Half Year 2026 Sabre Insurance Group PLC Earnings Call

August 4, 2026

Speaker #1: Thank you very much for joining us and dialing in on this bright and sunny day. I'm pleased to say "bright and sunny" is pretty much how we feel about the half-year results, actually.

Speaker #1: We think it's a good half-year performance, and we're looking forward to explaining why and getting into some of the detail in the next half an hour or so.

Speaker #1: Usual process today: myself and Adam will run through a few slides, and then we'll leave all the difficult questions to Trevor and Matt to pick up at the end.

Speaker #1: So this will be the presentation we'll run through, fairly punchy. We're not going to drag this out too long. We'll run through the top highlights, Adam will run through the financial performance, a bit of a market update, a bit of a strategy update, restate our investment case, and then the outlook.

Speaker #1: And we will, as ever, leave plenty of time for Q&A at the end. So the highlights: I guess for me, strong growth, probably slightly more growth than we expected at this point, and very confident in delivering against our current guidance of a profit slightly higher than last year.

Speaker #1: Probably impressively we've done that ahead of a meaningful market turn in pricing as well. We're looking into the detail a little bit. As I say, very confident in the full-year profit projection.

Speaker #1: Half-year: probably underplaced the progress. I know there's been some focus on the margin. To me, that's just maths. The margin will snap back into line with very, very confident by the end of the year.

Speaker #1: Matt can explain why later. Growth: we don't quite have the market turn, like I say, partly because we've been able to reduce our claims inflation assumption as we discussed in the full-year and the full-year results.

Speaker #1: By coming back from high single-digit to mid-single-digit, that's allowed us to rebase slightly. Importantly, we continue to write completely within our target margins on new business, and we're completely covering our forward-looking claims inflation, which we'll discuss later.

Speaker #1: So financial result: 15% up on the top line. Profit before tax: pretty healthy at this point. Full-year profit: as I mentioned again, anticipate to be ahead of last year.

Speaker #1: All new business being written within our target markets. We're not underpricing to grow by any stretch of the imagination. Strong solvency position. Dividend is fairly mechanical, but hopefully an attractive dividend coming out of the half-year.

Speaker #1: Virtually finished the share buyback. And on strategy, good progress on our ambition 2030. First proof points coming through as motorcycle. And we're also building in more customer enhancements by use of portals and looking at how chatbots can support customers.

Speaker #1: Going forward as well. So at this stage, very happy with where we are at the half-year. At that point, I will leave Adam to talk about the financial position in a bit more detail.

Speaker #1: Then we'll come back and give a bit more context around some of those points. So Adam, if I can hand to you.

Speaker #2: Great. Thanks, Jeff. And good morning, everyone. I'll take you through the financial performance for the first half of 2026. The first half reflects two important themes in the business.

Speaker #2: Firstly, we've delivered a strong and profitable growth, with gross written premium increasing by 15.7% year-on-year to 116 million pounds. Secondly, because insurance premium earns through the life of the policy, the value generated by that growth is not yet fully reflected in the period.

Speaker #2: As a result, profit before tax of 23.9 million pounds is slightly lower than the comparative period, but entirely in line with our expectations. And supports our confidence in delivering a full-year profit slightly ahead of 2025.

Speaker #2: Our net insurance margin was 15.7%, reflecting a net loss ratio of 55.7%, and an expense ratio of 29.9%. The loss ratio remains comfortably within our long-term expectations, whilst the expense ratio reflects lower earned premium from the reduced volumes written during 2025, together with continued investment in people and technology.

Speaker #2: Importantly, the increase in premium written during 2026 is expected to earn through progressively over the remainder of the year. Resulting in a lower expense ratio, and we expect the net insurance margin to return to within our target range of 18 to 22% for the full year.

Speaker #2: Our solvency position remains very strong, at 161.4%, after allowing for the interim dividend and the ongoing 5 million pound share buyback program. That strength has enabled the board to increase the interim dividend in line with our dividend policy by 20% to 4.1 pounds per share.

Speaker #2: This chart provides some additional context around the movement in net insurance margin. As a reminder, the net insurance margin measures the proportion of net insurance revenue retained after claims and expenses, and is our key underwriting profitability metric.

Speaker #2: The principal driver of the reduction from the 19.2% achieved in 2025 to 15.7% in the first half of 2026 is the expense ratio. The expense ratio increased to 29.9%, reflecting the lower earned premium generated from reduced 2025 volumes.

Speaker #1: 0.9%. The loss ratio remains comfortably within our long-term expectations, while the expense ratio reflects lower earned premium from the reduced volumes written during 2025, together with continued investment in people and technology.

Adam Westwood: 1.9%. The loss ratio remains comfortably within our long-term expectations, while the expense ratio reflects lower earned premium from the reduced volumes written during 2025, together with continued investment in people and technology. Importantly, the increase in premium written during 2026 is expected to earn through progressively over the remainder of the year, resulting in a lower expense ratio, and we expect the net insurance margin to return to within our target range of 18% to 22% for the full year. Our solvency position remains very strong at 161.4%, after allowing for the interim dividend and the ongoing GBP 5 million share buyback program. That strength has enabled the board to increase the interim dividend in line with our dividend policy by 20% to GBP 0.041 per share. This chart provides some additional context around the movement in net insurance margin.

Adam Westwood: 1.9%. The loss ratio remains comfortably within our long-term expectations, while the expense ratio reflects lower earned premium from the reduced volumes written during 2025, together with continued investment in people and technology. Importantly, the increase in premium written during 2026 is expected to earn through progressively over the remainder of the year, resulting in a lower expense ratio, and we expect the net insurance margin to return to within our target range of 18% to 22% for the full-year. Our solvency position remains very strong at 161.4%, after allowing for the interim dividend and the ongoing GBP 5 million share buyback program. That strength has enabled the board to increase the interim dividend in line with our dividend policy by 20% to GBP 0.041 per share.

Speaker #2: Because our growth returned strongly in the first half of this year, there's a natural timing mismatch between writing the business and earning the associated revenue.

Speaker #1: Importantly, the increase in premium written during 2026 is expected to earn through progressively over the remainder of the year, resulting in a lower expense ratio. We expect the net insurance margin to return to within our target range of 18% to 22% for the full year.

Speaker #2: Alongside that, we've continued to invest in our people, systems, and technology as we execute on ambition 2030. As those higher premium volumes earned through during the second half, we expect the expense ratio to improve meaningfully, which, along with a strong loss ratio delivered through continued underwriting discipline, will allow the net insurance margin to return to within our target range.

Speaker #1: Our solvency position remains very strong at 161.4% after allowing for the interim dividend and the ongoing £5 million share buyback program. That strength has enabled the board to increase the interim dividend, in line with our dividend policy, by 20% to £4.10 per share.

Speaker #2: Our core strategy remains unchanged. We continue to write business at target margins, and fully cover expected claims inflation within our pricing. And as a reminder, for comparability with previous periods and many of our long-standing disclosures, all of the headline ratios shown here are presented on an undiscounted basis.

Speaker #1: This chart provides some additional context around the movement in net insurance margin. As a reminder, the net insurance margin measures the proportion of net insurance revenue retained after claims and expenses, and is our key underwriting profitability metric.

Adam Westwood: This chart provides some additional context around the movement in net insurance margin. As a reminder, net insurance margin measures the proportion of net insurance revenue retained after claims and expenses and is our key underwriting profitability metric. The principal driver of the reduction from the 19.2% achieved in 2025 to 15.7% in H1 2026 is the expense ratio. The expense ratio increased to 29.9%, reflecting the lower earned premium generated from reduced 2025 volumes. Because our growth returned strongly in H1 of this year, there is a natural timing mismatch between writing the business and earning the associated revenue. Alongside that, we have continued to invest in our people systems and technology as we execute on Ambition 2030.

Adam Westwood: As a reminder, net insurance margin measures the proportion of net insurance revenue retained after claims and expenses and is our key underwriting profitability metric. The principal driver of the reduction from the 19.2% achieved in 2025 to 15.7% in H1 2026 is the expense ratio. The expense ratio increased to 29.9%, reflecting the lower earned premium generated from reduced 2025 volumes. Because our growth returned strongly in H1 of this year, there is a natural timing mismatch between writing the business and earning the associated revenue. Alongside that, we have continued to invest in our people systems and technology as we execute on Ambition 2030.

Speaker #2: I did not include any benefit from IFRS 17 discounting. This slide breaks down the loss ratio into current year and prior year. With the chart on the left showing the performance in 2026 to date, and the chart on the right showing the full year 2025 comparative.

Speaker #1: The principal driver of the reduction from the 19.2% achieved in 2025 to 15.7% in the first half of 2026 is the expense ratio. The expense ratio increased to 29.9%, reflecting the lower earned premium generated from reduced 2025 volumes.

Speaker #2: The overall net loss ratio for the period was 55.7%, compared with 54.1% in 2025. The current year loss ratio was 66.5%. This is a little above the position at the end of 2025, but remains firmly within normal levels of volatility and is consistent with our usual approach to reserving.

Speaker #1: Because our growth returned strongly in the first half of this year, there's a natural timing mismatch between writing the business and earning the associated revenue.

Speaker #1: Alongside that, we've continued to invest in our people, systems, and technology as we execute on Ambition 2030. As those higher premium volumes are earned through during the second half, we expect the expense ratio to improve meaningfully, which—along with a strong loss ratio delivered through continued underwriting discipline—will allow the net insurance margin to return to within our target range.

Speaker #2: At the half-year stage, there is always significant uncertainty around recently reported claims, so the current year position naturally includes the largest level of explicit margins.

Adam Westwood: As those higher premium volumes earn through during H2, we expect the expense ratio to improve meaningfully, which, along with a strong loss ratio delivered through continued underwriting discipline, will allow the net insurance margin to return to within our target range. Our core strategy remains unchanged. We continue to write business at target margins and fully cover expected claims inflation within our pricing. As a reminder, for comparability with previous periods and many of our long-standing disclosures, all of the headline ratios shown here are presented on an undiscounted basis and do not include any benefit from IFRS 17 discounting. This slide breaks down the loss ratio into current year and prior year, with the chart on the left showing the performance in 2026 to date and the chart on the right showing the full year 2025 comparative.

Speaker #2: The prior year loss ratio was a favorable 10.8%. That reflects continued release of explicit margins held against older claims reserves, as those claims mature together with some positive prior year development during the period.

Speaker #1: Our core strategy remains unchanged: we continue to write business at target margins and fully cover expected claims inflation within our pricing. And as a reminder, for comparability with previous periods and many of our long-standing disclosures, all of the headline ratios shown here are presented on an undiscounted basis.

Speaker #2: There have been no unexpected adverse claims frequency or severity trends, and our assumption for claims inflation remains unchanged at a mid-single-digit level. Overall, the loss ratio remains fully consistent with the business being written at our target profitability levels.

Speaker #1: And do not include any benefit from IFRS 17 discounting. This slide breaks down the loss ratio into current year and prior year, with a chart on the left showing performance in 2026 to date, and a chart on the right showing the full-year 2025 comparative.

Speaker #2: So this slide shows the underwriting performance across our three product lines. Motor vehicle continues to be the key driver of profitability, delivering a net loss ratio of 52%, while written premium increased strongly.

Speaker #2: Policy count grew 16.5% year-on-year, demonstrating our ability to grow whilst maintaining underwriting discipline. Motorcycle premium increased by more than 50% compared to the first half of last year, largely reflecting the continued success of Sabre Direct Motorcycle, the product's loss ratio is elevated at the half-year stage, reflecting the effect of individually large claims and normal seasonality within what remains a relatively small portfolio.

Speaker #1: The overall net loss ratio for the period was 55.7%, compared with 54.1% in 2025. The current year loss ratio was 66.5%. This is a little above the position at the end of 2025, but remains firmly within normal levels of volatility and is consistent with our usual approach to reserving.

Adam Westwood: The overall net loss ratio for the period was 55.7%, compared with 54.1% in 2025. The current year loss ratio was 66.5%. This is a little above the position at the end of 2025, but remains firmly within normal levels of volatility and is consistent with our usual approach to reserving. At the half-year stage, there is always significant uncertainty around recently reported claims, so the current year position naturally includes the largest level of explicit margins. The prior year loss ratio was a favorable 10.8%. That reflects continued release of explicit margins held against older claims reserves as those claims mature, together with some positive prior year development during the period. There have been no unexpected adverse claims frequency or severity trends, and our assumption for claims inflation remains unchanged at a mid-single-digit level.

Speaker #1: At the half-year stage, there is always significant uncertainty around recently reported claims, so the current year position naturally includes the largest level of explicit margins.

Speaker #2: Taxi performance improved significantly year-on-year with a loss ratio reducing to 48.2%, whilst premium volumes remained deliberately constrained—this reflects the benefit of maintaining a disciplined approach in parts of the market where pricing remains undetractive.

Speaker #1: The prior year loss ratio was a favorable 10.8%. That reflects continued release of explicit margins held against older claims reserves, as those claims mature, together with some positive prior year development during the period.

Speaker #2: Looking across the portfolio as a whole, the message is unchanged. We're growing where market conditions allow us to achieve target volume where pricing does not adequately compensate us for the risk.

Speaker #1: There have been no unexpected adverse claims frequency or severity trends, and our assumption for claims inflation remains unchanged at a mid-single-digit level. Overall, the loss ratio remains fully consistent with the business being written at our target profitability levels.

Speaker #2: And finally, turning to capital generation. The group continues to benefit from strong profitability and an efficient capital model, generating capital organically whilst maintaining a prudent balance sheet.

Adam Westwood: Overall, the loss ratio remains fully consistent with the business being written at our target profitability levels. Wait for the slide to change. There we go. This slide shows the underwriting performance across our three product lines. Motor Vehicle continues to be the key driver of profitability, delivering a net loss ratio of 52%, while written premium increased strongly. Policy count grew 16.5% year on year, demonstrating our ability to grow while maintaining underwriting discipline. Motorcycle premium increased by more than 50% compared to H1 of last year, largely reflecting the continued success of Sabre Direct Motorcycle. The product's loss ratio is elevated at the H1 stage, reflecting the effect of individually large claims and normal seasonality within what remains a relatively small portfolio. Taxi performance improved significantly year on year, with loss ratio reducing to 48.2%.

Speaker #2: The board has declared an interim dividend of 4.1 pounds per share, up from 3.4 pounds last year, and in line with our stated dividend policy.

Speaker #1: Sorry, the slide to change—there we go. So, this slide shows the underwriting performance across our three product lines. Motor Vehicle continues to be the key driver of profitability, delivering a net loss ratio of 52%.

Speaker #2: Alongside this, the 5 million pound share buyback announced at full-year results is now nearing completion. After allowing for both the dividend and buyback, our solvency coverage ratio stands at 161.4%, which is slightly above our preferred operating range of 140 to 160%.

Speaker #1: While RISEN premium increased strongly, policy count grew 16.5% year on year, demonstrating our ability to grow whilst maintaining underwriting discipline. Motorcycle premium increased by more than 50% compared to the first half of last year.

Speaker #2: That provides substantial flexibility to support growth, investing in ambition 2030, and continue to deliver attractive returns to shareholders. As ever, our capital framework remains straightforward.

Speaker #1: This largely reflects the continued success of Sabre Direct Motorcycle. The product's loss ratio is elevated at the half-year stage, reflecting the effect of individually large claims and normal seasonality within what remains a relatively small portfolio.

Speaker #2: We prioritize underwriting discipline and capital generation, pay ordinary dividends in line with the policy, and return surplus capital where appropriate. And with that, I'll hand back to Jeff.

Speaker #1: Taxi performance improved significantly year on year, with the loss ratio reducing to 48.2%. Whilst premium volumes remained deliberately constrained, this reflects the benefit of maintaining a disciplined approach in parts of the market where pricing remains unattractive.

Speaker #1: Thanks, Adam. So a brief market update. Where's the market pricing to start with? I would say slightly messy would probably be my summary. I think it's pretty clear that more prices needed in the market.

Adam Westwood: While premium volumes remain deliberately constrained, this reflects the benefit of maintaining a disciplined approach in parts of the market where pricing remains unattractive. Looking across the portfolio as a whole, the message is unchanged. We are growing where market conditions allow us to achieve target returns, and we remain willing to limit volume where pricing does not adequately compensate us for the risk. Finally, turning to capital generation. The group continues to benefit from strong profitability and an efficient capital model, generating capital organically while maintaining a prudent balance sheet. The board has declared an interim dividend of GBP 0.041 per share, up from GBP 0.034 last year, and in line with our stated dividend policy. Alongside this, the GBP 5 million share buyback announced at the full year results is now nearing completion.

Speaker #1: Looking across the portfolio as a whole, the message is unchanged. We're growing where market conditions allow us to achieve target returns, and we remain willing to limit volume where pricing does not adequately compensate us for the risk.

Speaker #1: We're seeing evidence people are trying to push that price on. It's maybe not necessarily sticking. So struggling to get a really firm foothold to push on from.

Speaker #1: So clear evidence market pricing needs to go up still. It's definitely stabilized. It's definitely stopped going down. It's definitely inching forward, but quite a lot more to go is our view.

Speaker #1: And finally, turning to capital generation. The Group continues to benefit from strong profitability and an efficient capital model, generating capital organically whilst maintaining a prudent balance sheet.

Speaker #1: We're pretty well positioned coming into this market. We've maintained our rating strength over the last couple of periods. We've priced pretty strongly for claims inflation, so we still see forward-looking claims inflation of 6 or 7% from our current rating base.

Speaker #1: The board has declared an interim dividend of £4.10 per share, up from £3.40 last year, and in line with our stated dividend policy.

Speaker #1: Alongside this, the £5 million share buyback announced at the full year results is now nearing completion. After allowing for both the dividend and buyback, our solvency coverage ratio stands at 161.4%, which is slightly above our preferred operating range of 140% to 160%.

Speaker #1: Clearly, if you've got a bit behind the curve, you may have more to catch up with on that, which we'll talk about in a second.

Adam Westwood: After allowing for both the dividend and buyback, our solvency coverage ratio stands at 161.4%, which is slightly above our preferred operating range of 140% to 160%. That provides substantial flexibility to support growth, invest in Ambition 2030, and continue to deliver attractive returns to shareholders. As ever, our capital framework remains straightforward. We prioritize underwriting discipline and capital generation by Ordinary dividends in line with the policy and return surplus capital where appropriate. With that, I will hand back to Gem.

Speaker #1: So where we are, we see growth coming towards us as the market does eventually get a good foothold and push on with pricing. We can probably increase prices less than the market, given our current price adequacy.

Speaker #1: That provides substantial flexibility to support growth, invest in Ambition 2030, and continue to deliver attractive returns to shareholders. As ever, our capital framework remains straightforward.

Speaker #1: On claims inflation, not a lot of clear evidence yet of anything coming through from the current conflicts. We're looking both at our own data and we're trying to look as far through the supply chain as we can for any early evidence of issues emerging.

Speaker #1: We prioritize underwriting discipline and capital generation, pay ordinary dividends in line with the policy, and return surplus capital where appropriate. And with that, I'll hand back to Jeff.

Speaker #1: So far, not a lot, and we think our current 6 to 7% inflation probably covers where we are. Probably some things to be cautious of around care inflation.

Speaker #2: Thanks, Adam. So, a brief market update. Where's the market pricing to start with? I would say slightly messy would probably be my summary. I think it's pretty clear that more price is needed in the market.

Geoff Carter: Thanks, Adam. A brief market update. Where is the market pricing to start with? I would say slightly messy, would probably be my summary. I think it is pretty clear that more price is needed in the market. We are seeing evidence people are trying to push that price on. It is maybe not necessarily sticking. Struggling to get a really firm foothold to push on from. Clear evidence market pricing needs to go up still. It is definitely stabilized. It is definitely stopped going down. It is definitely inching forward, but quite a lot more to go is our view. We are pretty well-positioned coming into this market. We have maintained our rating strength over the last couple of periods. We have priced pretty strongly for claims inflation, so we still see forward-looking claims inflation of 6% or 7% from our current rating base.

Speaker #1: You may see Andy Burnham talking about the need for care workers to be well paid. Clearly, that will knock through to NHS and potentially care for seriously injured individuals.

Speaker #1: So it's something to watch there as well. Trevor, I'm sure can give some more detail at the end if helpful. Regulatory, probably about as stable as it's been for a very long time.

Speaker #2: We're seeing evidence people are trying to push that price on. It's maybe not necessarily sticking, so struggling to get a really firm foothold to push on from.

Speaker #1: No new market interventions. Government task force concluded that the market added work competitively, and there was no price profiteering going on. As a general rule, we look to maintain a very low regulatory burden anyway, low regulatory risk.

Speaker #2: So, clear evidence that market pricing needs to go up still. It's definitely stabilized. It's definitely stopped going down. It's definitely inching forward, but quite a lot more to go is our view.

Speaker #2: We're pretty well positioned coming into this market. We've maintained our rating strength over the last couple of periods. We've priced pretty strongly for claims inflation.

Speaker #1: We really make our money from underwriting, not from any of the things that might be seen as more controversial. To summarize the pricing piece, this is, thank you to Jefferies for this graph.

Speaker #2: So, we still see forward-looking claims inflation of 6 or 7% from our current rating base. Clearly, if you’ve got a bit behind the curve, you may have more to catch up with on that, which we’ll talk about in a second.

Speaker #1: This really shows where claims inflation has gone and where premiums inflation has gone. And I guess, really, you'd want the premium line to be on top of the claims inflation line.

Geoff Carter: Clearly, if you got a bit behind the curve, you may have more to catch up with on that, which we'll talk about in a second. Where we are, we see growth coming towards us as the market does eventually get a good foothold and push on with pricing. We can probably increase prices less than the market, given our current price adequacy. On claims inflation, not a lot of clear evidence yet of anything coming through from the current conflicts. We're looking both at our own data, and we're trying to look as far through the supply chain as we can for any early evidence of issues emerging. Far, not a lot, and we think our current 6% to 7% inflation probably covers where we are. Probably some things to be cautious of around care inflation.

Speaker #2: So, where we are, we see growth coming towards us as the market does eventually get a good foothold and push on with pricing. We can probably increase prices less than the market, given our current price adequacy.

Speaker #1: Similarly, other market commentators have spoken about the need for a 15-point increase over the next two years. I think some have thought that might be 4% this year, maybe 12 next year.

Speaker #1: Not a position I fully understand. If you think you're heading into trouble, why not put 12 on this year and 12 next year? So market's still got some way to go.

Speaker #2: On claims inflation, there isn't a lot of clear evidence yet of anything coming through from the current conflicts. We're looking both at our own data, and we're trying to look as far through the supply chain as we can, for any early evidence of issues emerging.

Speaker #1: As I mentioned, we're not seeing the need for this to come through to drive growth, and we don't need this price to hit our margins going forward.

Speaker #1: So maybe a little frustrating the market's not moved quicker, but we're still trading perfectly nicely through it. A strategy update. So ambition 30, I guess a lot of people on the call will understand the intention of ambition 2030.

Speaker #2: So far, not a lot, and we think our current 6–7% inflation probably covers where we are. There are probably some things to be cautious of, especially around care inflation.

Speaker #2: You may see an Andy Burnham talking about the need for care workers to be well paid. Clearly, that will knock through to NHS and potentially care for seriously injured individuals.

Geoff Carter: You may see Andy Burnham talking about the need for care workers to be well paid. Clearly, that will knock through to NHS and potentially care for seriously injured individuals. Something to watch there as well. Trevor, I'm sure, can give some more detail at the end if helpful. Regulatory, probably about as stable as it's been for a very long time. No new market interventions. Government task forces concluded that the market added work competitively, and there was no price profiteering going on. As a general rule, we look to maintain a very low regulatory burden anyway, low regulatory risk. We really make our money from underwriting, not from any of the things that might be seen as more controversial. To summarize the pricing piece, this is Thank you to Arthur Jeffries for this slide, this graph.

Speaker #1: Very briefly, it's to move our profit up to around 80 million. By 2030, by two things. One is to increase our competitive position on core motor, and to increase our general market presence on motorcycle.

Speaker #2: So, it's something to watch there as well. Trevor, I'm sure, can give some more detail at the end if helpful. Regulatory—probably about as stable as it's been for a very long time.

Speaker #2: No new market interventions. The government task force concluded that the market acted competitively, and there was no price profiteering going on. As a general rule, we look to maintain a very low regulatory burden anyway—low regulatory risk.

Speaker #1: On core motor, going pretty nicely. The base IT development's all in place. Further evolution to go over the next few years. The initial pricing Tesla completed, and we're probably about to start getting into some slightly higher cadence and some slightly higher impact pricing tests.

Speaker #1: As we come toward through the end of this year and into next year. On motorcycle, all the IT is in place. Motorcycle customer service is being done entirely online through a web chat and customer portal.

Speaker #2: We really make our money from underwriting, not from any of the things that might be seen as more controversial. To summarize the pricing piece, I'd like to say thank you to Jefferies for this slide.

Speaker #1: Really interesting. We haven't seen any customer any meaningful customer demand for phone-based support here. Clearly, we do phone out where it's required, but most things are sticking within the portal or the chat.

Speaker #2: This graph really shows where claims inflation has gone and where premiums inflation has gone. And I guess, ideally, you’d want the premium line to be on top of the claims inflation line.

Geoff Carter: This really shows where claims inflation has gone and where premiums inflation has gone. I guess really you'd want the premium line to be on top of the claims inflation line. Similarly, other market commentators have spoken about the need for a 15-point increase over the next two years. I think some have thought that might be 4% this year, maybe 12 next year. Not a position I fully understand. If you think you're heading into trouble, one put 12 on this year and four next year. The market's still got some way to go. As I mentioned, we're not seeing the need for this to come through to drive growth, and we don't need this price to hit our margins going forward. Maybe a little frustrating the market's not moved quicker, but we're still trading perfectly nicely through it. A strategy update.

Speaker #1: Motorcycle pricing, we continue to test and reassure and iterate our pricing. But our confidence grows increasingly on that. And we'll be quoting across the entire market probably as we go towards the end of this year.

Speaker #2: Similarly, other market commentators have spoken about the need for a 15-point increase. Over the next two years, I think some thought that might be 4% this year, maybe 12% next year.

Speaker #2: Not a position I fully understand. If you think you're heading into trouble, one, put 12 on this year and for next year. So, market's still got some way to go.

Speaker #1: Inherent within all of this is maintaining our expense base. We can't afford to get sloppy. We want to make sure we keep expenses controlled as we roll out this new strategy.

Speaker #2: As I mentioned, we're not seeing the need for this to come through to drive growth, and we don't need this price to hit our margins going forward.

Speaker #1: So. 2030 is AI. This is something we spent a lot of time looking at as a business over the last six months or so.

Speaker #2: So, maybe it's a little frustrating the market hasn't moved quicker, but we're still trading perfectly nicely through it. A strategy update: so, Ambition 2030. I guess a lot of people on the call will understand the intention of Ambition 2030.

Speaker #1: It's probably got five key areas where it's going to be an advantage to us. The first one is the speed of coding on systems.

Speaker #1: That's our internal systems and potentially our sort of core infrastructure systems. Clearly, coding is much quicker. And that provides new opportunities to us going forward.

Geoff Carter: Ambitions, I guess a lot of people on the call will understand the intention of Ambition 2030. Very briefly, it's to move our profit up to around GBP 80 million by 2030 by two things. One is to increase our competitive position on core motor and to increase our general market presence on motorcycle. On core motor, going pretty nicely. The base IT development's all in place. Further evolution to go over the next few years. The initial pricing tests are completed, and we're probably about to start getting into some slightly higher cadence and some slightly higher impact pricing tests as we come forward through the end of this year and into next year. On motorcycle, all the IT is in place. Motorcycle customer service is being done entirely online through a web chat and customer portal.

Speaker #2: Very briefly, it's to move our profit up to around £80 million by 2030, by two things. One is to increase our competitive position on core motor, and to increase our general market presence on motorcycle.

Speaker #1: AI can support our field checks. So it gives another tool to try and find filters. I would say that's a bit of an arms race.

Speaker #1: So as quickly as we're looking for AI to help us, we know there's a risk of AI-generated images, CCTV images, and still images coming through.

Speaker #2: On core motor, going pretty nicely. The base IT developments are all in place. Further evolution to go over the next few years. The initial pricing test completed, and we're probably about to start to get into some slightly higher cadence and some slightly higher impact pricing tests.

Speaker #1: So it's a bit of an arms race in terms of how we keep on top of that one. The actuarial team just outside my door here are getting very excited about the opportunity for AI to support some of the pricing decisions.

Speaker #2: As we come toward the end of this year and into next year, on motorcycle, all the IT is in place. Motorcycle customer service is being done entirely online through a web chat and customer portal.

Speaker #1: We've got great data, great techniques, great people. AI gives us another tool to put on top of that as well. So I think that gives another boost to our strengths going forward.

Speaker #1: We think AI is going to help on some customer interactions. So certainly, the chatbots at the moment are still manned by people. We see maybe AI having a role there going forward as well.

Speaker #2: Really interesting. We haven't seen any meaningful customer demand for phone-based support here. We do phone out where it's required, but most things are sticking within the portal or the chat.

Geoff Carter: Really interesting, we haven't seen any meaningful customer demand for phone-based support here. Clearly, we do phone out where it's required, but most things are sticking within the portal or the chat. Motorcycle pricing, we continue to test and register and iterate our pricing, but our confidence grows increasingly on that. We'll be quoting across the entire market probably as we go towards the end of this year. Inherent within all this is maintaining our expense base. We can't afford to get sloppy. We want to make sure we keep expenses controlled as we roll out this new strategy. Something that is going to become an enabler for us on 2030 is AI. This is something we've spent a lot of time looking at as a business over the last six months or so. It's probably got five key areas where it's going to be an advantage to us.

Speaker #1: What I would say on that side of things is that for us, AI is all about enhancing people's jobs. We have no plans for redundancies whatsoever.

Speaker #2: Motorcycle pricing: we continue to test, reassure, and iterate our pricing. But our confidence grows increasingly on that, and we'll be quoting across the entire market, probably as we go towards the end of this year.

Speaker #1: We think as we grow, we can hold our staff numbers, but we're certainly not looking to lose people as we go forward. And the final box, really, is we've had a very tight focus on the risks of AI coming through.

Speaker #2: Inherent in all of this is maintaining our expense base. We can't afford to get sloppy. We want to make sure we keep expenses controlled as we roll out this new strategy.

Speaker #1: We obviously seen things recently about AI bots breaking out of their sandbox to hack other companies. We're putting even more effort into the cybersecurity that's both in terms of stopping hacks into us and the risk of leaking customer or company IP out as well.

Speaker #2: So, what is going to become an enabler for us in 2030 is AI. This is something we have spent a lot of time looking at as a business over the last six months or so.

Speaker #1: So lots of opportunities, but we're equally focused on what could be downsides if we are careless. Investment case, very brief, just one slide on the investment case.

Speaker #2: It's probably got five key areas where it's going to be an advantage to us. The first one is the speed of coding on systems— that's our internal systems and potentially our sort of core infrastructure systems.

Geoff Carter: The first one is the speed of coding on systems. That's our internal systems and potentially our sort of core infrastructure systems. Coding is much quicker, and that provides new opportunities to us going forward. AI can support our fraud checks. It gives another tool to try and find fraudsters. I would say that's a bit of an arms race. As quickly as we're looking for AI to help us, we know there's a risk of AI-generated images, CCTV images, and still images coming through. It's a bit of an arms race in terms of how we keep on top of that one. The actuarial team just outside my door here are getting very excited about the opportunity for AI to support some of the pricing decisions. We've got great data, great techniques, great people.

Speaker #1: We think we have some pretty significant competitive advantages. We're very focused pure motor insurer. I think we've got a long track record of delivering near market lead in margins and market performance all plus market cycle.

Speaker #2: Clearly, coding is much quicker, and that provides new opportunities for us going forward. AI can support our fraud checks, so it gives us another tool to try and find fraudsters.

Speaker #1: We have a mindset which is perhaps unusual, that we're prepared to reduce volume when pricing is weak. We will always protect our margin and capital, and that will maximize our medium-term profitability.

Speaker #2: I would say that's a bit of an arms race. So, as quickly as we're looking for AI to help us, we know there's a risk of AI-generated images—CCTV images and still images—coming through.

Speaker #1: We're now really in a position where we see the growth potential. So we've always said we can grow as market rates harden. That's really what we would expect to see going through the next 6 to 12 months.

Speaker #2: So it's a bit of an arms race in terms of how we keep on top of that one. The actuarial team just outside my door here are getting very excited about the opportunity for AI to support some of the pricing decisions.

Speaker #1: Ability to grow further as the market increases. Clear medium-term growth plans through ambition 30. Very low risk balance sheet. No debt. Reinsurance cover at quite a low retention limit to protect the volatility of the P&L.

Speaker #2: We've got great data, great techniques, great people. AI gives us another tool to put on top of that as well, so I think that gives another boost to our strengths going forward.

Geoff Carter: AI gives us another tool to put on top of that as well. That gives another boost to our strengths going forward. We think AI is going to help on some customer interactions. Certainly, the chatbots for the moment are still manned by people. We see maybe AI having a role there going forward as well. What I would say on that side of things is that for us, AI is all about enhancing people's jobs. We have no plans for redundancies whatsoever. We think as we grow, we can hold our staff numbers, but we're certainly not looking to lose people as we go forward. The final box really is, we've had a very tight focus on the risks of AI coming through. We've obviously seen things recently about AI bots breaking out of their sandbox to hack other companies.

Speaker #2: We think AI is going to help with some customer interactions. So, certainly, the chatbots at the moment are still manned by people. We see maybe AI having a role there going forward as well.

Speaker #1: And straightforward investment portfolio. Nothing complicated. We make our money from underwriting, not from taking investment gambles. Attractive income and capital returns. Good dividend yield.

Speaker #2: What I would say on that side of things is that, for us, AI is all about enhancing people's jobs. We have no plans for redundancies.

Speaker #1: All the dividend are fairly straightforward dividend policy. And special dividends and buybacks are now part of our thinking as well where we end up with truly surplus capital.

Speaker #2: Whatsoever. We think as we grow, we hope we can hold our staff numbers, but we're certainly not looking to lose people as we go forward.

Speaker #1: Really, that means ambition 30 is an evolution of what we do today, not a revolution. This is really building on our core strengths rather than taking a big swing by entering perhaps more risky new areas.

Speaker #2: And the final box really is, we've had a very tight focus on the risks of AI coming through. We’ve obviously seen things recently about AI bots breaking out of their sandbox to hack other companies.

Speaker #1: This is really more of what we do today. So outlooks. As promised, let's get this presentation pretty brief and punchy. And I'll keep this outlook and summary equally punchy.

Speaker #2: We're putting even more effort into cybersecurity. That's both in terms of stopping hacks into us and the risk of leaking customer or company IP out as well.

Geoff Carter: We're putting even more effort into the cybersecurity. That's both in terms of stopping hacks into us and the risk of leaking customer or company IP out as well. Lots of opportunities. We're equally focused on what could be downsides if we are careless. Investment case. Very brief, just one slide on the investment case. We think we have some pretty significant competitive advantages. We're a very focused pure motor insurer. I think we've got a long track record of delivering near market-leading margins and market-leading performance through all parts of the market cycle. We have a mindset which is perhaps unusual, that we're prepared to reduce volume when pricing is weak. We will always protect our margin and capital. That will maximize our medium-term profitability. We're now really in a position where we see the growth potential.

Speaker #1: We expect for this year strong growth and confident we're very confident in the four-year guidance. Net insurance margins be back within the range by the end of the year.

Speaker #2: So, lots of opportunities, but we're equally focused on what could be downsides if we are careless. Investment case—very brief, just one slide on the investment case.

Speaker #1: That's just math. That will snap back in again. And ambition 2030 currently on track with the early proof points coming through from the very strong growth in saber motor motorcycle.

Speaker #2: We think we have some pretty significant competitive advantages. We're a very focused, pure motor insurer. I think we've got a long track record of delivering near market-leading margins and market-leading performance through all parts.

Speaker #1: Now, at that point, we will pause. And we're happy to take any questions whatsoever. If you want to stick your hand up, Hanno will unmute you and we'll go from there.

Speaker #2: That's the market cycle. We have a mindset which is perhaps unusual, in that we're prepared to reduce volume when pricing is weak. We will always protect our margin and capital, and that will maximize our medium-term profitability.

Speaker #1: Hanno to you.

Speaker #2: First question is from Ivan from Barclays. So I've got three questions, please. The first one, just on the market outlook and pricing. I was just wondering if you could maybe share a little bit more color of how you think this is going to play out.

Speaker #2: We're now really in a position where we see the growth potential. We've always said we can grow as market rates harden. That's really what we would expect to see going through the next six to twelve months.

Speaker #2: I mean, one obvious question there is there may be a 15 points of price needed, but all the major players seem to still be generating good underwriting profits.

Geoff Carter: We've always said we can grow as market rates harden. That's really what we would expect to see going through the next 6 to 12 months, the ability to grow further as market increases. Clear medium-term growth plan through Ambition 2030. Very low-risk balance sheet, no debt, reinsurance cover at quite a low retention limit to protect the volatility of the P&L. Straightforward investment portfolio, nothing complicated. We make our money from underwriting, not from taking investment gambles. Attractive income and capital returns, good dividend yield. Ordinary dividend, a fairly straightforward dividend policy. Special dividends and buybacks are now part of our thinking, as well where we end up with truly surplus capital. Really that means Ambition 2030 is an evolution of what we do today, not a revolution.

Speaker #2: Ability to grow further as the market increases. Clear medium-term growth plan through Ambition 30. Very low-risk balance sheet. No debt. Reinsurance cover at quite a low retention limit to protect the volatility of the P&L.

Speaker #2: So what will make them push prices up so much at the risk of losing volumes? My second question is actually going to be on the loss ratio.

Speaker #2: So I think what you were talking about is the overall loss ratio is within expectations. But there's, of course, quite a bit of volatility between the current year loss ratio and the PYD.

Speaker #2: And a straightforward investment portfolio—nothing complicated. We make our money from underwriting, not from taking investment gambles. Attractive income and capital returns. Good dividend yield.

Speaker #2: Just thinking into second half, I mean, should we expect the overall loss ratio to stay high because of current year loss ratio reducing or because of reserve release to stay high?

Speaker #2: All new dividends are fairly straightforward dividend policy. And special dividends and buybacks are now part of our thinking as well, where we end up with truly surplus capital.

Speaker #2: And I have a third question as well, please. And this is just on the capital generation. I think we have seen in the past that episodes of strong growth at much the same rate create quite a lot of new capital generation, which is not the case right now.

Speaker #2: Really, that means Ambition 30 is an evolution of what we do today, not a revolution. This is really building on our core strengths, rather than taking a big swing by entering, perhaps, more risky new areas.

Geoff Carter: This is really building on our core strengths rather than taking a big swing by entering perhaps more risky, new areas. This is really more of what we do today. Outlook. As promised, we've kept this presentation pretty brief and punchy, and I'll keep this outlook and summary equally punchy. We expect for this year strong growth, we're very confident in the full-year guidance. To reiterate, profit higher than last year. Net insurance margins will be back within the range by the end of the year. That's just maths. Maths will snap back in again. Ambition 2030, currently on track with the early proof points coming through from the very strong growth in Sabre Direct Motorcycle. At that point, we will pause, we're happy to take any questions whatsoever.

Speaker #2: Maybe you could help us on the what's happening currently and what's your kind of outlook for the next 6 to 12 months there. Thank you.

Speaker #2: This is really more of what we do today. So, outlook. As promised, we've kept this presentation pretty brief and punchy, and I'll keep this outlook and summary equally punchy.

Speaker #1: Yeah, sure. I'll take the first one. Matt, you take the second. Adam, the third, if that's okay. So in terms of pricing, I think pretty consistent views that claims inflation is now mid-single digit.

Speaker #2: We expect strong growth this year and are very confident in the four-year guidance. So, to reiterate, profit will be higher than last year, and net insurance margins will be back within the range by the end of the year.

Speaker #1: I don't think it matters where your profits are at the moment. It's going to go backwards if you're not covering claims inflation on a forward-looking basis.

Speaker #1: I haven't heard anybody say they don't think claims inflation exists. Everything I'm seeing from external commentators suggests our call on this is about right, but you need to be in that 10 to 15 percent range for price increase of the market to stay profitable.

Speaker #2: That's just math. That was math back in again. And Ambition 2030 is currently on track, with the early proof points coming through from the very strong growth in Sabre motor motorcycle.

Speaker #2: Now, at that point, we will pause, and we're happy to take any questions whatsoever. If you want to stick your hand up, our handrail will unmute you, and we'll go from there.

Speaker #1: Clearly, bigger players probably have more reserves. There may be some synergy benefits coming through in some places. I think probably the most uncomfortable place to be will be the squeezed sort of middle, the mid-ranking insurers.

Geoff Carter: If you want to stick your hand up, Hanro will unmute you, we'll go from there. Hanro, to you.

Speaker #1: Where there's no small and specialist, we can afford to be focused. Big means you've got some synergy and probably some other cost savings coming out.

Speaker #2: Hand rail to you.

Speaker #1: The first question is from Ivan at Barclays.

Hanro van Heerden: First question is from Ivan from Barclays.

Speaker #2: Come on, Ivan. Ivan, are you unmuted?

Speaker #1: But I think, Ivan, there's not too much question it rates need to go up across the market. It's more when not if. Matt, do you want to talk about the loss ratio evolution?

Geoff Carter: You went, Ivan. Ivan, are you unmuted?

Speaker #1: I am now. Thank you, appreciate that. So, I've got three questions, please. The first one is just on the market outlook and pricing. I was just wondering if you could maybe share a little bit more color on how you think this is going to play out.

[Analyst] (Barclays): I am now. Thank you.

Ivan Bokhmat: I am now. Thank you.

Geoff Carter: There we are. Okay.

[Analyst] (Barclays): Appreciate that. I've got three questions, please.

Ivan Bokhmat: Appreciate that. I've got three questions, please.

Speaker #3: Yeah. So the question is in two parts, Ivan. First of all, around prior year, movements and then current year movements. So on prior years, we'd expect in the second half this year to continue to see the margins come off.

[Analyst] (Barclays): The first one, just on the market outlook on pricing. I was just wondering if you could maybe share a little bit more color of how you think this is going to play out. An obvious question. There may be 15 points of price needed, but all the major players seem to still be generating good underwriting profits. What will make them push prices up so much at the risk of losing volumes? My second question is actually going to be on the loss ratio. I think what you were talking about is the overall loss ratio is within expectations. There's of course, quite a bit of volatility between the current year loss ratio and the PYD. Just thinking into H2, should we expect the overall loss ratio to stay high because of current year loss ratio reducing or because of reserve releases stay high?

Ivan Bokhmat: The first one, just on the market outlook on pricing. I was just wondering if you could maybe share a little bit more color of how you think this is going to play out. An obvious question. There may be 15 points of price needed, but all the major players seem to still be generating good underwriting profits. What will make them push prices up so much at the risk of losing volumes? My second question is actually going to be on the loss ratio. I think what you were talking about is the overall loss ratio is within expectations. There's of course, quite a bit of volatility between the current year loss ratio and the PYD. Just thinking into H2, should we expect the overall loss ratio to stay high because of current year loss ratio reducing or because of reserve releases stay high?

Speaker #1: I mean, one obvious question there is, there may be a 15-point price needed, but all the major players seem to still be generating good underwriting profits.

Speaker #3: So that seems like the risk adjustments as claims settle. So except some improvement from that. We don't anticipate the selected ultimates reducing further. So any further movement in the prior year loss ratio will be from the margin runoff.

Speaker #1: So, what will make them push prices up so much at the risk of losing volumes? My second question is actually going to be on the loss ratio.

Speaker #1: So, I think what you were talking about is the overall loss ratios being within expectations. But there's, of course, quite a bit of volatility between the current year loss ratio and the PYD.

Speaker #3: On the current year, loss ratio, we did see that we had some large claims in Q1, less so in Q2, which is normal volatility in that top layer.

Speaker #3: We're right in the business. We've been right in the business at our target margins. Therefore, for the second half of the year. But more towards our target range.

Speaker #1: Just thinking into the second half—should we expect the overall loss ratio to stay high because of the current year loss ratio reducing, or because of the reserve release staying high?

Speaker #3: Therefore, in the second half of the year, the overall loss ratio to improve driven by the current year loss ratio coming down.

Speaker #1: And I have a third question as well, please. This is just on capital generation. I think we have seen in the past that episodes of strong growth at the margins that Sabre generates bring quite a lot of new capital generation, which is not the case right now.

[Analyst] (Barclays): I have a third question as well, please. This is just on the capital generation. I think we have seen in the past that episodes of strong growth at the margins that Sabre generates brings quite a lot of new capital generation, which is not the case right now. Maybe you could help us on what's happening currently and what's your outlook for the next 6 or 12 months there. Thank you.

Ivan Bokhmat: I have a third question as well, please. This is just on the capital generation. I think we have seen in the past that episodes of strong growth at the margins that Sabre generates brings quite a lot of new capital generation, which is not the case right now. Maybe you could help us on what's happening currently and what's your outlook for the next 6 or 12 months there. Thank you.

Speaker #1: And Adam, can you take the question about capital generation and growth?

Speaker #3: So on capital generation, I mean, I think what's happened in the first half of the year is sort of within reasonable bands of what's happening with earnings.

Speaker #1: Maybe you could help us with what's happening currently, and give us your outlook for the next six to twelve months there.

Speaker #3: If you look at sort of where the starting point was versus what we've generated in the year and what's happened in the capital requirement, the capital requirement has grown.

Speaker #1: Thank you.

Speaker #2: Yeah, sure. No problem. I'll take the first one. Matt, you take the second. Adam, the third, if that's okay. So, in terms of pricing, I think there are pretty consistent views that claims inflation is now in the mid-single digits.

Geoff Carter: Yeah, sure. No problem. I'll take the first one. Matt, you take the second and the third, if that's okay. In terms of pricing, I think pretty consistent view is that claims inflation is now mid-single digit. I don't think it matters where your profits are at the moment. It's going to go backwards if you're not covering claims inflation on a forward-looking basis. I haven't heard anybody say they don't think claims inflation exists. Everything I'm seeing from external commentators suggests our call on this is about right, that you need to be in that 10% to 15% range of price increase for the market to stay profitable. Clearly, bigger players probably have more reserves. There may be some synergy benefits coming through in some places. I think probably the most uncomfortable place to be will be the squeezed middle, the mid-ranking insurers. They're small and specialist.

Speaker #3: As we've grown, there's a business. Both in sort of the reserves we're holding and the premium we're writing. We would expect a sort of similar trend to continue through the second half of this year.

Speaker #2: I don't think it matters where your profits are at the moment. It's going to go backwards if you're not covering claims inflation on a forward-looking basis.

Speaker #3: We have seen in the past that when premium grows, fairly rapidly, that we get a bit of a boost to capital versus earnings. That might happen.

Speaker #2: I haven't heard anybody say they don't think claims inflation exists. Everything I'm seeing from external commentators suggests our call on this is about right, but you need to be in that 10% to 15% range for price increases in the market to stay profitable.

Speaker #3: Although in the first half of the year, it hasn't happened as pronouncedly as it did in previous years, like 2023, for example. So there's a few things to think about there.

Speaker #3: I think generally, we sort of anchor capital generation on earnings and then take off a bit for capital requirement improvement, increase rather. I think that's probably the best way to think about it for now.

Speaker #2: Clearly, bigger players probably have more reserves. There may be some synergy benefits coming through in some places. I think probably the most uncomfortable place to be will be the squeezed sort of middle—the mid-ranking insurers.

Speaker #3: What does that mean in terms of our policy, well, that's obviously exactly the same. So we think we can comfortably pay an ordinary dividend, 70 to 80 percent of profit after tax.

Speaker #2: Where there's nowhere small and specialist, we can afford to be focused. Big means you've got some synergy and probably some other cost savings coming out.

Geoff Carter: We can afford to be focused. Big means you got some synergy and probably some other cost savings coming out. I think, Ivan, there's not too much question that rates need to go up across the markets. More when, not if. Matt, do you want to talk about the loss ratio, the evolution?

Speaker #3: We expect that there may be some surplus capital and we'll sort of decide what to do with that at the year end. But as always, when I'm talking about solvency, there are quite a lot of moving parts.

Speaker #2: But I think, Ivan, there's not too much question that rates need to go up across the market. It's more when, not if. Matt, do you want to talk about the loss ratio evolution?

Speaker #3: It's very hard to put a sort of good point estimate on it. So thinking about it sort of in the round, that's the way I would think about it.

Speaker #3: Yeah. So the question is in two parts, Ivan. First of all, around prior year movements, and then current year movements. So, on prior years, we'd expect in the second half of this year to continue to see the margins come off.

Matt Wright: Yeah. The question is in two parts, Ivan. First is around prior year movements and then current year movements. On prior years, would expect in the H2 this year to continue to see the margins come off. That's things like risk adjustments as the claims settle. Expect some improvement from that. We don't anticipate the select ultimates reducing further. Any further movement in the prior loss ratio will be from the margin runoff. On the current year loss ratio, we did see that we had some large claims in Q1, less so in Q2, which is normal volatility in that top layer. We'll be writing the business at our target margins. Therefore, for the H2 of the year, we expect loss ratio for current year to reduce back more towards our target range.

Speaker #3: So very comfortable with what we've got, but comfortable with what we think is going to generate in the second half of the year to be able to deliver the kind of capital returns that markets are expecting.

Speaker #3: And we'll sort of see what happens over the next six months.

Speaker #3: So that's things like risk adjustments as claims settle, so we expect some improvement from that. We don't anticipate the select ultimates reducing further, so any further movement in the prior year loss ratio will be from the margin runoff.

Speaker #1: Okay. Hano, who was next?

Speaker #2: Next person is a bid from Panmeer.

Speaker #4: So I have three questions if I can, please. The first one was on the margin. I was wondering if you could help us bridge the half-year net insurance margin back to the 18 to 22 percent range for the full year.

Speaker #3: On the current year loss ratio, we did see that we had some large claims in Q1, less so in Q2, which is normal volatility in that top layer.

Speaker #3: We're right in the business. We've been right in the business at our target margins. Therefore, for the second half of the year, we expect the loss ratio for the current year to reduce.

Speaker #4: Is it just simply the mechanical premium earned through, or do we need some normalization on the loss ratio? I think we've got a few comments probably a bit of both.

Speaker #3: That's more towards our target range. Therefore, during the second half of the year, we expect the overall loss ratio to improve, driven by the current year loss ratio coming down.

Matt Wright: Therefore, through the H2 of the year, the overall loss ratio to improve driven by the current year loss ratio trend now.

Speaker #4: So just any more color on that. And then the second question is on growth. So the motor vehicle policy count drew, I think, some 15 percent since the start of the year.

Speaker #2: And Adam, can you take the question about capital generation and growth? Once you come off mute, that is.

Geoff Carter: Adam, can you take the question about capital generation and growth? Once you come off mute, that is.

Speaker #4: I'm wondering, can it grow further if pricing remains where it is, or do you need pricing now to increase from here? So just any color on that, please.

Speaker #1: I was about to get caught up by that one. So, on capital generation, I think what's happened in the first half of the year is sort of within reasonable bands of what's happening with earnings.

Adam Westwood: I was about to get called out by that one. On capital generation, I think what's happened in the H1 of the year is within reasonable bands of what's happening with earnings. If you look at where the starting point was versus what we've generated in the year and then what's happened in the capital requirement, the capital requirement has grown as we've grown as a business. The reserves we're holding and the premium we're writing, we would expect a similar trend to continue through the H2 of this year. We have seen in the past that when premium grows fairly rapidly, that we get a bit of a boost to capital versus earnings. That might happen, although in the H1 of the year, it hasn't happened as pronouncedly as it did in previous years, like 2023, for example.

Speaker #4: And then the final question is on the motor vehicle NIM. Could you share where that is for the half-year? I think it might be slightly better than the group number, but just any further detail on that would be helpful.

Speaker #1: If you look at where the starting point was versus what we've generated in the year and what's happened with the capital requirement, the capital requirement has grown.

Speaker #1: As we've grown as a business, both in terms of the reserves we're holding and the premium we're writing, we would expect a similar trend to continue through the second half of this year.

Speaker #4: Thank you.

Speaker #1: Okay. Thanks, Peter. I'll take the growth one. Matt, maybe you talk about the bridge. And Adam, talk about the NIM. See how we go on that.

Speaker #1: We have seen in the past that when premium grows fairly rapidly, we get a bit of a boost to capital versus earnings. That might happen.

Speaker #1: Growth, I think I've been done pretty confident we can carry on growing. The market's not turned in the first half dramatically, and we've managed to put on pretty good growth.

Speaker #1: Although in the first half of the year, it hasn't happened as pronouncedly as it did in previous years—like 2023, for example—so there are a few things to think about there.

Speaker #1: The extent of growth in the second half will depend partly on that market movement, but I would be pretty confident we're going to see growth coming through the second half of this year regardless.

Adam Westwood: There's a few things to think about there. I think generally, we anchor capital generation on earnings and then take up a bit for capital requirement increase. I think that's probably the best way to think about it for now. What does that mean in terms of our policy? Well, that's obviously exactly the same. We think we can comfortably pay an ordinary dividend, 70, 20% of profit after tax. We expect that there may be some surplus capital, and we'll decide what to do with that at the year-end. As always, when I'm talking about solvency, there are quite a lot of moving parts. It's very hard to put a good point estimate on it. Thinking about it in the round, that's the way I would think about it.

Speaker #1: I think, generally, we sort of anchor capital generation on earnings, and then take off a bit for capital requirement improvement—increase, rather. I think that's probably the best way to think about it for now.

Speaker #1: Matt, do you want to talk about the bridge between half one and half two margin?

Speaker #1: What does that mean in terms of our policy? Well, that's obviously exactly the same. So, we think we can comfortably pay an ordinary dividend—70 to 80 percent of profit after tax.

Speaker #3: Yeah. So as I mentioned before, we expect the current year loss ratio to improve in the second half of the year. Which should help the margin improve back to our target range.

Speaker #1: We expect that there may be some surplus capital, and we'll sort of decide what to do with that at the year end. But as always, when I'm talking about solvency, there are quite a lot of moving parts.

Speaker #3: As Adam mentioned in the presentation, the premium is expected to be higher in the second half of the year as well, which should help the expense ratio reduce as well, which contributes towards the margin.

Speaker #1: It's very hard to put a sort of good point estimate on it, so thinking about it sort of in the round—that's the way I would think about it.

Speaker #3: The business we've been writing is in line with our targets. Therefore, as our earns through in the second half of the year, we expect that to be earning at our target loss ratio, which again helps us contribute, bring us back towards our target margin.

Speaker #1: So we're very comfortable with what we've got, and we're comfortable with what we think we're going to generate in the second half of the year to be able to deliver the kind of capital returns that the market's expecting.

Adam Westwood: Very comfortable with what we've got, but comfortable with what we think is going to generate in H2 of the year to be able to deliver the kind of capital returns that the market's expecting. We'll sort of see what happens over the next six months.

Speaker #1: And we'll sort of see what happens over the next six months.

Speaker #3: So anything you want to add to that, Adam?

Speaker #2: Excellent. Thanks, Adam. Henrik, who was next?

Speaker #1: No, no, that's completely right. So the expense ratio will be a chunk of the bridge and the loss ratio will pull the gap essentially and hopefully get us to within our target range.

Geoff Carter: Thanks, Adam.

[Analyst] (Barclays): Thank you very much.

Ivan Bokhmat: Thank you very much.

Geoff Carter: Thanks, Adam. Hang on. Who was next?

Speaker #1: Next person is a bid from Panmeer.

Hanro van Heerden: Next person is Abid from Panmure.

Speaker #4: Good morning, David.

Speaker #3: Excellent.

Speaker #1: I've got to say for aid, I should treat factory, that's as wildly confident as you can hope to be. Adam, do you want to be anything on the I think that was asked a bit as well, didn't it?

Geoff Carter: Good morning, Abid. Give you a second to come off mute.

Speaker #2: I'll give you a second to come off mute.

Speaker #4: Good morning. Can you hear me?

Speaker #1: Did I ask for the NIM question? I think.

Speaker #2: We can. Loud and clear.

[Analyst] (Panmure): Morning. Can you hear me?

Abid Hussain: Morning. Can you hear me?

Speaker #4: I hadn't realized you had to manually unmute as well.

Speaker #3: I think where a bit was coming from was if you look at it on a product basis, what the margin might look like for most people.

Geoff Carter: We can. Loud and clear.

[Analyst] (Panmure): I hadn't realized you have to manually unmute as well. Let me see if I can.

Abid Hussain: I hadn't realized you have to manually unmute as well. Let me see if I can.

Speaker #2: That's a hint for everyone else coming to speak as well, then.

Speaker #3: Now, we don't calculate or disclose by product margins. We have a fixed cost base across the entire business. So it's not a number that we report.

Geoff Carter: That is a hint for everyone else coming to speak as well then.

Speaker #4: So I had three questions, if I may, please. The first one was on the margin. I was wondering if you could help us bridge the half-year net insurance margin back to the 18 to 22 percent range for the full year.

[Analyst] (Panmure): I have three questions, if I can please. The first one was on the margin. I was wondering if you could help us bridge the H1 net insurance margin back to the 18% to 22% range for the full year. Is it just simply the mechanical premium earn through, or do we need some normalization on the loss ratio? I think from sort of your comments, it is probably a bit of both. Just any more color on that. The second question is on growth. The Motor Vehicle policy count grew, I think, some 15% since the start of the year. I am wondering, can it grow further if pricing remains where it is? Do you need pricing now to increase from here? Just any color on that, please. The final question is on the Motor Vehicle NIM.

Abid Hussain: I have three questions, if I can please. The first one was on the margin. I was wondering if you could help us bridge the H1 net insurance margin back to the 18% to 22% range for the full-year. Is it just simply the mechanical premium earn through, or do we need some normalization on the loss ratio? I think from sort of your comments, it is probably a bit of both. Just any more color on that. The second question is on growth. The Motor Vehicle policy count grew, I think, some 15% since the start of the year. I am wondering, can it grow further if pricing remains where it is? Do you need pricing now to increase from here? Just any color on that, please. The final question is on the Motor Vehicle NIM.

Speaker #3: However, I suppose if you were to add our normal expense ratio or the expense ratio you received in the first half of the year to the loss ratio for, say, motor, that would take us to around an 82 percent combined across that product, which would okay to a margin in the sort of 18 to 19 percent range.

Speaker #4: Is it just simply the mechanical premium earned through, or do we need some normalization on the loss ratio? I think, from your comments, it's probably a bit of both.

Speaker #3: Obviously, there's a lot more factors you could try and build into that if you were doing it properly. So I think we're pretty comfortable with the margins that we're achieving on motor vehicle, I suppose, is sort of key answer to your question there.

Speaker #4: Is there any more color you can give on that? And then the second question is on growth. So, the motor vehicle policy has increased by, I think, some 15% since the start of the year.

Speaker #4: Yeah, that's what I thought. That's what I was trying to tease out there. That makes sense to me.

Speaker #4: I'm wondering, can it grow further if pricing remains where it is, or do you need pricing now to increase from here? So just any color on that, please.

Speaker #1: Thanks, Bit. Hano, where are we going next?

Speaker #2: Next up is Ben Cohen from RBC. Ben, if you can unmute yourself.

[Analyst] (Panmure): Could you share where that is for the H1? I think it might be slightly better than the group numbers. Just any further detail on that would be helpful. Thank you.

Abid Hussain: Could you share where that is for the H1? I think it might be slightly better than the group numbers. Just any further detail on that would be helpful. Thank you.

Speaker #5: Good morning, everyone. I think you can hear me. I had two questions, please. The first was just in terms of the mix of where the growth in motor is coming from.

Speaker #5: I guess overall it looks like your premium growth is really matching the number of policies that are growing. Does that have any implications in terms of the growth in terms of lower premium policies versus higher premium policies?

Speaker #4: Thank you.

Speaker #2: Okay, thanks, Peter. I'll take the growth one. Matt, maybe you talk about the bridge, and Adam, talk about the NIM. See how we go on that.

Geoff Carter: Okay. Thanks, Abid. I'll take the growth one. Matt, maybe you talk about the bridge, Adam will talk about the NIM. See how we go on that. Growth, I think Abid, I'm pretty confident we can carry on growing. The market's not turned in the H1 dramatically, and we've managed to put on pretty good growth. The extent of growth in the H2 will depend partly on that market movement, I would be pretty confident we're going to see decent growth still coming through the H2 of this year regardless. Matt, do you want to talk about the bridge between H1 and H2 margin?

Speaker #2: Growth—I think I've been pretty confident we can carry on growing. The market's not turned in the first half dramatically, and we've managed to put on pretty good growth.

Speaker #2: The extent of growth in the second half will depend partly on that market movement, but I would be pretty confident we're going to see decent growth still coming through the second half of this year regardless.

Speaker #5: Could you maybe talk about your competitiveness in different kind of subparts of the market? And the second question was just in terms of the motorcycle business.

Speaker #5: I think I took away that despite the fact that loss is kind of increased in the first half of the year on the first half of last year, that you're still quite confident with the new strategy that basically you're going to be moving that into profitability soon.

Speaker #2: Matt, do you want to talk about the bridge between half one and half two margin?

Speaker #3: Yes, so as I mentioned before, we expect the current year loss ratio to improve in the second half of the year, which should help the margin return to our target range.

Matt Wright: Yeah. As I mentioned before, we expect the current year loss ratio to improve in the H2 of the year, which should help the margin improve back to our target range. As Adam mentioned during the presentation, the premium is expected to be higher in the H2 of the year as well, which should help the expense ratio reduce as well, which contributes towards the margin. The business we've been writing is in line with our targets. Therefore, as that earns through in the H2 of the year, we expect that to be earning at our target loss ratio, which again helps us contributes, bring us back towards our target margin. Is there anything you want to add to that, Adam?

Speaker #5: Could you maybe just talk about how you think that is going to come through given that the loss ratios at the moment are running pretty high?

Speaker #3: As Adam mentioned during the presentation, the premium is expected to be higher in the second half of the year as well, which should help to reduce the expense ratio and contribute towards the margin.

Speaker #5: Thank you.

Speaker #1: Yeah, sure. I'll start with the motorcycle one. I mean, I guess in some ways it's simply a function of quite low earned premium in there.

Speaker #3: The business we've been writing is in line with our targets. Therefore, as our earnings come through in the second half of the year, we expect that to be earning at our target loss ratio, which again helps contribute to bringing us back towards our target margin.

Speaker #1: If you have one large claim and not much earned premium, it has an outside impact on the loss ratio. Clearly, as we earn more premium through the second half of this year, that impact will naturally subside.

Speaker #1: Anyway, so we're pretty confident we're writing motorcycle at the right margin. That will all come through as we get towards the year end. Matt, anything you want to add on motorcycle?

Speaker #3: So, anything you want to add to that, Adam?

Speaker #2: No, no, that's completely

Speaker #1: Right. So, the expense ratio will be a chunk of the bridge and the loss ratio will pull the gap, essentially, and hopefully get us to within our target range.

Adam Westwood: No, that's completely right. The expense ratio will be a chunk of the bridge, the loss ratio will pull the gap essentially hopefully get us to within our target range.

Speaker #3: Yeah, I would say on motorcycle, with the half year where it is. Halfway through the peak season of the riding, we tend to see claims more weighted towards the half year for when it actually happened.

Speaker #2: Excellent. I've got to say, for actually two factories, that's as wildly confident as you can hope to be. Adam, did you want to add anything on that? I think that was asked a bit as well, didn't it?

Geoff Carter: Excellent. I've got to say, for a Chief Actuary, that's as wildly confident as you can hope to be. Adam, do you want to be anything? I think that was answered. Did I answer the NIM question? I think you did.

Speaker #3: Therefore, there's less development. So as the year goes on, these claims develop, we get more there'll be less volatility in those claims. Therefore, we can put more confidence in the edible loss ratio.

Speaker #2: Did I ask for the NIM question? I think so.

Speaker #1: I think where a bit of that was coming from was, if you look at it on a product basis, what the margin might look like for most people.

Adam Westwood: No. I think where Abid was coming from was if you look at it on a product basis, what the margin might look like for Motor Vehicle. We don't calculate or disclose by-product margins. We have a fixed cost base across the entire business. It's not a number that we report. However, I suppose if you were to add our normal expense ratio or the expense ratio received in H1 to the loss ratio for, say, motor

Speaker #3: We saw something similar last year where we were at over 100 percent loss ratio at half year on motorcycle. And by year end, that improved.

Speaker #1: Now, we don't calculate or disclose product margins. We have a fixed cost base across the entire business, so it's not a number that we report.

Speaker #3: Down to roughly 70.

Speaker #5: Thanks, Bit.

Speaker #1: And actually, Ben. I think our mix is pretty similar. Clearly, bike is a lower premium. That will start to impact the overall average premium number you might look at.

Speaker #1: However, I suppose if you were to add our normal expense ratio—or the expense ratio you received in the first half of the year—to the loss ratio for the same motor, that would take us to around an 82% combined across that product, which would look like a margin in the sort of 80% to 90% range, obviously.

Speaker #1: We're not seeing any loss in our normal markets. Clearly, as we start to roll our ambition in 2030, that will be slightly lower average premiums.

Adam Westwood: That would take us to around an 82% combined across that product, which would equate to a margin in the sort of 18% to 19% range. Obviously, there's a lot more factors you could try and build into that if you were doing it properly. I think we're pretty comfortable with the margins that we're achieving on Motor Vehicle, I suppose, is the key answer to your question there.

Speaker #1: There are a lot more factors you could try and build into that if you were doing it properly. So I think we're pretty comfortable with the margins that we're achieving on motor vehicle, which I suppose is the key answer to your question there.

Speaker #1: So you should expect to see that natural migration over time. But Matt, I don't know if you want to add on that.

Speaker #3: That's pretty fair.

Speaker #1: I think all I'd say is our general mix for core motor is as expensive the price and basis. And we are seeing that growth on motorcycle from the direct rollouts continuing.

Speaker #4: Yeah, that's what I thought. That's what I was trying to tease out there. That makes sense to me.

[Analyst] (Panmure): Yeah, that's what I thought. That's what I was trying to tease out there. That makes sense to me.

Abid Hussain: Yeah, that's what I thought. That's what I was trying to tease out there. That makes sense to me.

Speaker #2: Thanks, Ben. Henrik, where are we going next?

Geoff Carter: Thanks, Abid. Hanro, where are we going next?

Speaker #1: Next up is Ben Cohen from RBC. Ben, if you can unmute yourself.

Hanro van Heerden: Next up is Ben Cohen from RBC. Ben, if you can unmute yourself.

Speaker #1: Yeah.

Speaker #3: Thank you for the questions, Ben.

Speaker #5: Ben, hi there. Hi, good morning, everyone. I think you can hear me. I had two questions, please. The first was just in terms of the mix of where the growth in motor is coming from.

Speaker #5: Okay. Thank you.

Speaker #4: Thank you very much.

Geoff Carter: Ben.

Ben Cohen: Hi there. Hi.

Speaker #1: Hano, back to you.

Geoff Carter: Hi.

Speaker #2: It seems like the last question is from Cole from.

Ben Cohen: Good morning, everyone. I think you can hear me. I had two questions, please. The first was just in terms of the mix of where the growth in motor is coming from. I guess overall it looks like your premium growth is really matching the number of policies that are growing. Does that have any implications in terms of the growth in terms of lower premium policies versus higher premium policies? Could you maybe talk about your competitiveness in different sub-parts of the market? The second question was just in terms of the motorcycle business. I think I took away that despite the fact that losses increased in H1 of the year on H1 of last year, that you're still quite confident with the new strategy, that basically you're going to be moving that into profitability soon.

Speaker #1: Most of it answered already, but I just had one on AI and whether you see it being used a bit more frequently by just in fraud-related cases and it being used to kind of create some maybe elaborate claims.

Speaker #1: Which perhaps are you hadn't been seen in the past that are kind of linked to these LLM models and is that a trend that you'll see in at all?

Speaker #5: Could you maybe talk about your competitiveness in different sub-parts of the market? And the second question was just in terms of the motorcycle business.

Speaker #3: Sure. Trevor, perhaps you can talk about that in a second. I think we can definitely see AI being used in I'm pleased to say we don't get all that many complaints.

Speaker #5: I think I took away that despite the fact that loss has kind of increased in the first half of the year compared to the first half of last year, you're still quite confident with the new strategy and that you’re basically going to be moving that into profitability soon.

Speaker #3: But you can definitely see AI being used to generate those letters, some of which don't make a lot of sense because it's quite some US case law and all that sort of nonsense.

Speaker #3: Trevor, in terms of where we are in terms of AI in claims we're seeing today?

Speaker #5: Could you maybe just talk about how you think that is going to come through, given that the loss ratios at the moment are running pretty high?

Ben Cohen: Could you maybe just talk about how you think that is going to come through, given that the loss ratios at the moment are running pretty high? Thank you.

Speaker #4: Yeah, so we are absolutely vigilant for it in terms of generation of images. We are still traditionally in a lot of the things that we do in terms of inspecting vehicles

Speaker #5: Thank you.

Speaker #2: Yeah, sure. I'll start with the motorcycle one. I mean, I guess in some ways, it's simply a function of quite low earned premium in there.

Geoff Carter: Yeah, sure. I'll start with the motorcycle one. I guess in some ways it's simply a function of quite low earned premium in there. If you have one large claim and not much earned premium, it has an outsized impact on the loss ratio. Clearly, as we earn more premium through H2 of this year, that impact will naturally subside anyway. We're pretty confident we're right in motorcycle at the right margin. That will all come through as we get towards the year-end. Matt, anything you want to add on motorcycle?

Speaker #2: If you have one large claim and not much earned premium, it has an outsized impact on the loss ratio. Clearly, as we earn more premium through the second half of this year, that impact will naturally subside.

Speaker #1: Physically sending people out to take statements and actually go to the scene of accidents . So we're using those tools to help assist us in identifying potential fraud .

Speaker #2: Anyway, so we're pretty confident we're writing motorcycle at the right margin. That will all come through as we get towards the year end. Matt, anything you want to add on motorcycle?

Speaker #1: And we're very front loaded in terms of our fraud management . I think I would echo what Jeff said around compliance . That's probably where it's most prevalent .

Speaker #1: You may also see that there's quite a lot of commentary in terms of how lawyers have been using AI , not so much in our space , but where they're where AI is generating reference to case law that simply doesn't exist So we're being we're vigilant for it .

Speaker #3: Yeah, I would say on motorcycle, with the half year, where it is halfway through the peak season of the riding, we tend to see claims more weighted towards the half year for when it actually happened.

Matt Wright: Yeah. I would say on motorcycle with H1, where it is halfway through the peak season of the riding, we tend to see claims more weighted towards H1 for when accidents happen, therefore there's less development. As the year goes on, those claims develop, there'll be less volatility in those claims, therefore we can have more confidence in the overall loss ratio. We saw something similar last year where we were at over 100 loss ratio at H1 on motorcycle, and by year-end that improved, down to roughly 70.

Speaker #3: Therefore, there's less development. So as the year goes on, as claims develop, we're getting more information—there will be less volatility in those claims. Therefore, we can put more confidence in the inevitable loss ratio.

Speaker #1: We're we've given out a lot of training in terms of sort of . The features to , to look out for . We're not seeing huge amounts of it , though Thank you .

Speaker #3: We saw something similar last year where we were at over 100% loss ratio at half year on motorcycle, and by year end, that improved.

Speaker #3: Down to roughly 70.

Speaker #1: And Trevor Parsons , you're talking .

Speaker #5: Thanks, Ben.

Speaker #2: About

Speaker #2: And growth in motor, there's no great change, actually, Ben. I think our mix is pretty similar. Clearly, bike is a lower premium; that will start to impact the overall average premium number you might look at.

Speaker #3: It's not really having the conversation . Might be worth a minute on that .

Geoff Carter: Perfect. Growth in motor, there's no great change actually, Ben. I think our mix is pretty similar. Clearly, bike is a lower premium. That will start to impact the overall average premium number you might look at. We're not seeing any loss in our normal markets. Clearly, as we start to roll out Ambition 2030, that will be slightly lower average premiums. You should expect to see that natural migration over time. Matt, anything you want to add on that?

Speaker #1: Yes . So I think what I'd say is having seen a period where claims frequency was improving , we're actually seeing sort of in the most recent periods , claims frequency easing back up again .

Speaker #2: We're not seeing any loss in our normal markets. Clearly, as we start to roll our ambition into 2030, that will mean slightly lower average premiums.

Speaker #1: There was potentially an expectation that as fuel prices went up earlier in the year , that that would have had an impact on frequency .

Speaker #2: So, you should expect to see that natural migration over time. But Matt, Adam, is there anything you want to add on that?

Speaker #1: We've not seen that On the personal injury side , it's pretty flat . So again , it's sort of fell around 2020 for us .

Speaker #1: No, I think that's pretty clear.

Speaker #3: I think all I would say is our general mix for core motor is as expected. The price and trials continue on a very gradual basis.

Matt Wright: No, I think that's pretty clear. I think all I'd say is our general mix for core motor is as expected. The pricing trials continue on a very natural basis. We are seeing that growth on motorcycle from the Direct, Sabre Direct rollouts continuing.

Speaker #1: But we're not seeing we're not really seeing that that come down any further . And I guess sort of linking frequency . We've obviously seen pressure around personal injury , particularly the low value in terms of severity and some of the changes that have come through that we've talked about previously .

Speaker #3: And we are seeing that growth on motorcycle from the direct rollouts continuing.

Speaker #2: Yeah.

Speaker #1: Thank you for the questions, Ben.

Speaker #5: Okay. Thank you.

Geoff Carter: Yeah.

Speaker #4: Thank you very much.

Ben Cohen: Thank you.

Geoff Carter: That answers your questions, Ben, I think.

Speaker #2: Henrik, back to you.

Ben Cohen: Yeah.

Geoff Carter: Thank you.

Speaker #1: It seems like the last question is from Cole from Berenberg, Jeff.

Ben Cohen: Thank you very much.

Geoff Carter: Hanro, back to you.

Hanro van Heerden: It seems like the last question is from Karl from Berenberg, Geoff.

Speaker #2: Okay, Cole, if you can unmute yourself. Perfect. You’ve gone back on mute again.

Speaker #1: So we don't see sort of necessarily good guys coming through on frequency or severity , and hence our our view really that mid digit inflation needs to be needs to be thought about

Geoff Carter: Okay. Karl, if you can unmute yourself. Perfect. You can go back on mute again.

Speaker #1: Can you hear me now?

Speaker #2: Loud and clear.

Speaker #1: Okay, great. Most of the answer already, but I just had one on AI and whether you see it being used a bit more frequently by customers, or is it kind of just in fraud-related cases and being used to create some maybe more elaborate claims?

Speaker #3: Yeah .

[Analyst] (Berenberg): Can you hear me now?

Carl Lofthagen: Can you hear me now?

Speaker #1: Single digit . Yeah

Geoff Carter: Louder and clear.

[Analyst] (Berenberg): Okay, great. Most have been answered already, I just had one on AI and whether you're seeing it being used a bit more frequently by customers, or just in fraud-related cases and it being used to create some maybe elaborate claims, which perhaps you hadn't been seeing in the past that are linked to these LLM models. Is that a trend that you are seeing at all?

Carl Lofthagen: Okay, great. Most have been answered already, I just had one on AI and whether you're seeing it being used a bit more frequently by customers, or just in fraud-related cases and it being used to create some maybe elaborate claims, which perhaps you hadn't been seeing in the past that are linked to these LLM models. Is that a trend that you are seeing at all?

Speaker #3: Thank you . That answer your question Very clear . Thank you . Okay . Thank you . There's one question on the which I've just spotted from Ivan .

Speaker #3: As a follow up , which is can we provide some color on reinsurance renewals ? Price retention and how we should think about gross versus net premiums going forward ?

Speaker #1: Which, perhaps, you hadn't seen in the past that are kind of linked to these LLM models, and is that a trend that you'll see at all?

Speaker #3: Overall reinsurance pricing across the market , reinsurance pricing on Zol seems to have come down a bit in the last year or two .

Speaker #3: Sure. Trevor, perhaps you can talk about that in a second. I think we can definitely see AI being used, and I'm pleased to say we don't get all that many complaints.

Speaker #3: I think probably the reinsurance market had priced pretty heavily for Ogden over the previous periods . And there's a bit of a correction going on in the last year or two to bring some of those prices down a bit .

Geoff Carter: Sure. Trevor, perhaps you can talk about that in a second. I think we can definitely see AI being used. I'm pleased to say we don't get all that many complaints, you can definitely see AI being used to generate those letters, some of which don't make a lot of sense because it was quoting US case law and all that sort of nonsense. Trevor, in terms of where we are in terms of AI in claims we're seeing today.

Speaker #3: But you can definitely see AI being used to generate those letters, some of which don't make a lot of sense because it's quoting US case law and all that sort of nonsense.

Speaker #3: If you've got a decent performing portfolio retention , I think our view is we have , as I think everyone knows , an Excel retention just over a million .

Speaker #3: Trevor, in terms of where we are in AI in claims, what are we seeing today?

Speaker #3: Our general view is we should inflate that gently as the years go by . We're not looking for a sudden jump , but I think we'll just continue to ease up our our retention in future periods .

Speaker #4: Yeah, so we are absolutely vigilant for it in terms of the generation of images. We are still traditional in a lot of the things that we do, in terms of inspecting vehicles physically, sending people out to take statements, and actually going to the scene of accidents.

Trevor Webb: Yeah. We are absolutely vigilant for it in terms of generation of images. We are still traditional in a lot of the things that we do in terms of inspecting vehicles physically, sending people out to take statements, and actually go to the scene of accidents. We're using those tools to help assist us in identifying potential fraud. We're very front-loaded in terms of our fraud management. I think I would echo what Geoff said around complaints. That's probably where it's most prevalent. You may also see that there's quite a lot of commentary in terms of how lawyers have been using AI, not so much in our space, but where they're generating or where AI is generating reference to case law that simply doesn't exist. We're vigilant for it.

Speaker #3: Gross versus net premiums going forward . Adam , do you wanna say anything on that one ? I mean , there's nothing really surprising .

Speaker #4: Expected on gross versus net premiums . We we pay our insurance premium premium basis . So the current sort of net earned premium in any six month period reflects the prevailing rates at the time .

Speaker #4: So, we're using those tools to help assist us in identifying potential fraud, and we're very front-loaded in terms of our fraud management. I think I would echo what Jeff said around complaints.

Speaker #3: Thank you . Adam Anything else ? I'll just pause for a second . Okay . In that case .

Speaker #2: I'm actually appreciate

Speaker #4: That's probably where it's most prevalent. You may also see that there's quite a lot of commentary in terms of how lawyers have been using AI—not so much in our space—but where they're generating, or where AI is generating, reference to case law that simply doesn't exist.

Speaker #3: The questions . Anything you think of I'm very happy to have calls later on today . Where around all today and most of the rest of the week .

Speaker #4: So we're being vigilant for it. We're giving out a lot of training in terms of the features to look out for. We're not seeing huge amounts of it, though.

Trevor Webb: We've given out a lot of training in terms of sort of the features to look out for. We're not seeing huge amounts of it, though.

Speaker #2: Thank you.

Speaker #1: And Trevor, perhaps since you're talking, would you want to talk about where we see claims frequency going at the moment? It's not really topping the conversation.

[Analyst] (Berenberg): Good. Thank you.

Carl Lofthagen: Good. Thank you.

Geoff Carter: Trevor, perhaps as you're talking, do you want to talk a bit about where you see claims frequency going at the moment? It's not really come up in the conversation much. You want a minute on that?

Speaker #1: Mike's got a minute on that.

Speaker #4: Yeah, so I think what I'd say is, having seen a period where claims frequency was improving, we're actually seeing in the most recent periods claims frequency easing back up again.

Trevor Webb: Yes. I think what I'd say is having seen a period where claims frequency was improving, we're actually seeing sort of in the most recent periods, claims frequency easing back up again. There was potentially an expectation that as fuel prices went up earlier in the year, that that would have had an impact on frequency. We've not seen that. On the personal injury side, it is pretty flat. Again, it sort of fell around 2024. We're not really seeing that come down any further. I guess sort of linking frequency, we've obviously seen pressure around personal injury, particularly the low value in terms of severity and some of the changes that have come through that we've talked about previously.

Speaker #4: There was potentially an expectation that, as fuel prices went up earlier in the year, that would have had an impact on frequency. We've not seen that.

Speaker #4: On the personal injury side, it's pretty flat. So, again, it sort of fell around 2024, but we're not really seeing that come down any further.

Speaker #4: And I guess, sort of linking frequency, we've obviously seen pressure around personal injury—particularly the low value—in terms of severity, and some of the changes that have come through that we've talked about previously.

Speaker #4: So, we don't see necessarily good guys coming through on frequency or severity, and hence our view really that mid-digit inflation needs to be thought about.

Trevor Webb: We don't see sort of necessarily good guys coming through on frequency or severity, and hence our view really that mid-digit inflation needs to be thought about.

Speaker #4: A single digit. Yeah.

Speaker #2: Thank you, Cole. I'll ask you a question. Okay, thank you. There's one question on the Q&A which I've just spotted from Ivan as a follow-up, which is: can we provide some color on reinsurance renewals, price retention, and how we should think about gross versus net premiums going forward?

Geoff Carter: Yeah. Thanks.

Trevor Webb: Single digit. Yeah.

Geoff Carter: Thank you, Karl. Does that answer your question?

[Analyst] (Berenberg): Yeah, very clear. Thank you.

Carl Lofthagen: Yeah, very clear. Thank you.

Geoff Carter: Okay. Thank you. There is one question on the Q&A, which I have just spotted from Ivan as a follow-up, which is, can we provide some color on reinsurance renewals, price retention, how we should think about gross versus net premiums going forward? Overall, reinsurance pricing across the market, reinsurance pricing on XOL seems to have come down a bit in the last year or two. I think probably the reinsurance market had priced pretty heavily for Ogden, over previous periods, and there is a bit of a correction gone on in the last year or two to bring some of those prices down a bit if you have got a decent performing portfolio. Retention, I think our view is we have, as I think everyone knows, an XOL retention of just over GBP 1 million. Our general view is we should inflate that gently as the years go by.

Speaker #2: Overall, reinsurance pricing across the market—reinsurance pricing on X or elsewhere—seems to have come down a bit in the last year or two.

Speaker #2: I think probably the reinsurance market had priced pretty heavily for Ogden over the previous period, and there's been a bit of a correction in the last year or two to bring some of those prices down a bit.

Speaker #2: If you want to do some performing portfolio retention, I think our view is, we have—I think everyone knows—an XOL retention just over a million.

Speaker #2: Our general view is we should inflate that gently as the years go by. We're not looking for a sudden jump, but I think we'll just continue to ease up our retention in future periods.

Geoff Carter: We are not looking for a sudden jump, I think we will just need to ease up our retention in future periods. Gross versus net premiums going forward, Adam, do you want to say anything on that one?

Speaker #2: Gross versus net premiums going forward—Adam, do you want to say anything on that one?

Speaker #3: I mean, there's nothing really surprising—expected on gross versus net premiums. We pay our insurance premium on an earned premium basis. So the current sort of net earned premium in any six-month period reflects the prevailing rates at the time.

Adam Westwood: I mean, there's nothing really surprising expected on gross versus net premiums. We pay our reinsurance premium on an earned premium basis. The current sort of net earned premium in any six-month period reflects the prevailing rates at the time.

Speaker #2: Okay, thank you, Adam. Is there anything else? I'll just pause for a second. No? Okay. In that case, thank you all very much for your time.

Geoff Carter: Thank you, Adam. Unless anything else, I'll just pause for a second. No. Okay, in that case, thank you all very much for your time. Appreciate your time. Appreciate the questions. Anything you think of afterwards, I'm very happy to have calls later on today. We're around all today and most of the rest of the week. Thank you very much, and speak to many of you soon. Thank you.

Speaker #2: Appreciate your time. Appreciate the questions. If you think of anything afterwards, I'm very happy to have calls later on today—if we're around—or at other points during the rest of the week.

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Half Year 2026 Sabre Insurance Group PLC Earnings Call

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