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Retail investors are being given the opportunity to take part in the IPO (initial public offering) offer for Sabre Insurance, owner of the Go Girl brand and underwriter for policies sold by the likes of Tesco Bank and others.
We understand the specialist motor insurer will pay a 6%+ dividend yield and the business should be worth around £600m once it floats on London’s Main Market in December.
Sabre claims to have a significantly lower combined ratio (72.4% average over the 10 years to 31 December 2015) than its peer group average (111%).
That’s the sum of claims, commissions and expenses as a percentage of premium income. The lower the ratio, the better; a figure below 100% indicates profitable underwriting.
‘We tend to write business which is ignored by major insurers, such as a young graduate who has moved to London and is driving their first car,’ says chief executive Geoff Carter. ‘There is a right price for every risk.’ It also insures taxis and vans. ‘We quote 90% of the market versus 50-60% from the major insurers,’ adds Carter.
Two thirds owner BC Partners, a private equity firm, is selling down some of its holding at IPO, so too some other shareholders and Sabre’s management team. Sabre previously considered a trade sale but is rumoured not to have attracted BC’s desired take-out price.
Carter says the business is highly cash generative, does not need any money to top up capital or pay down debt. Seventy per cent of its business is sold through brokers. It is targeting pure organic growth.
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