SHARES in car insurers were sent tumbling into the red yesterday after motor insurer Sabre warned over a hit from soaring costs as rampant inflation begins to take its toll on the sector.
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It said this is set to impact its profitability, sending shivers through the rest of the sector on the
Sabre said "extraordinary inflationary pressures" are set to see its combined operating ratio - a key measure of profitability for insurers showing costs and claims as a proportion of premiums - rise to 98.9 per cent in the half-year to 30 June against the more profitable 74.4 peer cent seen a year ago. It is set to re- port first half pre-tax profits slumping to £4.3m from £22.2m a year ago, and said shareholder dividend payments would be capped at a third of the profit after tax for the half-year.
Sabre still expects to pay a dividend overall for 2022, but said it will be at reduced levels before returning to more normal levels in 2023.
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The group has been hiking prices in response - up 19 per cent in the year to date - but this has in turn knocked demand, with gross written premiums on the motor book around 10.6 per cent below the same levels seen a year earlier.
Chief executive
"We believe that taking prudent and assertive action now, in conjunction with our normal pricing discipline, means that we are protecting the underlying profitability of the business, and will allow a rapid rebound to our expected levels of performance."
PA
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