Sabre Insurance Group plc

Okay, good morning everyone. Thank you very much to people who are joining us in the room and online. Welcome to our results presentation. I'm pleased to say we've got consistency in presenters. My colleagues there have been gently fried by the giant screen just behind their head. As normal admin I will do the presentation. and then we'll leave all the difficult questions to Matt and Trevor to handle at the end Adam tells me it's our ninth annual results presentation now and that's for the three of us so we'll be getting the cake out for next year's next year's one I think so very briefly outline the agenda we're going to run through the highlights Adam will then run through the financial performance and our ESG credentials I'm going to spend a few minutes going through our strategy which we've tried to present in a slightly different way this year I'll then look at the outlook and summary and we'll have plenty of time at the end for Q&A as ever. So overall I think there's a title suggested we think we had a very good year last year and as importantly we've got very good momentum coming into this year as well in terms of premium so we seem to have turned the corner from having to manage for a margin into now we're back into a slight growth mode as well. For recent annual reports, I seem to have stood here with a doom-laden message to impart, be it Brexit or Covid or Ogden discount or high inflation. Almost boringly, I don't have any of that this year. The horizon seems as clear as it's been for quite some time. So hopefully we can focus on our own numbers and what we think are some good things coming through both for the sector and ourselves. So let's touch on some of the highlights. Profit before tax up almost 5%, margin very comfortably within our range, an excellent net loss ratio across the portfolio at 54%. For motor itself, a core motor vehicle, that's effectively 50% which is probably as good or better than we would normally hope to achieve. Those results have been delivered against some pretty unattractive market conditions. where we think the market has still continued to underprice against ongoing claims inflation for most of the last couple of years. We've maintained our pricing discipline and as we say we've seen return to growth in the last quarter and that growth has carried on. We've mentioned in here that our premium is up by 5% to the end of February year on year. Very robust capital position still. total dividend of 13.5 pence and we've also announced another share buyback of £5 million in addition to the 13.5p total dividend so we've delivered a good year in terms of numbers we've also made really good progress well up in terms of on track with our timetable year for ambition 2030 Two big things this year one is the launch of Sabre Direct bike which we'll talk more about later and we've continued testing the differentiated price for our core motor product which we think will drive the big volume as we go towards 2030. So having stolen most of his interest in Thunder I'm now going to hand to Adam to run through the numbers and DSG.

Alright, thanks Geoff, and good morning everyone. So I'll take us through some of the key numbers from 2025 in a little bit more detail. So our results this year perfectly reflect Sabre's core strategy. As expected and in line with performance reported to date, we've allowed our premium to drop in unfavourable market conditions, ending at £202.9 million of premium for the year. and since our last report in Q3 we have seen some momentum in premium in Q4. Our net insurance margin is now comfortably within our target range of 18-22% and at 19.2% reflects the continued discipline and control applied across the year. The net loss ratio has improved by 4.6 percentage points to 54.1% in line with our long term target and reflective of strong underwriting throughout soft market conditions. Our expense ratio is up by 1.9 percentage points, primarily due to the net-earned premium having reduced and reflecting some cost inflation during the year. As a result of the improving margin, as well as increased investment returns, our total profit before tax is up 4.9% to £51 million. This has allowed us to declare an increased dividend per share of 13.5p, leaving us with solvency capital ratios slightly above our preferred range at 161.5%, and around 154% after the proposed £5 million share buyback. This chart shows the stabilisation of our margin since the period of very high inflation. As a reminder, our net insurance margin is a function of both claims experience and expenses incurred as a proportion of insurance related income, which is primarily premium but also includes instalment income. In this chart, the growing blue bars show improving margin and we're now operating at a comfortable level and expect to maintain our net insurance margin within this target 18-22% range all the way through to 2030. For clarity, if comparing across peers, none of our headline performance ratios including the net insurance margin include any discounting benefit under IFRS 17. So this slide bakes down the loss ratio into current and prior year performance, with a comparison to last year. It shows the total claims cost divided by earned premium, net of the impact of reinsurance. The current year ratio reflects the book position for claims in 2025, and the prior year ratio reflects movements in the actual and expected ultimate claims costs for claims already on the books at the start of 2025. Overall, the 4.6 percentage point improvement in net loss ratio has been driven to a return to prior year releases during the year with the amount for 2025 a little above our long run expectation for the run off of risk adjustment. Our current year loss picks naturally reflect the greater level of uncertainty attached to the most recent year due to the larger number of new and undeveloped claims and allows for above normal inflation in the short term. The current year will always carry a risk adjustment which means the current year loss ratio is expected to be above the ultimate loss ratio achieved by that business. This chart shows the relative contribution from our motor vehicle and other products during the year. Performance in motor vehicle has improved further in 2025, delivering a loss ratio of 50.5%. Motorcycle and taxi remain much smaller, with loss ratios impacted by the individually large claims reported at the half-year stage, although both have shown much improved loss ratios in the last six months. As is demonstrated in the policy counts, we have allowed motor vehicle and taxi books to shrink in 2025, whilst market conditions were unfavourable, although we note that the motor vehicle book did return to policy count growth during the end of 2025 and throughout 2026 to date. Motorcycle policy count has grown as we have introduced more volume through our direct brand, for which we are controlling the rate of growth as the product matures. This slide shows how our capital was generated during the year. with the total dividend for the year being slightly above the net of capital generated less the increase in capital requirement reflecting very strong position coming into the year post dividend the solvency coverage ratio was above our preferred operating range so the board has elected to propose a five million pound share buyback subject to regulatory approval which will take the post buyback solvency coverage ratio at the end of 2025 to 154% which is comfortably within our preferred operating range The Group's policy remains simple, to pay an ordinary dividend in the range of 70-80% of profit after tax, and to consider paying a special dividend or utilising buybacks to distribute excess capital, generally moving the post dividend capital to within the Group's range of 140-160%. Importantly, this is a genuine range and will be utilised in the right circumstances, in this case considering the current share price and the comfort in the Group's ability to generate future capital in the coming year. So a quick update on our sustainability practices. We continue to monitor our progress towards our ambition to hit net zero by 2050 and we publish our net zero roadmap on our website. We've taken steps to minimize our direct emissions from operations and our largest emission space is the assets in which we invest, which currently we expect the related emissions to decrease naturally over time. But we'll consider taking active steps to manage this as we move towards 2050. Along with most of the industry, we carefully monitor risks and opportunities related to climate, both transitional and physical. We are well-placed to support the transition to electric vehicles, and having collected significant data over a number of years, which is aided by our willingness to cover almost all vehicles. And with that, that's Geoff.

Thanks Adam. Okay we're going to spend a few minutes just on a recap of our strategy which as I mentioned earlier we're trying to set out in a slightly different way this year just so you don't get completely bored in the room for hearing it for the ninth time. I guess the headline here is key to us we think we are a high margin business with good growth opportunities as one of our shareholders once said why would you not want to own someone who's got those characteristics. So we think we're a strong company in an attractive market and as an underwriting focused business we think we're also in the best sub-sector of that attractive market. So to pick on a few strengths, to state the obvious, motor insurance is a mandatory product for all yuko drivers. That doesn't look like that's changing anytime soon. We can talk about autonomous vehicles and how that might impact later. We specialise in high premium, high margin policies. We don't really use the word non-standard because we consider everyone is a writable policy providing they're paying the correct margin and our premium is roughly twice that of the UK average. We provide policies across the UK for car, van and motorcycle. We've got a very long track record of delivering the results. Deep, accurate and relevant data, very consistent data-driven underwriting and expert claims handling. I think importantly we've also got a very consistent, thoughtful and long-term approach to reserving which avoids as many shocks as we can manage. What we've tried to put here, people often ask what is our, what's the sort of secret to our success, what's the sort of KFC formula that we keep locked in a vault, how do we do it? We don't have a KFC formula so what we've tried to do here is unpack what would be in it if we did have one And this also gives some context into why we're confident about Ambition 2030. This is the way we work. The top one here, I'll go from the top and work around to the right. One version of the truth. So that's consistency on the key assumptions across all departments. Now that might sound obvious but that's not the way that a lot of insurance companies work. This is the first company I've ever worked out where you don't have at least a twice annual bust up between the price and then the reserve in actuary on who's got the best view of the loss ratio. So we have one version of the truth that we as a management team will buy into. very high quotability we quote for almost everything that gives us really good access and insight into the market and what's going on with pricing and where we think opportunities might lie probably the really key thing is margin management we have no premium targets in the business at all the only targets we have are related to margin and profit and that's a DNA that goes through the middle of the stick of rock but everyone I think in the business would say the same thing every policy we underwrite we validate both using automated tools and through a sniff test from humans looking at those as well similarly claim screening every claim that comes in while we try and deal with claims very quickly very fairly everything gets screened for fraud and accuracy again both using automated techniques and using human skills on that as well Very fast feedback loops. Matt and Trevor are sitting incredibly close to each other as actuaries and claims directors today and that's about as close as they sit most days as well. So very fast feedback loops from things we're seeing in the claims environment into things we need to...

There you go. Is someone trying to phone us?

I'll just pause for a few seconds. Looks like someone's getting a phone call in the presentation booth. Anyone wants to know about the West Ham result last night? I'm very happy.

Tremendous penalty victory I think you'll find.

Perhaps that's why I'm not sure because of that today, because of the results. Are we going to burst back? This is the first. So maybe if I just describe why we're confident about how this is going to translate into ambition 2030. so Ambition 30 as you know has two key two key elements one is to expand our motor quotability the fact you like people who have got it in the pack here people online I'd like you to access the presentation on the website if it's died here so for core motor the key thing here is we're looking to expand our competitive footprint we already quote for everything in that expanded footprint today so we're not trying to go into uncharted territory We already underwrite policies in all elements of that expanded footprint just to a greater or lesser degree What we're really doing here is expanding them to change our margin To hit the optimum point between volume and margin in that that extended footprint on motorcycle The new rating structure putting in place which we're doing on direct first is really taking some of the skills and data that we're developing on car and applying at the motorbike as well and we've got a new pricing infrastructure that Matt and his team have put in place over the last six months and that has been tested through last year and we're now increasingly expanding our footprint for motorbike as we go through this year so we'll see a fairly rapid ramp up in our direct motorcycle distribution don't know who Darrell Legg is but I do wish I'd go away and So you have a large amount of... There we go. Right, we're back. Good. I think I managed to cover that almost not seamlessly at all. So we're in the bottom right-hand box on motorcycle. So we were saying there that we are putting in place, we have a new distribution in place for direct motor. New pricing infrastructure is going in place. That has been tested through last year and into this year. We're now increasingly confident in that new, very sophisticated motorcycle set of rates. And we'll increasingly open up our competitive footprint on bike as we go through this year. There are large amounts of cross-fertilisation between car and bike. So if someone's injured, handling a personal injury claim makes no difference if they've been hit by a bike or by a car. So a lot of the skills that we already have as a business can be exported straight into the bike product. So we're very confident our existing strengths translate directly into what we're trying to do on Ambition 2030. Data advantage. Sabre has been doing high premium business for over 25 years in a very specialist footprint. That means we generated a vast volume of very accurate data. we produce over 200 million quotes a year at the moment direct quotes that's an extraordinary amount of data that we can capture on potential new business people ask why we're confident going into this new footprint and we're generating that many quotes we have a really good starting point into there we've underwritten about six and a half million of vehicle years in the last 20 years so while we have a relatively small policy base at say 200 and odd thousand we've underwritten a lot of policies all of that data is complete and consistent and has been captured on one system we don't have a multitude of legacy systems that we can't reconcile we keep all our data on one system so it's accurate available and speedy the analysis as we mentioned earlier we have our pricing and reserving integrated so we have a very robust view of pricing and how reserving is knocking through the forward-looking pricing as well much more integrated I think than most most companies and specialist underwriting data. We've built our rates off the data that we've obtained over 20 years. Very difficult for someone to capture that data, as we've discussed before, unless you've underwritten it and you've taken the pain of the claims. You need to write the policy to understand how it's going to perform going forward. Our growth tracks are completely on, our growth plans are completely on track. So a reminder, that's to make at least 80 million by 2030. The core bits that we've done so far, we'll go through in the next couple of slides. On core motor, we're looking to become more efficient on our direct distribution. That really means looking to expand customer portals. We're looking to push more people onto a portal. More people on the portal, much cheaper to deal with, good for customers, good for us. Expand our market position, which we've spoken about, testing the rates. On motorcycle, that launched in half one last year. We think we're in a unique position that that product is serviced entirely online. and customer service via chatbots. We think that's the first time that's been done in the UK. Once we're happy and we've fully bedded in the direct book, we'll then look to expand to motorcycle brokers. There's three or four, maybe five large motorcycle brokers that we'll look at maybe towards the end of this year or into 2027 once we've fully bedded down the direct product first. Here's how we're getting on so far on core motor. The base IT systems are all in place to allow this to happen, to allow Matt's team to start to roll out, well they have rolled out the pricing test and to continue to evolve those pricing tests. Good progress last year, we've learned a lot. It's left us more confident that we are definitely going to hit the ambition 2030 numbers. On motorcycle, all the IT is in place for that. Direct is going really well as I mentioned. Customer service, we're looking to expand probably into AI driven chat as well going forward. So at the moment it's an old-fashioned online chat with individuals dealing with responses. We think over time we can take that down an AI route as well. Our motorcycle price, as I mentioned, we're expanding our quotability as we go through the rest of this year. Alongside all this, it's important that we maintain our expense base at a low level and that's a large part of the work as well. automated vehicles I guess impossible to do a presentation at the moment without talking about automated vehicles I have to say it does look like a bunch of overhyped nonsense some of the stuff that we've seen in recent weeks if I put it bluntly We saw Admiral's slides last week to reference the competitor and we could have crossed off there, blowgun pals and I think it feels like we're in a similar place. Near term impacts feel massively exaggerated to me. True level 5 autonomy, so level 1 not much autonomy in the car at all, maybe a bit cruise control. Level 5 you can curl up in the back of the car and go to sleep. I think we're a very, very, very long way from level 5 autonomy. We think cars with a meaningful degree of autonomous capability are going to be less than 5% of new car sales by 2035. It's the best research we've seen on that. Importantly, the average car age in the UK is 10 years old and ageing. These people don't want to buy electric cars particularly. If you've got a good petrol car, you tend to try and hang on to it. so a material impact on the insurance market as in when a truly automated AV becomes a large part of the car park feels decades away I would say this is certainly not a near-term near-term risk and that assumes there's a customer demand for full-time level 5 autonomy in the first place. Personally I would get bored to tears if my hour to journey each way to work involved me just sitting there fridging gently car sick trying to read a report. So I don't think that's at all certain. Clearly everyone would like autonomy going up the M6 in the traffic jam, that makes all sorts of sense. The first and the last mile I don't think makes so much sense for level 5 autonomy. The legislative framework requires individuals to insure those vehicles and for us to recover from the manufacturer. if we think the vehicles at fault and therein lies a really interesting question of there is no mechanism yet to capture that data from the manufacturer so we need near real-time instant who was driving was a vehicle in charge of we in charge those mechanism need to go in place without that there's going to be an enormous transition friction for the industry as we we argue an arm wrestle with manufacturers But no one's talking about autonomous motorbikes, which I guess is a way of saying there are other things out there to insure as well. So even if our successes are sitting here in 30 years time, I think the world will develop, e-bikes are becoming bigger, there's all sorts of other personal transport modes coming through, we're not going to run out of things to insure. so yeah I think autonomous automated vehicles definitely going to be a role for sort of robo taxis in the in the mile to zone 1 zone 2 maybe and in big cities struggle to see that in the country and I struggle to see personal individual vehicles being a massive significant part anytime soon also I guess impossible to do a presentation without talking about AI recently We've been using their elements of AI for many years. We have a very skilled, very dedicated team in Sabre. I guess we're looking at four main use cases for AI. Some of these are in place, some of them are in trials, some of them are being rolled out. One of those is coding support in pricing. So we already use machine learning techniques in our pricing. There's new tools coming through like Claude. All of those we're investigating until they add value to our pricing approach. We're going to enhance the skilled human efficiency. so if I take Trevor's team for example when a very thick medical report comes in useful to get someone to scan that and pull out instantly the very big injuries that allows us to put an even more accurate reserve on very quickly so that's enhancing the human skills of claims handling chatbot development for direct customer service and preparing for possible medium-term distribution changes which we'll talk about more in the next slide We're also very thoughtful about the risks that get presented by AI. So advanced phishing, phishing is one of the biggest cyber risks most businesses face. AI helps with that from the bad boys point of view. Unintended consequences, modified claims evidence can come through and regulatory change. I think my current favourite story here is the man who was trying to wire up his Robo vacuum cleaner to his Playstation controller and inadvertently gained control of the other 7,000 vacuum cleaners in the world including access to the camera. That sort of shows the things that can happen. I've seen a demonstration recently where a firm demonstrated how they could access the car controls but all they were able to do, although they did them that day, was to make the indicators go on and often make the windows go up and down but they made it very clear they could have controlled a lot of other things had they wanted to. If you want to scare yourself go and look at the common bits of electronics between a household appliance and a car. so one of the risks here is someone doesn't try and hack a car at all they try and hack a fridge freezer and at the same time they inadvertently hack a car so there's quite a lot we need to watch around automated vehicles AI and how this might roll out in the future I think AI may impact the industry we think if it's going to impact anywhere it's probably in distribution not as a product manufacturer as we mentioned earlier if you haven't got any data you still can't use AI to optimize it a distribution I think different in the UK potentially compared to other European countries the PCW solution works incredibly well for most customers in terms of a one-stop shop to compare the market customer interaction may evolve for some cohorts into people using AI generated search rather than search engine optimization generative engine optimization and we're making sure we're positions that we can open up our quotation systems wherever a customer wants to go so if we do see a part of the population want to quote through AI we'll be ready to accept those quotes on a direct basis that does lead to some challenges one which is data accuracy when we go live on a new comparison website we spend an enormous amount of time making sure the data maps across correctly from the price comparison website into our system so we're pricing accurately how is that going to work with an AI engine which we know can hallucinate already some of the answers customer understanding if you've just said go and buy me the best policy what's going to happen when you try and make a claim and that policy wasn't the policy you thought you were buying how is that going to flow through payment processes are you going to trust putting your credit card in and just say go and buy me a car insurance policy or holiday or anything else so there's a customer issue there the payment process issue an interesting one could be product disaggregation So at the moment obviously a lot of companies make a lot of money from cross-selling and up-selling ancillary products. How will that work if you say go and buy me a product with breakdown and personal accident and key cover attached to it if the AI can buy those products from different suppliers. Regulation, how is the regulator going to feel if someone hasn't signed a form, hasn't confirmed that they know what the policy is they're buying. So there's a whole bunch of stuff here that means this isn't going to happen very quickly and there's some stuff to be worked through first we think we're well positioned we make the vast majority of our profits through underwriting through a product manufacturer rather than distributor at heart we're well used to partnering with a variety of distributors we have over a thousand brokers that we partner with and having conversations on a weekly basis with what I might describe as the next generation of brokers who feel they are generating AI enabled engines that they may embed into other sales processes we're always happy to talk to people and understand how that might work for us and where focus internally is to make AI complement to our existing skill set. So we see AI as an opportunity for us, not a threat, I would say. Pricing. Well, I guess the simplest, I mean, and thank you to Geoff for starting to use this slide. We think the market's been underpriced and has been for quite some time. Listening to commentary recently, it feels like other people are in the same opinion and there's a lot of talk of pricing needing to move. We think, if you look at this graph on the far right hand side, there's a meaningful delta between where claims are and where premium is. We haven't allowed that to happen at Sabre. We've continued to fully cover claims inflation all the way through the last few periods and that's what's opened this drive growth now. Claims inflation we think has actually moderated. Last time we spoke I think we were at high single digit, we're now at mid single digit. So what are the key drivers of claims costs? We still need to be careful about care costs and wage inflation. Increasing complexity of car parts, so as autonomous vehicles roll out, frequency might come down but severity will probably go the other way. These cars are very expensive to fix. Used car prices are stabilised and costs of compensation victims of uninsured drivers are still going up. there's some interesting stuff in the industry for things like e-bikes are not insured but they do get picked up by the MIB which we all have to contribute to there's some interesting claims pressures coming through claims frequency we're seeing a drop in frequency we think it's settled we don't think it's carrying on going down we think it's reached a new level Interesting question of is that because of increased safety or is it because people didn't want to claim because they'd seen very high premium increases in 23 and Chose not to put their NCD at risk or not to so they were self insured for a period If it is behavioral and people do start to claim again, you may see frequency tick back the other way again So that's something that we're watching very closely. I Guess we should touch on the current conflict in Iran, which obviously is awful for all the people involved and From our perspective we think there may be some impact on gas, well anyway there will be some impact on gas and energy prices if it goes on. That's not a first order issue for us and it's not a significant issue for us. Very different to the situation in Ukraine and we'll happily do all that in Q&A in terms of some more background on why we think this feels so different. But we don't see that as dramatically changing our view of claims inflation in the near to medium term. Legislative developments, good news here, the UK government task force came out and basically said they felt the UK market performed well, was competitive and innovative and that the cost pressures driving premium had been formed by external factors. Similarly the premium finance has taken a view there's no market-wide intervention and they'll deal with outliers individually. We try and keep our APR very much in the middle of the pack. We have no wish to be taking advantage of customers or to be above the parapet on that one. so outlook and summary profit up really well and vision 30 on track we've returned to growth we mentioned we're growing into this start of this year up to the end of February the last numbers we're quoting and this year we expect to grow premium and profit compared to last year so growing the top and the bottom line this year with our margin remaining within our target range what I would say is I think our staff have done a fantastic job this year some of them are sitting in the room today at the back there so you know the pricing team have done a great job in terms of getting the developments moving claims they've done a great job controlling costs all the support teams have done a brilliant job this year of course to keep us moving to deliver on the core business and get ambition 30 firmly on track as well at that point I will pause and we're now ready to take any questions at all I think you were just about there sir if that's okay I should say if you're watching online if you put any questions into the webcast they'll appear as if I buy magic beside me, apparently.

Morning, it's Abed Hussain from Pamela Lieberman. I've got three questions if I can. The first one on pricing, I think some of your peers said last week, some of the larger peers, that they expect pricing to increase over the rest of this year. You said something similar this morning as well. I'm just wondering What does it actually take for for pricing to move up because I know there's long tails of insurers and whilst pricing should increase what will it actually take for it to increase and to reflect that claims inflation so that's the first question The second one is on the new strategy rollout. Can you just give us some more colour in terms of where you are on the car insurance bit of the rollout into the broader footprint and when do you expect that to impact the bottom line? And then just finally on the Iran conflict, I think you said that there's a real read across from the Ukraine-Russia conflict. Can you just sort of talk to why there isn't any?

Yeah, of course. I'll take the first one, then maybe Matt and Trevor. So, what does it take for prices to increase? Well, I guess... Combined ratios going past 100% is always a bit of a mark. A lot of external surveys have combined ratio for the market going to 110% or so this year. It doesn't feel unrealistic with where pricing's been compared to where claims inflation is. I think what it takes is people to stop talking about it and start changing prices fundamentally. We've put our money where our mouth is for the last two years. We've taken the volume hit to make sure we price properly. We can only control our own our own destiny on that one but it does draw like people are talking about it and hopefully that that translates into interaction.

Matt do you want to say anything a bit more on Ambition 2030? On Ambition 2030 the IHP rollout continues through brokers during Q4 last year we started our price testing on the expanded competitive footprint for car and van It's currently in a test and learn phase, so kind of test, learn, refine and we continue to do that at the start of this year and that will continue through most this year for more growth in that segment over the coming years.

I guess the similarities are that there's been an impact on energy or on oil and gas from both for slightly different reasons The Ukrainian invasion, that really caused problems to the supply chain. So we had the semiconductor issue, wiring harness issues, and that was really driving inflation. If you remember, new cars couldn't be produced, so residual values on used cars were very, very strong, if not inflationary. and those factors all sort of very strongly fed into RBI. We don't see Iran and the surrounding areas as being those centres of manufacture in the same way. The Suez which is a sort of obviously a main distribution route has been circumnavigated now for quite some time by a lot of the supply chains. They've also moved away from having a solar manufacturing zone post Ukraine. So at the moment, we're not seeing or foreseeing those same impacts that we saw before.

Hi, thank you very much. It's Ivan from Barclays.

My first question would be on growth. I mean you're suggesting that in the first two months of the year. We're talking about five percent growth If indeed the market does accelerate and the applying price and you've been ahead of that Maybe you can talk about you know, how much can you accelerate and separately? Because the motorcycle now seems to have been fixed You know the direct brand rolled out How much do you think that could contribute to growth? Because right now it's about 5% of your top line. Could it double in absolute terms for the year? And my second question, well, I don't want to be picking up on what you said too much, but I think in your introduction you suggested that the combined ratio and the loss ratio is as low or better than you've hoped. And yet your margin is in the middle of the range, sort of, you can even say towards the lower end of it. I'm just wondering where you think Improvements can come through through the components of your combined ratio. Is it expenses? Do we need just to see more volumes going through and maybe finally just to pick up on the Iran point I wanted to check as we go back to the previous instances of Fuel price shocks. Do you notice any visible reduction in miles driven and can that be? somewhat of an offset in terms of frequency I

yes we would expect frequency to be an offset potentially to any claims inflation costs it's hard to point directly at a comparative because we can't find a completely clean period where you only had fuel prices going on but yeah I think I'm absolutely with you if we do see fuel buzz you would expect driving miles to come down therefore frequency to fall as well On the bike question, I think we always said that we thought bike would be realistically maybe 20 million. Didn't seem an unrealistic target. I think we'd still say that doesn't feel too mad to us. It's going really well. And if we can write more than that, we'll write more than that. If we hit our target margin at a certain volume, we'll stop there. But I don't think 20 sounds ridiculous at all. How much can we accelerate? That was on the car question, wasn't it?

Do you want to say anything more on that one? We've covered the inflation in our rating so we're kind of writing out our target margins for car that means if the market does put a significant rating above inflation there's a potential opportunity for us to grow slightly similar to what we saw in 2023 when the prices took off.

Yeah, that's exactly right. So we don't have to cover a delta. We think the industry needs to cover the delta and then it needs to cover forward-looking inflation of 5%. So we only need to cover the forward-looking element. There's no delta to fill with us. We think there is for probably most other people. So there is a chance of quite high growth coming through. The margin question, Adam, do you want to take that one?

Yeah. I guess motor, it probably wouldn't be necessary or desirable to get a loss ratio better than we currently have this year which is around 50% it can be a bit volatile year on year so it could go up or go down but that certainly I wouldn't look to see any massive improvements in motor into the future motorcycle and taxi are clearly that bit higher, and I would hope they would come down more towards our target loss ratios as time goes on. The expense ratio has gone up this year. As I said, premium is lower. We've had a lower in premium, and that's come through in this expense ratio. I expect that to continue to be the case for a while as we sort of have that earning catch-up relative to expense inflation, but I do see over the sort of ambition 2030 period certainly that that expense ratio does improve as we start to get the benefit from leverage and keep a cap on our on our costs so I mean we've given ourselves a range of margin target because it allows what naturally happens in insurance which is loss ratios to move about a bit expense ratio is a bit more predictable but I think we're not sort of calling a big move sort of up in our margin range it's quite a comfortable place where it currently is and we'll sort of see how the market develops and react accordingly to that

What I would say just as we should also always be aware that while bike and taxi are small and growing accounts a couple of large losses can have an outsized impact in any one period so there's every chance we might at some point while they're still growing get a bad year followed by a really good year we're looking through the middle and saying what does our rating strength and structure look like into the medium term.

Hi there, Ben Cohen at RBC. I had two things that I wanted to ask you please. First it was just about the mix in 2025 on the motor vehicle. It looks like you know the average premium was down sort of double digits and you talked about putting through I guess mid to high single digit claims inflation could you talk about what has happened on the other side that we've ended up with a pretty significant decline in average premium and the second question was just on the reinsurance recoveries in the year it looked like there was a big increase both in terms of receivables but also just in the P&L what drove that and does that have any implications for the cost of your reinsurance going forward thank you

I'll take the first one, maybe Adam or Max will take the second. I guess on average premiums it's really quite simple, we just become more competitive for cheaper premiums. So we think of the word as a Venn diagram, that Venn diagram closes up a little bit and we become more likely to convert between £800 and just the ones at £1,000. Is there anything to add?

Should I start on the mechanics of the reinsurance then? Maybe you can give some content on what's happening. So we do have this sort of gross position and the net position. Clearly the net position is what impacts RP&L and the gross position reflects the impact of large claim movements. It is generally very volatile. So we'll see years where that is very small and years where it's very big. In this year, the gross has moved down and that's been swallowed by the reinsurance and that's why the recoverable is that much bigger. in a one-year period it doesn't tell you a huge amount about what's gone other than that it's just a quite a volatile number which obviously is why the insurance program is there in the first place. Do you guys want to mention anything on the on the program itself?

Well I think we're not anticipating any adverse impact from that in terms of our insurance renewal.

so we saw the market saw some pretty significant reinsurance premium reductions in January probably over 10% across the piece we have our renewal on the 1st of July and we'd be hopeful of something similar that's not yet in our numbers definitely saw your hand keep going up there

Yes, hello, Amelia from Deutsche Bank. Thank you for taking my question. I just have two. If I think about the solvency ratio, I mean, given sort of capital consumption in any given year and the growth that you want to achieve with Ambition 2030, how should I think about the solvency growth in a given year and that's sort of in terms of solvency points? and then I appreciate you spoke about autonomous vehicles and the impact on on motor and motor bikes but what about taxi I would appreciate sort of any any comments around that in particular given sort of the big companies testing taxis for example in in central London yeah thank you I'll take the second one Adam you can then take the much more difficult one on solvency

so taxes yeah I think absolutely there must be an impact in the inner city bits something like Waymo having done a bit of research on this fairly recently is doing extensive mapping of the streets so it's not just relying on cameras it's actually mapping the routes it's mapping that would be an enormously expensive thing to do outside a fairly tight part of the city centre they're interesting there's there's some behavioural stuff here you fancy enjoy yourself you see a Waymo just step out in front of it and see what happens because it just stays there and doesn't do anything you know they're not hard to bully as a car because they're programmed not to do anything dangerous so it's going to be quite an interesting part there if you're a black cab driver you're going to get around a bit quicker when there's a Waymo waiting for you to move so I do think it's going to have an impact you must have an impact in city centres controlled you know London is different to some of the grid systems in the states it's much more difficult intuitive how you get around we'll see how that goes much longer to impact country towns I would have thought on that sort of thing Adam, is that giving you time to think of a good answer on solvency?

Almost enough, yeah. I think when we came out with the Ambition 2030 strategy in December 2024 and in the subsequent results, we were quite clear that one of the good things about this strategy is that it doesn't really use a huge amount of capital. We're still writing business at great margins. That business brings capital in and the capital requirement potentially catches up over time. We also said that the kind of 100% of earnings distributions that we'd had going up to that point were driven by very specific reasons and we would normally expect that amount of sort of maximum distribution to be lower to maintain a capital at a decent pace and indeed to look at the dividend this year and it's in the high 80% of profit which is a bit more sustainable. that remains the case over the long term so you know this business should be capital generative it should allow us to be able to distribute a good amount of that and sort of keep the flow of dividends going what we've seen this year is a couple of things one is that the Solvency capital requirement has increased as it will do it'll do it in kind of fits and spurts because it is a little bit volatile and depends on things like the settlement rate claims and all kinds of things that aren't necessarily related to earnings but over the long run that's fairly predictable We've also demonstrated that we're very happy to operate within that range That's why the range is there because the capital position can be a little bit volatile. We've got this 140 160 percent range 140 percent is the floor not 160 percent and so this year we came in we paid we agreed the dividend that was 161.5% of capital at that point we then decided to propose a buyback which took us down to 154% which is a very very comfortable place you know there's no concerns on some capital constraints at that level and it clearly indicates that we're looking to generate further capital through 26 as we write whatever we do during that year

Hi, I'm Darius Lukaskos, KBW. Congratulations on a good set of numbers today. Two questions please. So the first question is on your inflation expectations changed from 7% to 8% to 5%. I'm wondering if you can give us any colour on how many months of sort of business written at that high inflation you've got in the back book that says to earn through? That's the first question. The second question is I'm just sort of trying to reconcile the bigger picture. I understand the detail and everything but if I step back The industry is saying that the UK motor market is at its lows and the combined ratio is terrible and it needs to turn. And here we are with Sabre being competitive right at the bottom and growing. What am I missing? I get the detail, but why now is a good time to grow? Because everyone else is saying it's a terrible business, needs to improve. And Sabre is saying, well, it's a great business for us, we're writing it.

yeah so I'll take the second one I guess we've been feeling a bit lonely for the last two years saying that the market's been in a terrible place and people should be pricing properly and this is I guess a bit of a counter cyclical impact to that we've priced properly for the last two or three years we've not let ourselves get into that Delta we've said going all the way back to our IPO our strategy is if we're prudent and cautious on pricing when the market starts to turn we spin off some really good margins from Business Rewritten which goes to the first part of your question and it means we have to put prices up a lot less in the market at that point so at the point everyone else I guess it's a bit of a Warren Buffett thing it's the only way I compare myself to Warren Buffett in any way shape or form you know be greedy when everyone else is nervous and the flip side so we stayed very cautious and we thought the market was being too greedy on volume we can now accelerate when when the market's feeling pain that that's exactly what we expect to do as a as a business

Matt there was a question about how many months we got in the banks without giving away too much on pricing and strategy there clearly Yes so at Q3 we talked about inflation being that down to mid single digits therefore you can assume that there's consideration given at that point so we are now pricing and rising our expected loss ratio at that mid to single digits inflation number So I guess we got quite a lot of last year

at the higher inflation number.

Thank you, Andreas from MDPL Hunt. You mentioned in your annual report that there still appears to be poor value in ancillary products across the industry. I just wondered which products are you thinking of where you still see poor value? And the second question attached to that is, do you see any pricing pressure on the ancillary products, either from manufacturers or brokers in 25 and could that continue 26? Thank you.

I think that the fair value rules should smooth some of this out. You have to be able to convince yourself as a business that you're providing fair value to any product that you sell. I do struggle a bit with some of the prices I see charged for maybe something like personal accident. well you know it's been generated at Lloyds and there's been quite a chain the distribution before it gets sold to the end consumer so I do think there's some of those products I suspect the FCA will have on their radar to say are you sure you're providing for fair value and the companies actually justify that those premiums so yeah I haven't seen much on that so far I think the focus has been on premium finance for the last year or so I haven't seen a lot going on with other ancillaries anything else?

So just coming back on reserve releases and you know pricing for a mid single-digit claims inflation since 3Q How should we think about reserve releases going forward then I mean, you know 25 was quite a lot of release compared to for example 24 where you added a bit so just maybe a bit of Guidance on how we should think about that going forward. Thank you.

Sure. I think Adam, do you want to start?

okay I'll start I mean I think I'll say the same thing that I say every year when asked that question it's just that we should be reserving at a best estimate basis and then the releases that we get come through would be the run-up of the risk adjustment at the sort of normal risk adjustment rate this year the reserve release was a little bit more so clearly we've had some favourable development on those claims it would be nice to have continued favourable development but as I say we reserve on a best estimate basis is that fair that's it I've been so Cole you go first you're not

I just had a quick one on the kind of within your core market a motor market are there any pockets of the of the non-standard section where you're seeing maybe a bit more growth opportunities whether that's sort of classic cars or sort of younger drivers or where you maybe seen a bit more dislocation and you think it's there's some attractive room for both thank you

We don't really target any individual sectors in that way, we don't really define a competitive footprint. It's important that we don't do individually our handwritten policies, so the ultra high net worth classic car stuff, that's not really us, that involves individual underwriting, ours is more system driven pricing. Telematics has been astonishingly competitive. through last year that's not a market we're particularly focused on we have taken our first steps back into telematics through a broker called MyFirst this year so that's for the first time in a long time we've taken a look at telematics and we're just feeling our way around that market but that does feel very very competitive for classically sold telematics at the moment so I don't think Matt anything particularly to call out in individual pockets of the core market is we know we're equating and we think we know where we can amend our margin and pick up more business. Ivan did that answer your question or do you have a further one?

Thank you. will follow up would be just firstly on the on the pricing rollouts I mean forgive me if I'm being difficult but we're talking about the impact being meaningful in 2027 but this was rolled out over a year ago or announced as a as a plan I'm just wondering why why it takes so long does it need a different market environments to properly deploy or it just feels like especially now in the world where everything can be developed in in about an hour with AI that is a very long lead. And secondly, also sort of related to new technology, I think something intriguing you said about the cyber risk and the motor insurance. Is it actually something that's covered for new cars? Would it be part of like a standard UK motor coverage?

yeah well I mean yes I mean things can be rolled out now and they can be broken in an hour and a half I guess is the flip side of that so until you've paid the claims or seen some claims with it you don't really know whether you've got your prices completely accurate so it'd be we could go bold we could say we're completely confident we're going to roll this out and then we could be sitting here in a year's time going we got that slightly wrong and we've destroyed all our profits I think it's a cautious rollout and that would be

It's that test and learn approach, we'll do a little bit, we'll analyse it, understand what's going on and work out how we can refine it to improve it going forward. As Geoff said, if it went big bang and we got it wrong, it would be quite painful, so we just need to be sensible, waiting for the long term, not the short term, it's ambition 2030, trying to get it all in one year would be a dangerous move.

Terrorism is a really interesting one. Terrorism is covered by the MIB primarily. I think when is terrorism not terrorism? Someone is trying to hack their robo hoover and accidentally makes every Tesla turn left. Is that terrorism or just some horrible mistake that has happened? They are the sort of untested things in the industry. You are covered by a reinsurance. If it is not terrorism

our insurance picks it up if it is terrorism the MIB pick it up so we're not exposed I guess is the key thing there and what about cyber like you know a failure of car system because of a hacker or something like this failure of I don't know some central depository yeah basically we would whichever you might want to answer that one you'll produce slightly more technical on that

bioinsurance is one incident and if it's as Jeff says if it's declared a terrorism incident then that goes into the central fund of the MIB is it covered yes but there are policy conditions to ensure that you take in all the updates etc that don't get pushed out by the manufacturers yeah anything else I'm conscious we are pretty at time

Thank you very much for bearing with us during whatever was going on with the screen earlier. I'm still very happy about the West Ham result if you want to hang around afterwards. So thank you for your time and thank you online as well. Thanks a lot.