Annual Results Presentation 2018

Presenting & Q&A

Geoff Carter - CEOAdam Westwood – CFOTrevor Webb – Claims DirectorJames Ockenden – Chief Actuary

2018 HighlightsGeoff Carter

Financial ResultsAdam Westwood

Market context Geoff Carter

Strategy - reminderGeoff Carter

Summary & OutlookGeoff Carter

Q&AAll

Today’s agenda

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2018 HighlightsGeoff Carter

Financial highlights

OUR ABSOLUTE FOCUS ON PROFITABILITY DELIVERED STRONG

RESULTS AGAINST A CHALLENGING MARKET BACKDROP:

● Leading underwriting performance...

- Loss ratio of 48.5%

- Expense ratio of 22.1%

- Combined ratio of 70.6%

● ...strong profitability and returns...

- Adjusted profit after tax of £50.1m (EPS of 19.9p)

- Return on Tangible Equity of 54.4%

● ...attractive capital generation...

- Solvency ratio of 213%, over our 140-160% target range

● ...maintained flat premium in line with expectations

- Gross written premium of £210.0m in 2018

● …allowing us to announce an attractive total dividend of

20p per share

- 7.2p interim, 12.8p final, including special

LOSS RATIO %

48% 47% 49%

EXPENSE RATIO %

22% 22% 22%

2016 2017 2018

COMBINED RATIO %

69% 68% 71%

2016 2017 2018

2016 2017 2018

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Operational highlights

Product developments

● Continued roll-out of new rating factors● Soft launch of new direct van product (Insure2Drive Van) in Q4 ‘18● Enhancement of Broker based van product in Q1 ‘19

Operational improvements

● Rolling out software robots to enhance customer service and efficiency ● Completed transition to a new hybrid cloud IT infrastructure ● Testing innovative AI / machine learning processes

● Engaged BDO as outsourced internal auditor

Employee satisfaction

● Maintained extremely low levels of employee turnover ● Excellent response to first staff survey – 88% would recommend Sabre as a

good place to work

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Financial ResultsAdam Westwood

Results summary

2018 2017 Change

Gross written premium £210.0m £210.7m (£0.7m)

Net earned premium £188.2m £186.9m £1.3m

Combined ratio 70.6% 68.5% 2.1ppts

Investment return £0.8m (£0.7m) £1.5m

Adjusted profit before tax £61.9m £63.9m (£2.0m)

Adjusted profit after tax £50.1m £53.3m (£3.2m)

Basic EPS 19.9p 14.5p 5.4p

Dividend per share 20.0p 12.7p 7.3p

Solvency coverage ratio 213% 160% 53pps

à Post-dividend 161% 160% 1ppt

Return on Tangible Equity 54.4% 81.8% (27.4ppts)

Return on opening SCR 82.0% 92.1% (10.1ppts)

2018 Summary financial performance● Gross written premium broadly in-line

with 2017

● Slight increase in combined ratio as loss ratio tends towards long-run average, following an exceptional year in 2017

● Underwriting profit remains primarily a function of net earned premium and combined ratio

● Investment return represents net yield on gilt portfolio – no significant changes

● Profit figures reflective of the above, also include the £0.7m amortised cost of free shares issued at IPO, which has no impact on our Solvency Capital

● Return on SCR reflective of profits generated during the year

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59.2% 48.5% 48.5%

10.7%

Current year Prior year Financial year

Leading underwriting performance

46.5% 48.5%

22.0% 22.1%

2017 2018

Loss ratio Expense ratio

2.1pp

● Financial year combined ratio below long-run mid-70’s target, driven by a strong loss ratio

● Current accident-year loss ratio returns to long-run norm as prior-year reserve movements remain high. Level of current-year claims recorded supports our view of having written at a mid-70’s combined ratio during 2018

● Prior-year reserve movement continues to represent run-off of prudence margins and exceptional releases

● No changes to reserving methodology

● Expense ratio relatively flat against 2017, includes amortised cost of free shares issued to staff. Costs remain largely proportional to volume of business written

Combined ratio evolution

Loss ratio breakdown

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Conservative approach to risk

● Investments continue to be held in UK government bonds, in line with our conservative approach to risk

● Investment portfolio managed in house and focused on capital preservation to support our profitable underwriting activities

● Net investment return of £0.8m for 2018 in-line with normal gilt yield adjusted for market value movements

● Low risk investment portfolio complemented by a consistent and conservative reserving policy and prudent use of reinsurance

94.4%

0.1% 5.5%

Gilts

Corporate bonds

Cash

(0.7)

0.8

2017 2018

Investment portfolio breakdown

Investment return evolution (£m)

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Attractive capital generation

● We continue to benefit from strong profitability and an

efficient capital model

● 2018’s adjusted profit after tax was equivalent to 82%

of the opening solvency capital requirement

● Strong capital generation led to a year end solvency

ratio of 213%, managed back within our preferred

operating range by means of a special dividend

● Stated dividend policy from IPO: c. 70% of profit after

tax as an ordinary dividend, with additional

distributions of surplus capital above the Group’s

target 140-160% solvency ratio range

● In 2018 the Group has paid an interim ordinary

dividend of c. 70% of its profit after tax for the first 6

months of the year

50.161.1

2018 Adjusted PAT 2018 Opening SCR

82% return on opening SCR

160%213%

2017 2018 Pre finaldividend

+53pp

Return on opening SCR

Solvency coverage ratio

Total dividend of £50.0m (20.0 pence per share) in respect of 2018.

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Approach to capital management

Our approach

● Prudent approach to regulatory capital with a minimum SCR of 140%● Focus on underwriting discipline generating organic capital - target long term COR of mid-70s

Continued investment

● Continued investment in business to enhance product capabilities and maintain operational efficiencies

Capital distribution

● Ordinary dividend pay out ratio of 70%● Surplus capital beyond top of SCR range of 160% returned to shareholders via special dividends

● Target range of 140%-160% enables more stable returns of capital to investors by supporting dividends during cycle downturns or periods of rapid growth

120.0%

140.0%

160.0%

180.0%

200.0%

220.0%

Capital at 31December 2017

2018 H1 Trading 2018 InterimDividend

Capital at 30 June2018

2018 H2 Trading 2018 Proposed finaldividend

Capital at 31December 2018

160%

179%

161%

49% (30%) 34% (52%)

FY2018 Regulatory Capital Movements

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Strategy and Market Environment 2019 OutlookGeoff Carter

Market context

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2015 2016 2017 2018

ABI Claims Settled Claims DataIndexed Average Claim Costs

Claims exc. Injury All Claims

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000

80,000

Jan-

16Fe

b-16

Mar

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-16

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Aug

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Sep

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Oct

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Jan-

17Fe

b-17

Mar

-17

Apr

-17

May

-17

Jun-

17Ju

l-17

Aug

-17

Sep

-17

Oct

-17

Nov

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Dec

-17

Jan-

18Fe

b-18

Mar

-18

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-18

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l-18

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-18

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-18

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-18

Nov

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-18

Jan-

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CN

F C

ount

MOJ Portal Statistics: Rolling 3 Month Average CNF Count1. MOJ portal – injury frequency is broadly flat

Claims inflation / premium inflation

2. ABI data – settled non-injury claims have been increasing at compound rate of 10.7% annually since 2015

3. ABI – overall settled claims inflation running at 5.6% since 2015

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Sabre view

“Bent Metal” high single digit %

PI frequency flat, severity circa 5%

inflation

Theft inflation > 25%

Overall inflation 6-7%

Sabre current view of market inflation driven by a combination of Bent Metal and PI claims, with Theft now also a meaningful factor

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300

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540

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2012 2013 2014 2015 2016 2017 2018

Average Premium (£)

Market premiums down 1% over 2018 and appear to be lagging claim inflation (6 to 7%)

Premium inflation

ABI motor premium tracker

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2019 – potential market impacts

Possible premiumdeflation factors

• Whiplash reforms

• Ogden discount rate

• New MGA’s launching

• Continued claims inflation

• Competitor margin squeeze

• Lawyer legal reforms response

• FCA pricing review

Possible premiuminflation factors

Sabre Strategy

Continue to price to mid 70%’s CoR, reflectingchanges as they emerge and avoiding speculation

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Possible premium inflation factors

• Focused on inertia pricing and propensity modelling

• Key concern seems to be pockets of vulnerable customers

Possible Impacts• Increase in new business pricing through forced (nearer)

parity between new business and renewal pricing

• Risk of customer redress if companies are found to have acted poorly

FCA Pricing Review

• Claims inflation currently (6-7%) / Premium inflation pretty flat

• Claims inflation driven by increased costs due to technology in newer vehicles & theft

Possible Impacts• If current dynamics continue, potential margin squeeze

across the industry likely to continue

• Still unclear how strongly competitors have reflected current level of claims inflation in premiums

Market claims / premium inflation

Sabre does not utilise inertia pricing or propensity modelling, and prices are calculated purely from

risk factors

Sabre has sought to fully cover emerging claims experience in 2018 and into 2019, maintaining

its underwriting discipline

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Possible premium deflation factors

* Caveated assumption that average PI cost for claims caught by the changes will generate a saving of £30 per policy.

Possible Impacts

• Risk that lawyers adapt behaviours to neutralise planned savings from reforms

• Potential for new non-whiplash claim elements (e.g. hearing related)

• Possible emergence of non-regulated claims management companies (“McKenzie Friends”)

• Associated claims elements not included in reforms, e.g. credit hire

• Inflating claims to drag over small claims limits• No guarantees savings will emerge

Whiplash reforms

(Target implementation April 2020)

Rate likely to move back to a discount around mid-year. Reasonable range of 0 to 0.5%

Possible Impact

• Sabre impact assuming rate moves to 0.5% discount:– Potential £0.7m P&L benefit– Potential modest reinsurance spend saving– Discount rate to be assessed every 5 years.– Only impacts England & Wales – Scotland discount rate expected to be lower

Ogden discount rate

Sabre will continue to focus on “Facts Not Opinions”

and will amend rates as evidence emerges

Sabre continues prudently to rate / reserve on (-0.75%

Discount rate) until any change is actually made

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What has our approach been?

• Sabre has “Walked the Walk” on focusing on profitability not volume

• Prices reduced during start of the year to reflect reduced small BI frequency– Most competitors reflected this in late 2017

• Price increases in H2 2018 to reflect unattractive claims inflation trends

• Sabre believes it has covered claims inflation - minimised negative jaws between claims and premium inflation

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Strategy reminder

Strategy and key business principles

Premium growth across

the cycle

Maintain wide underwriting footprint

Market leading underwriting performance COMBINED RATIO

TARGET

Mid 70%

Strong returns and cash generation

Controlled and attractive growth across the cycle

£70%

BASE DIVIDEND PAYOUT

140-160%

TARGET SOLVENCY RATIO

Return excess capital to shareholders

Continue to develop defensive non-

standard positioning

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“Wide footprint” - Prince Philip crash (Daily Mail research)

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Likely short / medium term scenarios

?

● Potential market margin compression leads to price increases

● Sabre has already taken pricing action, and will therefore be able to grow

● Potential FCA pricing review impacts in addition

Sabre current cautious approach is correct

● Data will demonstrate too much prudence in pricing assumptions, allowing prices to be reduced fuelling growth

● Potential FCA pricing review impacts in addition

Sabre current view is too cautious

• Timing on either scenario is difficult to assess and a range of GWP outcomes therefore remain possible• As pricing ahead of the market, it is reasonable to assume a slower start to the year, accelerating when

the market hardens

• Sabre will return to GWP growth at the appropriate time

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Summary & OutlookGeoff Carter

Summary and outlook

• We remain focused on our long term and well established strategy; prioritizing underwriting profitability over premium growth and centered on a mid 70% COR target.

• This profit focused business model, aided by a bias toward to the higher premium market segments and prudent in year claims reserving, will:

Øallow Sabre to maintain its underwriting profitability

Øcontinue to deliver strong capital generation

Øsupport attractive and sustainable returns to shareholders, through the cycle

• We will consider utilising our capital generation & range as appropriate to support dividends in certain market conditions.

• Having covered claims inflation leaves us well positioned to take advantage of growth opportunities as the market turns, expansion into other “Engine and Wheels” products provides further potential options.

• We are looking forward with confidence.

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Q&A Geoff Carter - CEOAdam Westwood – CFOTrevor Webb – Claims DirectorJames Ockenden – Chief Actuary

Appendices

Reconciliation to KPIs (1)

Adjusted Profit Before Tax2018 2017 2016£'k £'k £'k

Profit before tax 61,363 55,512 63,432Add: Amortisation of goodwill 501 887 1,619Exceptional items - 7,542 -Adjusted profit before tax 61,864 63,941 65,051

Adjusted Profit After Tax2018 2017 2016£'k £'k £'k

Profit after tax 49,568 45,343 52,293Add: Amortisation of goodwill 501 887 1,619Exceptional items - 7,542 -Tax on exceptional items - (482) -Adjusted profit after tax 50,069 53,290 53,912

Loss Ratio2018 2017 2016£'k £'k £'k

Net insurance claims 97,861 92,912 92,721Less: Claims handling expenses (6,536) (6,044) (5,878)

91,325 86,868 86,843Net earned premium 188,235 186,866 182,107Net loss ratio 48.5% 46.5% 47.7%

Expense Ratio2018 2017 2016£'k £'k £'k

Total expenses 35,191 34,994 33,488Plus: Claims handling expenses 6,536 6,044 5,878

41,727 41,038 39,366Net earned premium 188,235 186,866 182,107Expense Ratio 22.2% 22.0% 21.6%

Combined Operating Ratio2018 2017 2016£'k £'k £'k

Total expenses 35,191 34,994 33,488Net insurance claims 97,861 92,912 92,721

133,052 127,906 126,209Net earned premium 188,235 186,866 182,107Combined operating ratio 70.7% 68.4% 69.3%

Solvency Coverage Ratio2018 2017 2016£'k £'k £'k

Solvency II net assets 130,019 97,873 74,283Solvency Capital Requirement 60,995 61,087 57,852Solvency Coverage Ratio 213.2% 160.2% 128.4%

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Reconciliation to KPIs (2)

Solvency Coverage Ratio - Post-Dividend2018 2017 2016£'k £'k £'k

Solvency II net assets 130,019 97,873 74,283Less: Final dividend expected (32,000) - -Solvency II net assets inc. dividend 98,019 97,873 74,283Solvency Capital Requirement 60,995 61,087 57,852Solvency Coverage Ratio 160.7% 160.2% 128.4%

Return on Rangible Equity

2018 2017 2016£'k £'k £'k

IFRS net assets at year-end 265,194 231,993 212,816Less:Intangible assets at year-end (156,279) (156,279) (156,279)Goodwill at year-end - (501) (1,388)Closing tangible equity 108,915 75,213 55,149Opening tangible equity 75,213 55,149 56,813Average tangible equity 92,064 65,181 55,981Adjusted profit after tax 50,069 53,290 53,912Return on tangible equity 54.4% 81.8% 96.3%

Return on Opening SCR

2018 2017£'k £'k

Opening SCR 61,087 57,852Adjusted profit after tax 50,069 53,290Return on SCR 82.0% 92.1%

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Balance sheet

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Claims development

Net insurance liabilities

2010 2011 2012 2013 2014 2015 2016 2017 2018 Total

Accident year £’k £’k £’k £’k £’k £’k £’k £’k £’k £’k

Estimate of ultimate claims costs:

At end of accident year 61,912 94,171 89,901 77,316 74,609 97,288 104,808 106,478 111,433

One year later 69,055 90,742 81,403 64,071 65,639 85,814 93,664 96,446

Two years later 72,475 87,494 75,938 59,301 60,953 81,164 87,824

Three years later 69,649 81,950 73,606 57,739 59,741 77,869

Four years later 68,001 78,509 74,304 56,947 59,008

Five years later 67,100 77,534 72,731 56,892

Six years later 66,926 77,496 72,624

Seven years later 66,791 77,266

Eight years later 66,791

Current estimate of cumulative claims 66,791 77,266 72,624 56,892 59,008 77,869 87,824 96,446 111,433

Cumulative payments to date (65,626) (76,928) (71,408) (53,732) (54,642) (66,638) (70,269) (64,200) (45,986)

Liability recognised in balance sheet 1,166 338 1,216 3,161 4,367 11,231 17,555 32,246 65,447 136,726

2009 and prior 1,326

Claims handling provision 3,502

Total 141,554

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Disclaimer

LEGAL NOTICE

This presentation has been prepared to inform investors and prospective investors in the secondary markets and other

market participants about Sabre Insurance Group plc and its subsidiaries (the "Group") and does not constitute an offer

of securities under any applicable legislation or an offer to sell or solicitation of any offer to buy, or otherwise constitute

an invitation or inducement to any person to subscribe for or otherwise acquire or underwrite, any securities or other

financial instruments or any advice or recommendation with respect to any securities or other financial instruments. This

presentation contains forward-looking statements concerning the financial condition, results, operations and business of

the Group which are necessarily subject to risks and uncertainties because they relate to events and depend upon

circumstances that may or may not occur in the future. For example, statements regarding expected revenues, margins,

earnings per share, market trends and the Group's product pipeline are forward-looking statements. Words such as

"aim", "plan", "intend", "anticipate", "well placed", "believe", "estimate", "expect", "target", "vision", "consider" or the

negative of these terms and other similar expressions are generally intended to identify forward-looking statements.

These forward-looking statements are based upon current expectations and assumptions regarding anticipated

developments and other factors affecting the Group and are not guarantees of future performance. There are a number

of factors, many of which are beyond the Group's control, that could cause actual results or developments of the

Group's business and operations to differ materially from those expressed or implied by these forward looking

statements. Some of those factors are discussed in the Group's Annual Report and Accounts 2018 in the section

headed "Principal risks and uncertainties". Any forward-looking statement is based on information available to the Group

as of the date of preparation of this presentation and the Group cautions against placing undue reliance on any forward-

looking statement. All written or oral forward-looking statements attributable to the Group are qualified by this caution.

Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to

release publicly any updates or revisions to any forward-looking statement contained in this presentation to reflect any

change in the Group’s expectations or any change in events, conditions or circumstances on which any such statement

is based. This presentation may contain supplemental non-GAAP financial and operating information which the Group

believes provides valuable insight into the performance of the Group's business. Whilst such information is considered

important, it should be viewed as supplemental to the Group's financial results prepared in accordance with International

Financial Reporting Standards and not as a substitute for them. Nothing in this presentation should be construed as a

profit forecast.

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