Interview: Geoff Carter and Trevor Webb, Sabre Insurance

Sabre executive team
L-r: CEO Geoff Carter; company secretary Anneka Kingan; head of IT Sue Holden; claims director Trevor Webb; head of HR Wendy Bamping. Back: chief financial officer Adam Westwood

  • Competition believe the insurer “should not be allowed to exist” and were left frustrated by lack of ‘how’ in IPO document
  • Focused outsourcing and ‘laser focus’ on 75% COR are among factors linked with success
  • Management talk of being “recalibrated” when they joined Sabre
  • No need to seek a rating, as PRA regulation means it comes under enough scrutiny

A self proclaimed ‘little gem’, Sabre literally went public last year with a London Stock Exchange listing. Jonathan Swift caught up with the management team to get under the bonnet of the non-standard motor insurer

Walk past the Sabre office in Dorking, Surrey, and as its CEO Geoff Carter remarks you would have little or no idea that behind the well-groomed hanging baskets and non-descript façade was the gateway to a publicly listed company with a market cap of  almost £700m.

Indeed, mentioning the words ‘public’ and ‘Sabre’ in the same sentence was an oxymoron until it took its bow on the London Stock Exchange on 11 December last year, such was its aversion to press coverage.

Instead the non-standard motor insurer almost revelled in its obscurity, and billing as the market’s best kept secret. A business that very much kept its cards to itself and consistently recorded the best results in the UK motor market.

“I spoke to somebody just after I joined,” reminisces Carter, who left Tesco Underwriting to join Sabre in 2015, initially as chief operating officer. “A very senior and successful executive and they said Sabre should not be allowed to exist; it should not be able to maintain those combined operating ratios in a truly competitive market.” For the full year to 31 December 2017, Sabre reported a COR of 68.5%.

“In terms of our competitors, they know we have been a little gem for 10 to 15 years and we took great care with the initial public offering to not tell anyone how we did it,” continued Carter.

“So one personal lines CEO said ‘I read that IPO document with huge excitement. And I found out what you did; but not a single thing about how you did it.’ Which is exactly what we wanted. We were very careful. We tell investors what the results are and the shape of things, but we never give specific examples. So we guard our intellectual property jealously to that extent.”

Sabre in its current incarnation was sold by Aviva to BDML Group, a company owned by its management team including Keith Morris and Angus Ball, in 2002, becoming the sole subsidiary of the rebranded Binomial Group in 2005 when Capita acquired the broking arm BDML Connect. Funds advised by BC Partners LLP acquired a controlling interest in the group’s 2014, before the recent IPO took the insurer public.

The longest serving member of the management team sitting around the board room when I caught up with Sabre is Trevor Webb, who was recruited in March 2010 becoming the second claim director the business had ever had.

Geoff Carter on…

Not discounting business to secure volumes: “A broker – with a smile on their face - described us ‘a pain in the arse to deal with, but a very consistent pain in the arse’. Because they know that we were exactly the same to deal with no matter on your size or scale - and that is very important to us.”

The future of broking: “If you look at the extremes at one end you have your BGL, which has invested heavily in technology and brand. And at the other end you have A Plan, which is making the high street work fantastically well. And my view is that the people towards either end of that spectrum will have a fantastic future. The ones who are in the middle who haven’t invested in price optimisation, technology or brand, and have not got a high street presence are in no man’s land and need to work out where their future lies.”

A little gem

“[When I joined] I knew about Sabre, and the little gem that it was. And that was part of attraction. There was also the opportunity to work with Keith and Angus, industry legends, that was too good to pass up.”

Morris and Ball remain on the insurance board and Carter notes the executive probably speak to them “once a fortnight inbetween their trips to exotic places”.

He adds: “We are beholden to their legacy in that they ran a fantastic business, and there is certainly a case of us not wanting to do anything that would spoil Sabre’s reputation.

In numbers

GWP: £210.7m

Policies in force: 351 000

Adjusted profit after tax: £53.3m

Combined operating ratio: 68.5%

Average COR [last 10 years]: 72.3%

Excess solvency capital: 160%

Percentage of business underwritten through brokers: 70%

Number of staff with more than 10 years experience: 76 out of 153 employees

Combined years experience in claims team: 600 (75 staff)

Source: Sabre Insurance Group 2017 Annual Report and Accounts

“But they are not looking over our shoulders at every turn. In a way they ran the perfect transition by bringing in really good people so that Angus replaced himself with [chief financial officer]Adam [Westward] and [chief actuary] James [Ockenden]; splitting the role in half. Broadly I replaced Keith and Trevor was already here in situ. So when I started Angus said, ‘just sit over there and do nothing, just learn how the company works and what makes us tick’. And that was the perfect way in.”

Indeed, Carter describes his introduction as “recalibration”, adding: “When you join Sabre, you have to forget quite a lot of what you previously knew about insurance.

“I was quite surprised how much I changed my ingrained perceptions. I spent six months throwing them out of the window, asking ‘why did I previously think like that’? And it was because everyone else thinks like that.”

Having now been given access to the secrets that make Sabre what it is today, do the management team think that the business could be replicated?

“I understood it was a disciplined business but not necessarily how all the components came together: Not just the claims or pricing, but the risk and credit control and  IT.  So there was quite a lot to understand once I had joined,” Webb explains. “And no I don’t think it could be replicated as a start-up or an incumbent in transition. There is a lot in the DNA here that is so hard to copy.”

“What makes us different?” Carter continues. “Well the first thing is we have been doing this for 20 odd years and so there is an incredibly rich bank of data that informs our rating structure.

“And then if you look at everything we do, and I mean everything, it is with a mind to get a mid-seventies combined operating ratio. And there is no growth targets for anyone in the executive team - or elsewhere in the business. So really our laser focus is on that 75%.”

“It should also be said that we are a single site business too, so everyone is spread across one building,” adds Webb. “And that means communication channels are very short and so from frontline claims into Geoff there will be no more than two or three people. Everyone is very close to the executive team.”

“And people are not afraid to challenge,” interjects Carter. “I was surprised when I first came in here and I saw someone quite junior challenging what Angus and Keith had said; and I thought that is unique. The fact the managers did not rule the place with fear.”

Sabre runs a lean operation, employing 159 staff, and Carter later quips it spent a grand total of “£150 on freshening up the brand” and is “far too tight fisted to change the letter heads”.

Geoff Carter on…

Sabre’s Drive Smart brand: “We don’t do much here and we are still pretty wary of the telematics market; I have not met too many people making an underwriting profit out of telematics and our view it is a great concept - and the data is brilliant. But the pricing is not at the right level. So we are keeping a finger in the pie, but not writing too much of it.”

The benefits of BC Partners recently selling its stock: “The share overhang meant that investors were wary of buying into the business knowing that at some point a big block would be made available, invariably at a discount to the prevailing price. Which might make them a bit nervous buying in knowing they might be able to buy shares a few pence cheaper a few days later. So our investors have been telling us they wanted the PE company out; not because they did not like PE companies, but because they don’t want this block of 14% in one person’s hands. So our share price should now naturally float up.”

Not wasting money

“But we are very strict about not wasting money; you look at this building there is nothing flashy at all,” he adds. “And because we have outsourced all the variable customer service elements, in terms of our expense base we don’t have the pressure to grow.”

The insurer outsources non-technical claims elements such as first notification of loss and accident management through the Innovation Group; and direct policy servicing through Right Choice.

“We don’t have the leverage to do big deals with repairers and manage a network. So we are absolutely focussed on the technical components of claims handling to understand what has happened as early as possible. And we are very well resourced,” Webb explains.

“I’ve never been in a business where my CEO has asked: ‘are you sure you have got enough people?’. So we have fantastic technology and our people are well invested in in terms of the training we give them and our retention rates are incredible. We have very low turnover, and as a result we have some very loyal individuals who understand the Sabre way of doing things.

One of the benefits of the IPO was that it allowed Sabre to reward this loyalty by giving each employee shares worth £3500, plus additional ones for every year of service, equating to an average of an extra £1500. Another key driver behind the IPO was that the management now claim they are under even less pressure to grow as Carter expands: “For us the IPO route means we are being bought as an income stock. We generate a pretty healthy dividend yield and Adam and I have spent a lot of time with investors making sure that they understand that story.


Sabre formed as an underwriting agency for Crusader Insurance and Royal Insurance UK

Launch of Sabre Insurance Company Limited, underwriting risks on its own account

Sabre acquired by General Accident

1998 – 2000
General Accident and Commercial Union merge to form CGU plc. CGU plc and Norwich Union merge to form CGNU plc (later known as Aviva).

Sabre sold to BDML Group Limited, a company owned by its management team including Keith Morris and Angus Ball.

BDML disposes of its broking business to Capita Insurance Services Group Limited, leaving Sabre Insurance Company Limited as its sole subsidiary. Keith Morris and Angus Ball acquire control of BDML which is renamed Binomial Group Limited.

Since 2010
The Direct Brands are launched.

2010 – 2015
Senior management team strengthened with the appointment of Geoff Carter, Adam Westwood, Trevor Webb and James Ockenden.

Funds advised by BC Partners LLP acquired a controlling interest in the Group’s business.

Sabre Insurance Group plc shares are admitted for trading on the London Stock Exchange on 11 December.

“And their message to us is ‘do not change’. We have bought into you because of who you are, and not so you become something else. Stick with that focus. If you do not grow it does not matter. Stick with the COR and the dividend return.

“A feature of PE is that they need to double their money again every five or so years and that would have meant as management team we would have felt a little uncomfortable going about our strategy.”

Although the majority of Sabre’s business is written though its 1100 strong brokers agency base, the insurer does own a telematics brand in Drive Smart and direct arm in Insure 2 Drive. However, it is the Go Girl moniker in which Sabre invests the most time and effort with Carter commenting no matter how pink it makes it, men still make up 46% of the overall book.

Asked whether it might consider other brand extensions, Carter responds: “We don’t spend a lot of time thinking about brand. We spend a lot of time thinking about pricing. And we are really very dull from that point of view. Dull but successful. So if we spent more than half an hour talking about branding a week I’d be surprised.”

Dull But Successful

And that ‘dullness’ extends to diversification too, with Carter admitting while bikes might be on the “edge of our radar,” it is determined not to shake up the formula too much: “Our view is that if it has wheels and an engine we should be thinking about it; but I told investors if we diversify into home insurance slap me and throw me out of the window because what skills have we got there? But we have a lot of experience in car; and we do a bit of van; a bit of taxi; the horizontal expansion opportunities.”

When it comes to geographical expansion Carter admits that it had “not recently” reviewed Ireland “but it is somewhere we will probably look at again at some point,” despite Webb admitting there would be challenges in terms of seeking new authorisation and extra expenses.

Something else Sabre will keep an eye on is whether there is a case for it get a rating, with Carter commenting: “There are quite a lot of benefits of being regulated by the Prudential Regulation Authority.

“If I look at most of the insurers that have got into trouble over the last few years they have not been PRA regulated. And so we don’t have a credit rating; but in our view the question is whether we have the expertise, are well regulated and capitalised; rather than having a rating.

“It is a huge administrative overhead that if we can avoid, we will. We would rather spend our time doing things that benefit the shareholders.”

And to that end Carter acknowledges that while the lack of rating did not come up in the IPO process at all, what was more surprising was the reception Sabre received over the Atlantic when it courted potential investors.

“We did think no one’s heard of Sabre in the UK, so why on earth are we going to New York and being wheeled around these massive skyscrapers? But actually they bought in. Indeed our fourth biggest investor Kayne Anderson is based in LA. And to think they are now investing in a Dorking-based insurer.”

And the UK market’s ‘best kept secret’ to boot. Although it might have to review that title if it continues to build out a trans-Atlantic fan club and invites journalists into its board room.

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