Total
£’k
263,629
4,055
267,684
Total
£’k
287,142
4,055
291,197
104
Sabre Insurance Group plc Annual Report and Accounts 2019
27.
Notes to the cash flow statement
Profit before tax for the year
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Share-based payment expense
Investment return
Operating cash flows before movements in working capital
Movements in working capital:
Change in reinsurance assets
Change in insurance and other receivables
Change in prepayments and other assets
Change in insurance liabilities including DAC and UPR
Change in trade and other payables
Cash generated from
Taxes paid
Net cash flow used by operating activities before investment of insurance assets
Interest and investment income received
Purchases of invested assets
Proceeds from sale of invested assets
Total
2019
£’k
56,479
165
251
–
1,106
(2,405)
55,596
(1,496)
3
911
(10,680)
(4,452)
39,882
(11,674)
28,208
8,148
(206,131)
223,902
54,127
2018
£’k
61,363
185
–
501
1,036
(777)
62,308
28,053
1,020
(1,684)
(26,324)
(7,410)
55,963
(7,219)
48,744
8,004
(152,162)
101,824
6,410
Share-based payments
28.
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.
Employee schemes shares
Free shares donated at listing
Shares bought/sold on open market
As at 21 September 2017
Corporate reorganisation
As at 31 December 2017
Shares purchased
Shares vested
As at 31 December 2018
Shares purchased
Shares disposed
Shares vested
As at 31 December 2019
In thousands
As at 31 December 2019
Number of
shares
Average price
(pence)
–
869,566
869,566
–
–
869,566
–
(42,325)
(286,658)
540,583
–
0.001
0.001
–
–
0.001
–
0.001
0.001
0.001
£
–
870
870
–
–
870
–
(42)
(287)
541
£'k
1
Number of
shares
Average price
(pence)
–
–
–
–
–
–
–
–
–
–
–
Total
£
–
870
870
–
–
870
£
–
–
–
–
–
–
395,587
268.073
1,060,462
1,060,462
–
–
–
–
–
–
(42)
(287)
395,587
268.073
1,060,462
1,061,003
£'k
1,060
£'k
1,061
105
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Share-based payments continued
28.
The Group recognised a total expense in the statement of comprehensive income for the year ending 31 December 2019 of £1,106k (2018:
£1,036k), relating to equity settled share-based plans.
Share-based payments reserve
As at 1 January 2018
Charge in respect of share-based payment
As at 31 December 2018
Charge in respect of share-based payment
Settlement of share-based payments
As at 31 December 2019
£'k
–
1,036
1,036
1,106
(780)
1,362
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. The vesting of LTIP Awards may (and, in the case of an LTIP Award to an Executive Director other than a Recruitment Award will)
be subject to the satisfaction of performance conditions. Any performance condition may be amended or substituted if one or more events occur
which cause the Board to consider that an amended or substituted performance condition would be more appropriate and would not be materially
less difficult to satisfy.
LTIP Awards which are subject to performance conditions will normally have those conditions assessed as soon as reasonably practicable after
the end of the relevant performance period and, to the extent that the performance conditions have been met, the LTIP Awards will vest either
on that date or such later date as the Board determines. LTIP Awards (other than Recruitment Awards) granted to the Executive Directors will
normally be subject to a performance period of at least three years. LTIP Awards (other than Recruitment Awards) which are not subject to
performance conditions will normally vest on the third anniversary of the date of grant or such other date as the Board determines.
LTIP Awards without performance conditions
In 2017, shares gifted to employees at IPO were held in trust under the Long-Term Incentive Plan, without performance conditions, with a vesting
period of two years (50%) and three years (50%).
LTIP Awards with performance conditions
During 2019, further share options were issued to management and senior employees under the LTIP, with performance conditions attached.
The following table lists the inputs to the model used to value the three plans for the year ended 31 December 2019. The fair value of the options
granted is measured using the Monte Carlo method considering the terms and conditions upon which the options were granted. The amount
recognised as an expense under IFRS 2 is adjusted to reflect the actual number of share options that vest.
Weighted average share price (per award)
Expected term
Expected volatility
Expected exercise price on outstanding awards
Grant-date TSR performance of the Group
Average risk-free interest rate
2019
LTIP grant
206 pence
4.51 years
23.26%
NIL
8.54%
0.81%
2018
LTIP grant
227 pence
2.8 years
22.81%
NIL
16.09%
0.73%
106
Sabre Insurance Group plc Annual Report and Accounts 2019
The tables below detail the movement in the LTIP:
Outstanding at 1 January 2019
Granted
Forfeited
Vested
Outstanding at 31 December 2019
(1) Weighted average exercise price - as a proxy for fair value
Outstanding at 1 January 2018
Granted
Forfeited
Vested
Outstanding at 31 December 2018
LTIP without performance
conditions
LTIP with performance
conditions
Number and WAEP(1)
Number and WAEP
Number
569,530
–
(8,333)
(286,658)
274,539
£
NIL
–
NIL
NIL
NIL
Number
572,649
644,745
–
–
1,217,394
LTIP without performance
conditions
LTIP with performance
conditions
Number and WAEP
Number and WAEP
Number
576,169
–
(6,639)
–
569,530
£
NIL
–
NIL
–
–
Number
–
572,649
–
–
572,649
£
NIL
NIL
–
–
NIL
£
–
NIL
–
–
NIL
Deferred Bonus Plan (“DBP”)
To encourage behaviour which does not benefit short-term profitability over longer-term value, Executive Directors were awarded 145,317 shares
in lieu of a bonus (2018: NIL), with an estimated fair value of £418,513k (2018: £NIL) to be deferred for two years, using the market value at the
grant date. These are subject to a two-year service period and are not subject to performance conditions.
The DBP is recognised in the statement of comprehensive income on a straight-line basis over a period of two years from grant date.
Share Incentive Plans (“SIPs”)
The Sabre Share Incentive Plans provide for the award of free Sabre Insurance Group plc shares, Partnership Shares, Matching Shares and
Dividend 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.
Free Shares
On 29 December 2017, Free Share awards were granted with a vesting period of three years from the award date. Vesting is unconditional for
participants still in service at the vesting date. Participants will also receive Dividend Shares which represent the value of reinvested dividends
which would have accrued over the vesting period on the shares in the Free Share award.
The fair value of the Sabre Share Incentive Plan awards is equal to the share price on the date of grant. Dividends are not deducted in the
calculation of fair value because dividends will be accumulated over the vesting period and repaid against equivalent dividend shares.
As at 31 December 2019, 166,698 (2018: 179,928) shares were held on behalf of employees with an estimated fair value of £513,430k
(2018: £491,203k). The average unexpired life of Free Shares awards is one year (2018: two years).
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 one free matching share for every
three 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 Dividend Shares. The fair value of such awards is estimated
to be the market value of the awards on grant date.
In the year ending 31 December 2019, 2,875 (2018: NIL) matching shares were granted to employees with an estimated fair value of
£9k (2018: £NIL).
As at 31 December 2019, 2,875 (2018: NIL) matching shares were held on behalf of employees with an estimated fair value of £9k (2018: £ NIL).
The average unexpired life of Matching Share awards is 2.3 years (2018: NIL years).
Save as You Earn
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.
107
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Related party transactions
29.
Sabre Insurance Group plc is the ultimate parent and ultimate controlling party of the Group. The following entities included below form the Group.
Name
Binomial Group Limited
Principal business
Intermediate holding company
Sabre Insurance Company Limited
Motor insurance underwriter
Barbados TopCo Limited
Barb IntermediateCo Limited
Barb MidCo Limited
Barb BidCo Limited
Barb HoldCo Limited
Other controlled entities
EBT – UK SIP
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Trust
The Sabre Insurance Group Employee Benefit Trust
Trust
No single party holds a significant influence (>20%) over Sabre Insurance Group plc.
Registered address
Sabre House, 150 South Street, Dorking, Surrey,
United Kingdom, RH4 2YY
Sabre House, 150 South Street, Dorking, Surrey,
United Kingdom, RH4 2YY
Heritage Hall, Le Marchant Street, St Peter Port,
Guernsey, GY1 4HY
13-14 Esplanade, St Helier, Jersey, JE1 1EE
13-14 Esplanade, St Helier, Jersey, JE1 1EE
13-14 Esplanade, St Helier, Jersey, JE1 1EE
13-14 Esplanade, St Helier, Jersey, JE1 1EE
Ocorian, 26 New Street, St Helier, Jersey, JE2 3RA
26 New Street, St Helier, Jersey, JE2 3RA
Both Employee Benefit Trusts (“EBTs”) were established to assist in the administration of the Group’s employee equity-based compensation
schemes. The UK registered EBT holds the all-employee Share Incentive Plan (“SIP”) in which each employee of Sabre Insurance Company
Limited was issued with £3,600 of shares on listing. The Jersey-registered EBT holds the Long Term Incentive Plan (“LTIP”) discretionary shares
awarded on IPO.
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 EBTs were set up by the Group with the sole purpose of assisting in the administration of these schemes, and are in essence controlled
by the Group and therefore consolidated.
During the period ended 31 December 2019, the Group donated no shares to the EBTs (2018: 1,315,538). While an amount of these shares was
sold on admission, 213,792 shares were retained in the UK EBT in relation to the SIP and 576,169 shares were retained in the Jersey EBT in
relation to the LTIP. The total value of the shares gifted to the EBTs by Sabre Insurance Group plc on admission was £3,025k.
Key Management compensation
Key Management includes Executive Directors, Non-executive Directors and other senior management personnel. Further details of Directors’
shareholdings and remuneration can be found in the Directors’ Remuneration Report on pages 56 to 58.
Salaries and other short-term benefits
Employer pension
Shares granted under LTIP
Fees
Total
2019
£’k
2,282
10
350
-
2,642
2018
£’k
2,682
13
466
23
3,183
108
Sabre Insurance Group plc Annual Report and Accounts 2019
Earnings per share
30.
Basic earnings per share
Profit for the year attributable to equity holders
Diluted earnings per share
Profit for the year attributable to equity holders
Net shares under options allocable for no further consideration
Total diluted earnings
Profit for the year attributable to equity holders
Net shares under options allocable for no further consideration
Total diluted earnings
2019
After tax
£’k
45,711
Per share
pence
18.35
2018
After tax
£’k
49,568
Per share
pence
19.90
After tax
£’k
45,711
After tax
£’k
49,568
2019
Weighted
average
number of
shares
£’k
249,064
1,876
250,940
2018
Weighted
average
number of
shares
£’k
249,126
1,578
250,704
Per share
pence
18.35
(0.13)
18.22
Per share
pence
19.90
(0.13)
19.77
Contingent liability
31.
In 2019 HMRC issued a determination in relation to the 2015 corporation tax filing of a subsidiary of the Group, which is currently dormant. This
asserted that the interest rate applied on intercompany debt, and the resultant allowable expense, was inconsistent with transfer pricing rules and
was excessive. The excess interest per the determination is £2.7m, tax relief for which equates to a reduction in the group’s overall tax liability of
£0.5m. The Directors obtained professional advice both at the time the return was filed and subsequent to the determination, and are satisfied
that the Group’s application of transfer pricing rules was correct. As such an appeal has been raised against the determination. The Board does not
consider it likely that the subsidiary will be required to resubmit its 2015 filing, or either of the two subsequent tax filings for the years in which the
intercompany debt remained in place.
Events after the balance sheet date
32.
The global outbreak of COVID-19 presents various operational, market, counterparty and insurance risks to the Group. The Directors continue
to monitor these risks closely and take all appropriate steps to manage the impact on policyholders, employees and other stakeholders. This is
discussed in more detail in the Chief Executive Officer’s Report, on page 13 of the Strategic Report. The Directors do not consider this event to
have any bearing on the valuation of assets or liabilities at year-end.
109
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Assets
Investments
Prepayments
Cash and cash equivalents
Total assets
Equity
Issued share capital
Own shares
Merger reserve
Share based payments reserve
Retained earnings
Total equity
Liabilities
Creditors: Amounts falling due within one year
Total liabilities
Total equity and liabilities
Notes
2019
£’k
2018
£’k
2
578,142
577,037
33
1,121
29
1,208
579,296
578,274
4
7
3
250
(1,061)
369,515
1,362
207,743
577,809
250
(1)
369,515
1,036
206,960
577,760
1,487
1,487
514
514
579,296
578,274
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 £43,491k (2018: £23,836k).
The attached notes on pages 112 to 113 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 6 April 2020.
Signed on behalf of the Board of Directors by:
ADAM WESTWOOD
Chief Financial Officer
110
Sabre Insurance Group plc Annual Report and Accounts 2019
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Share
capital
£’k
Share
premium
£’k
Own
shares
£’k
Notes
Merger
reserve
£’k
Share-based
payment
reserve
£’k
250
205,241
(1)
369,396
As at 1 January 2018
Profit for the year
Capital reduction
Share-based payment reserve
Dividends
At 31 December 2018
Profit for the year
Share-based payment reserve
8
Settlement of share-based payments
Own shares purchased
Share scheme transfer to retained earnings
Dividends
At 31 December 2019
–
–
–
–
250
–
–
–
–
–
–
250
–
(205,241)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
119
–
–
(1)
369,515
–
–
–
(1,060)
–
–
–
–
–
–
–
–
(1,061)
369,515
1,362
–
–
–
1,036
–
1,036
–
1,106
(780)
–
–
–
PARENT COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2019
Profit after tax
Movement in working capital
Change in debtors
Change in prepayments
Change in creditors
Net cash flow generated by operating activities
Net cash used in acquiring and disposing own shares
Dividends paid
Net cash used by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Retained
earnings
£’k
(4,047)
23,836
205,122
–
(17,951)
206,960
43,491
–
780
–
135
(43,623)
207,743
Total
equity
£’k
570,839
23,836
–
1,036
(17,951)
577,760
43,491
1,106
–
(1,060)
135
(43,623)
577,809
2019
£’k
2018
£’k
43,491
23,836
–
(4)
973
44,460
(924)
(43,623)
(44,547)
(87)
1,208
1,121
1,870
(29)
(6,518)
19,159
–
(17,951)
(17,951)
1,208
–
1,208
111
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
for the year ended 31 December 2019
Accounting policies
Basis of preparation
1.
1.1
These financial statements present the Sabre Insurance Group plc company financial statements for the period ended 31 December 2019,
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 Group have been prepared in accordance and fully comply with International Financial Reporting Standards (IFRSs),
as issued by the International Accounting Standards Board (IASB) and adopted by the EU. In accordance with the exemption permitted under
section 408 of the Companies Act 2006, the Company’s income statement and related notes have not been presented in these separate financial
statements.
The financial statements have been prepared on an historical cost basis, except for investment properties and 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.
Summary of significant accounting policies
1.2
(a) Investment in subsidiaries
Investment in subsidiaries is stated at cost less any impairment.
(b) Dividend income
Dividend income from investment in subsidiaries is recognised when the right to receive payment is established.
Investments
2.
Investment in subsidiary undertakings
As at 1 January
Additions
As at 31 December
2019
£’k
577,036
1,106
578,142
2018
£’k
576,000
1,037
577,037
The subsidiary undertakings of the Company are set out below. Their capital consists of ordinary shares which are unlisted. In all cases, the
Company owns 100% of the ordinary shares, either directly or through its ownership of other subsidiaries.
Name of subsidiary
Directly held by the Company
Binomial Group Limited
Barbados TopCo Limited
Barb IntermediateCo Limited
Barb MidCo Limited
Barb BidCo Limited
Barb HoldCo Limited
Indirectly held by the Company
Place of incorporation
Principal activity
United Kingdom
Guernsey
Jersey
Jersey
Jersey
Jersey
Intermediate holding company
Non-trading company
Non-trading company
Non-trading company
Non-trading company
Non-trading company
Sabre Insurance Company Limited
United Kingdom
Motor insurance underwriter
The registered office of each subsidiary is disclosed within Note 29 of the consolidated Group accounts.
112
Sabre Insurance Group plc Annual Report and Accounts 2019
3.
Creditors
Due within one year
Amounts owed to Group undertakings
As at 31 December
2019
£’k
1,487
1,487
2018
£’k
514
514
Share capital and reserves
4.
Full details of the share capital and capital reserves of the Company are set out in Note 21 to the consolidated financial statements.
Dividends
5.
Full details of the dividends paid and proposed by the Company are set out in Note 12 to the consolidated financial statements.
Related parties
6.
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:
Due to
Sabre Insurance Company Limited
Barbados TopCo Limited
As at 31 December
2019
£’k
1,005
482
1,487
2018
£’k
32
482
514
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.
Share–based payments
7.
Full details of share-based compensation plans are provided in Note 28 to the consolidated financial statements.
Risk management
8.
The risks faced by the Company, arising from its investment in subsidiaries, are considered to be the same as those presented by the operations
of the Group. Details of the key risks and the steps taken to manage them are disclosed in Note 3 to the consolidated financial statements.
Directors and key management remuneration
9.
The Directors and key management of the Group and the Company are the same. The aggregate emoluments of the Directors are set out in Note
8 to the consolidated financial statements, the compensation for key management is set out in Note 9 to the consolidated financial statements
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.
113
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019 APPENDIX – FINANCIAL RECONCILIATIONS
As at 31 December 2019
2019
£’k
56,479
–
–
2018
£’k
61,363
501
–
56,479
61,864
2019
£’k
45,711
–
–
–
2018
£’k
49,568
501
–
–
2017
£’k
55,512
887
7,542
63,941
2017
£’k
45,343
887
7,542
(484)
45,711
50,069
53,288
2019
£’k
101,990
(7,558)
94,432
183,238
51.5%
2019
£’k
32,507
7,558
40,065
183,238
21.9%
2019
£’k
32,507
101,990
134,497
183,238
73.4%
2018
£’k
97,861
(6,536)
91,325
188,235
48.5%
2018
£’k
35,191
6,536
41,727
188,235
22.1%
2018
£’k
35,191
97,861
133,052
188,235
70.6%
2017
£’k
92,912
(6,044)
86,868
186,866
46.5%
2017
£’k
34,994
6,044
41,038
186,866
22.0%
2017
£’k
34,994
92,912
127,906
186,866
68.5%
Adjusted Profit Before Tax
Profit before tax
Add:
Amortisation of intangible assets
Exceptional items
Adjusted profit before tax
Adjusted Profit After Tax
Profit after tax
Add:
Amortisation of intangible assets
Exceptional items
Tax on exceptional items
Adjusted profit after tax
Net Loss Ratio
Net insurance claims
Less: Claims handling expenses
Net claims incurred
Net earned premium
Net loss ratio
Expense Ratio
Total expenses
Plus: Claims handling expenses
Net operating expenses
Net earned premium
Expense ratio
Combined Operating Ratio
Total expenses
Net insurance claims
Net earned premium
Combined operating ratio
114
Sabre Insurance Group plc Annual Report and Accounts 2019
Solvency Coverage Ratio – Pre Dividend
Solvency II net assets
Solvency capital requirement
Solvency coverage ratio
Solvency Coverage Ratio – Post Dividend
Solvency II net assets
Less: Final dividend
Solvency II net assets (post dividend)
Solvency capital requirement
Solvency coverage ratio – post dividend
Return on Tangible Equity
IFRS net assets at year end
Less:
Intangible assets at year end
Goodwill at year end
Closing tangible equity
Opening tangible equity
Average tangible equity
Adjusted profit after tax
Return on tangible equity
Return on Opening SCR
Opening SCR
Adjusted profit after tax
Return on SCR
2019
£’k
127,086
59,495
213.6%
2019
£’k
127,086
(20,250)
106,836
59,495
179.6%
2018
£’k
130,019
60,995
213.3%
2018
£’k
130,019
(32,000)
98,019
60,995
160.8%
2017
£’k
97,873
61,087
160.2%
2017
£’k
97,873
–
97,873
61,087
160.2%
2019
£’k
2018
£’k
2017
£’k
267,417
265,148
231,993
–
(156,279)
111,138
108,869
110,004
45,711
41.6%
2019
£’k
60,995
45,711
74.9%
–
(156,279)
108,869
75,213
92,064
50,069
54.4%
2018
£’k
61,087
50,069
82.0%
(501)
(156,279)
75,213
55,149
65,181
53,290
81.8%
2017
£’k
57,852
53,290
92.1%
115
FINANCIAL STATEMENTSSabre Insurance Group plc Annual Report and Accounts 2019
SHAREHOLDER INFORMATION
Shareholder profile as at 31 December 2019
Number of
shareholders
% of total
shareholders
Ordinary
shares
% of issued
share capital
9
41
86
86
102
43
367
2.45%
11.17%
23.43%
23.43%
27.79%
11.72%
531
22,400
313,670
2,969,716
38,978,920
207,714,763
100%
250,000,000
0.00%
0.01%
0.13%
1.19%
15.59%
88.09%
100%
Number of
shareholders
% of total
shareholders
Ordinary
shares
% of issued
share capital
31
248
64
24
367
8.45%
67.57%
17.44%
6.54%
100%
542,842
206,862,263
37,612,062
4,982,833
250,000,000
0.22%
82.74%
15.04%
1.99%
100%
Electronic communications
Shareholders can elect to receive shareholder documents electronically
by registering with Shareview at www.shareview.co.uk. This will
save on printing and distribution costs, creating environmental benefits.
When you register, you will be sent an email notification to say when
shareholder documents are available on our website and you will be
provided with a link to that information. When registering you will need
your shareholder reference number which can be found on your share
certificate or proxy form. Please contact Equiniti Limited if you require
any assistance or further information. Equiniti Limited’s shareholder
helpline is 0371 384 2030 (UK), +44 121 415 7047 (International) and
0371 384 2255 (Mini Com).
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.
Range of holdings
1-100
101-1,000
1,001-10,000
10,001-100,000
100,001-1,000,000
1,000,001- highest
Total
Category
Private individuals
Nominee companies
Limited and public limited companies
Other organisations and banks
Total
Share price
London Stock Exchange, pence per 0.01 pence share.
Highest
Lowest
Financial calendar
Full Year Results
Trading Update
Annual General Meeting
Half Year Results
Trading Update
Dividend calendar
Final dividend 2019
Ex-dividend date
Record date
Payment date
Interim dividend 2020
Ex-dividend date
Record date
Payment date
324 pence (13 December 2019)
251 pence (15 January 2019)
7 April 2020
21 May 2020
21 May 2020
28 July 2020
13 October 2020
23 April 2020
24 April 2020
28 May 2020
20 August 2020
21 August 2020
17 September 2020
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.
Share dealing services
The Company’s Registrar, Equiniti Limited, offers a telephone and
internet dealing service, Shareview, which provides a simple and
convenient way of buying and selling shares. For telephone dealings
call 03456 037 037 between 8.00am and 4.30pm, Monday to Friday,
and for internet dealings log onto www.shareview.co.uk/dealing
116
Sabre Insurance Group plc Annual Report and Accounts 2019
Directors
Patrick Snowball
Chairman
Geoff Carter
Chief Executive Officer
Adam Westwood
Chief Financial Officer
Andy Pomfret
Senior Independent Director
and Non-executive Director
Catherine Barton
Non-executive Director
Ian Clark
Non-executive Director
Rebecca Shelley
Non-executive Director
Company Secretary
Anneka Kingan
Registered Office
Sabre House,
150 South Street,
Dorking,
Surrey,
RH4 2YY
Registration number
10974661
Website
www.sabreplc.co.uk
DIRECTORS, ADVISERS AND
OTHER INFORMATION
Auditor
Ernst and Young LLP
25 Churchill Place,
London,
E14 5EY
Company brokers
Barclays Bank plc
1 Churchill Place,
London,
E14 5LB
Numis Securities Limited
The London Stock Exchange Building,
10 Paternoster Square,
London,
EC4M 7LT
Principal bankers
National Westminster Bank plc
14 High St,
Dorking,
RH4 1AX
Public relations
Tulchan Communications Group Limited
85 Fleet Street,
London,
EC4Y 1AE
Registrars
Equiniti Limited
Aspect House,
Spencer Road,
Lancing,
West Sussex,
BN99 6DA
Solicitors
Dickson Minto W.S.
Broadgate Tower,
20 Primrose Street,
London,
EC2A 2EW
CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place,
78 Cannon Street,
London,
EC4N 6AF
117
Sabre Insurance Group plc Annual Report and Accounts 2019 sabreplc.co.uk
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