(Alliance News) - Sabre Insurance Group PLC on Tuesday said profit tumbled by two thirds in 2022 as "extraordinary levels of inflation" hit profit margins.

The Surrey, England-based motor insurance provider reported pretax profit of GBP12.8 million, down 66% from GBP37.2 million a year ago. Profit fell due to pressure on the net loss ratio, resulting from rapid and unexpected inflation due to the war in Ukraine, Sabre said.

The net loss ratio rose to 68.7% in 2022 from 51.1% in 2021. Sabre's combined operating ratio rose to 96.0% from 79.4%. This means its underwriting was barely profitable, as a ratio above 100% indicates losses on underwriting.

The insurer noted that it expects to see an improvement in loss ratios across its motor, motorcycle and taxi business in 2023.

Sabre said gross written premiums were GBP171.3 million in 2022, increasing 1.2% from GBP169.3 million in 2021. The increase was driven by the company's motorcycle and taxi business, it said, noting that its motor book remained suppressed in 2022 due to what it called market-wide under-pricing.

The motor business is expected to return to growth during 2023, Sabre said, if robust market pricing sustains.

The company declared a final dividend of 1.7 pence per share, falling from 4.7p in 2021, bringing the total dividend for 2022 down to 4.5p per share from 13.0p in 2021.

Chief Executive Officer Geoff Carter said: "In recent weeks we are seeing some encouraging evidence of market price increases resulting in weekly premium growth on the Motor line, and we are already benefiting from improving loss ratios across the portfolio.

"As we move through 2023, and earn out the inflation and new-product strain on Motorcycle & Taxi, we are confident we will be able to build the business profitably into the medium-term through a combination of organic growth if market price increases sustain, and our own development initiatives."

Sabre shares rose 1.1% to 97.77 pence each in London on Tuesday afternoon.

By Harvey Dorset, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.