Sabre warns about rising costs of motor insurance claims


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Sabre, a UK motor insurance company, saw its shares fall by a third following a warning from it that inflation was increasing the cost of claims payments and hitting its profits. It also suggested that a cut in its dividend would be possible.

A half-year trading update was posted on Thursday SabreThe annual rise in insurance claims is approximately 12 percent. This means that it is paying more for parts and labour, as well as replacement cars.

The company said these “extraordinary inflationary pressures” had prompted it to put prices up rather than chase volume, meaning that the level of motor premiums it gathered in the period was about a tenth lower than the same time last year.

It expects the combined operating ratio — a key measure of profitability that measures costs and claims as a proportion of premiums — to rise to the mid-90s, in percentage terms, for the full year. This compares to a more profitable 79% in 2021. This year’s dividend is expected to be reduced, before returning to “more normal levels” next year.

The company’s shares fell 34 per cent in early trading in London. The shares of other motor insurance companies were also affected, with Direct Line and Admiral both dropping by almost 4%.

Analysts at Barclays said the level of claims inflation should be “a negative surprise for all motor insurers, and a market hardening should follow”, as it trimmed its earnings targets for the group.

Sabre’s update adds to earlier warnings from insurance executives that inflation is not being reflected in prices. The motor sector is Heading for an Underwriting LossAccording to EY forecasts, this year and the next.


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