Sabre Insurance Group H1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 31, 2025

Key Takeaways

  • Positive Sentiment: The group delivered a 26% increase in profit before tax for H1, achieving a 19% margin and guiding that full-year earnings will be very similar to FY2024.
  • Neutral Sentiment: Gross written premium fell 20% year-on-year as management chose price discipline over volume, with growth expected to resume in H2 when market conditions improve.
  • Positive Sentiment: Interim dividend doubled versus prior year and the share buyback is about halfway complete, reflecting a strong capital return focus.
  • Negative Sentiment: Management warns the market is underpricing claims inflation—expected at around 7%—which could lead to industry profitability challenges in 2026 if premiums don’t rise.
  • Positive Sentiment: “Ambition 2030” targets remain on track to exceed £80m profit, backed by a successful online motorcycle launch and planned differential pricing tests on the core car product.
AI Generated. May Contain Errors.
Earnings Conference Call
Sabre Insurance Group H1 2025
00:00 / 00:00

There are 10 speakers on the call.

Operator

So straight on. Very pleased to say we've got the same team here presenting. As usual, myself and Adam will run through the presentation fairly briefly. And then any difficult questions, we'll hand to Trevor and Matt at the end. Agenda, fairly standard agenda for us.

Operator

We'll run through briefly the highlights. Adam will run through the financial performance. I'll give my thoughts on the current state of the market. We'll touch on our competitive edge given that market, environment, outlook and summary, and then we'll leave plenty of time for q and a at the at the end. So the highlights, overall, we're really pleased with where we find ourselves at the half year stage.

Operator

Good performance, good profit performance, good dividend, we'll talk about in a minute, for the half year. Probably more importantly is what it suggests about the full year this year, maybe even more importantly what it suggests for '26 and '27 onwards. I think we're probably in a very strong position compared to many others in the market at this stage. So to touch on the highlights briefly, very strong profit for the half year, 26% up year on year, and that's in weak market conditions, which we'll discuss much more later. Margin of 19% comfortably inside our range.

Operator

And some pretty explicit guidance this time around that we expect our full year profit to be very similar to that we delivered in 02/2024. Growth, I guess, breakable of misnomer in some ways that we didn't grow terribly much in the first half year. And that's a very deliberate management decision. We're very happy that we've maintained our discipline through the bottom of the pricing cycle, and we think we're riding very healthy premium levels at this stage. So very helpful with our proven position.

Operator

Leaves us well positioned to return to growth as market conditions improve, which we still expect to be the second half of this year. Robust capital position, that very strong, I think might be a good description. Interim dividend, 100% up on last year. Obviously, that is fairly formulaic. It's linked on the previous year's full dividend.

Operator

And we are going well on our first ever share buyback. I think we're probably around halfway through that now. And we'll talk more about that

Speaker 1

later. On the

Operator

strategy side, really good progress on Ambition 02/1930. Everything we're talking about today suggests to us we're very firmly in line to deliver our 80,000,000 plus profit by 30. The Slabred Direct motorcycle product launched very well, and the plan is still very much on track to start testing differential pricing on our core car product later this year. That's a very brief overview. Adam will announce about the numbers in more detail, and then we'll talk about the market and a few more of these things in more detail a little later.

Operator

So, Adam, you're gonna ask me when you wanna change slides, I think, because we go through.

Speaker 2

Thanks, Jeff. I will. So I'll run through the financial results for the 2025. Jeff, if we can move on to the first slide, please. So here's a snapshot of the results.

Speaker 2

We discussed in our first recent trading update that the market pricing could remain low in the first half of the year and that we'd protect margins and profits at the expense of a short term different premium, which is clearly evident in the gross written premium number, which is down 20% on the same period in 2024, albeit against a very strong comparator. The very good news

Operator

is that we're now able

Speaker 2

to show the positive side of maintaining this discipline with our margin now having improved to 19%, which is comfortably within our target 18 to 22% range. This is a result of the 4.8 percentage point improvement in net loss ratio to 54.9%, slightly offset by a 1.4 percentage point increase in expense ratio, which is a natural consequence of letting our premium reduce for a period. This improved margin has generated a 26% increase in profit before tax to £25,500,000, setting us on a great footing for the full year. Our interim dividend, is at 3.4 per share, which is in line with our policy to pay one third of the prior year's ordinary dividend. And our solvency capital generation has been commensurate with the earnings for the period, and our position at the June 30 is above our target 140 to 160% range.

Speaker 2

On to the next slide, Pisha. So here we show the progression of the group's margin since 2022. As planned, the margin has recovered to within the target range having almost got there last year. And we now expect to maintain the margin within the range through continued price discipline and cost management. Next slide, please.

Speaker 2

So diving into our loss ratio performance across the portfolio, this slide shows how the loss ratio of the period breaks down into current year claims, being the impact of accidents that have happened in the period, and the prior year loss ratio, which shows the impact of movements in expected and incurred payments on accidents that happened in previous years, but have not yet settled at the start of this year. And we've included charts for both the 2025 and the whole of 2024 on this slide.

Operator

So it's normal for the

Speaker 2

current year loss ratio to be a bit higher than our target, particularly in the first half of the year as there'll be significant number of new open claims with reserves carrying margins reflecting uncertainty. So the 61% current year loss ratio is absolutely fine on the plan for us.

Operator

It's been pleasing to see

Speaker 2

a return to a more normal state of prior movements being negative, presenting a benefit to profit rather than the small increase we saw in 2024. This movement represents a mixture of the runoff of risk adjustments on claims that were open at the start of the period and a reduction in the total amount of expected claims payments on previous years. Overall, our loss ratio is demonstrating good underwriting performance in line with our targets while still reflecting our cautious views around claims inflation. Now on to the next slide, please, Joe. So here we show our usual breakdown of underwriting profitability by product.

Speaker 2

Firstly, we can see that the main core motor vehicle book has performed incredibly well with a forty eight point eight point one percent loss ratio, having shown strong current year performance and being the main beneficiary of those prior year reserve movements. The focus on preserving margin and maximizing absolute profit has meant that we've allowed policy volume to dip through the soft part of the cycle. Motorcycle and taxi remain a very small part of the book

Operator

with the low earned premium in a

Speaker 2

six month period being particularly susceptible to the impact of large claims. This year, our large claims experience has been relatively good overall, but the large claims happened to have occurred on the motorcycle and taxi books. Hence, the high loss ratios on those small products, but we've no reason not to expect the performance of those products to improve for the full year 2025. Onto our capital position, please, Jeff.

Operator

So we've seen a small dip

Speaker 2

in our solvency capital requirements since the end of last year, while the capital generation has been reflected with a profit during the period. We started the buyback program announced at our year end results, and the full impact of it is reflected in the period end capital position. And the interim dividend at 3.4 p per share is in line with our policy. As in previous years, we assess the capital position at year end determine the total level of capital distribution for the year as well as how that capital will be distributed. And with that, back to you, Jeff.

Speaker 2

Thank you.

Operator

Thanks, Adam. Well, that's been a few minutes talking about our view of the current state of The UK market. And I guess I do feel I'm a bit of a stuck record on this, sometimes. We think the market is substantially underpricing at the moment and that risks a pretty silly price correction down down the line. We probably have some shorts and a bit of a land grab, but possibly ahead of M and A type activity to maintain value.

Operator

Others may be taking advantages and distraction in the market as, as acquisitions come together. It's pretty hard to argue with some of the external views that if prices don't move soon, then 2026 is gonna be a pretty ugly year for industry profitability. If we look at this slide on here, this is a slide, and thank you to Jeffrey who's who allowed us to use this slide. It perfectly sums up how we we view this. This shows the premium versus claims deficit by underwriting year.

Operator

You'll see having clawed back to a good position at the '23 to '24, the market has perhaps slightly sadly given all that away again to the point where there's now a deficit opening up between premium and claims. From a SABR perspective, we've continued to fully cover claims inflation. We've not allowed ourselves to get into a deficit. So we are very happy with the volume that we're able to write while fully covering claims inflation while it would appear the market isn't. That would be different for different insurers depending on how how much of a deficit they will have to open up.

Operator

So I I I guess, you know, the message from us is, I guess, the industry should be okay for this year profitability, but next year is gonna look difficult if prices don't start to move fairly soon. Look at client inflation. Client inflation is a bit more interesting perhaps than in some previous years. And that there's things you can see in point and count now And then things that involve a bit of crystal ball goes in. If we look at the slide here, on the left, you can see things that we would call items in the data.

Operator

So frequency is definitely down. There's definitely increased capacity in the body shop. Parts and paint inflation is slightly offset by some of the parts supply. You can already see some of the cost of care increases and underlying inflation. On a simplistic view, that would suggest that near term inflation would be somewhere around 55% or so.

Operator

So there's genuinely good news on claims inflation coming through. But there's quite a

Speaker 2

lot of items not yet

Operator

in the data. So we know that the injury portal tariffs are increasing. We think there could be a bit of a false read on frequency. We think there's an element. The customer saw some fairly high premium increases in recent years.

Operator

We think there might be a crash not claim mindset, because if you've had a relatively minor prank, you choose either drive the car around with it or put it hopefully, let it fix yourself. That may change as those premium increases fade a little bit in customers' memory. So it's possible that frequency ticks back the other way again. There's definitely a continued lack of resource in care and specialty care industries. We know there's all sorts of macro things happening around tariffs, shipping delays, tsunamis happening now just to add to the mix, persistent, highly economic inflation.

Operator

Algorithmic assumption would suggest you probably look at another couple of points on top for things that you you can't yet quantify but are out there in the world. So we would view a claims inflation assumption around 7% to be sensible. We think it would be very bold, or slightly mad to base your inflation assumptions going forward just on things you can see today at five at 5%. Have to take any questions on that later. These are our favorite scales on what we think should happen to premium in the market.

Operator

Why might premiums deflate? Well, claims frequency is definitely down and there is a reduction in overall claims inflation. That's good news. And the market or people in the market may over rely on short term trends. On the other side, things we've just discussed, claims inflation is too elevated.

Operator

Premium increases definitely needed to maintain industry profitability. So overall, good news on inflation generally, but apply any sensible level of prudence, you still need to be looking at an elevated level of claims inflation and to cover that through premium increases. Our view, really, the market is down, what, nine nine to 15% depending on which traffic you look at over twelve months. And claims inflation are up anywhere between 510% depending on where you are as an insurer. So quite a delta opening up at industry level.

Operator

And to reiterate, we've not allowed ourselves to drift into that into that place. Interesting regulatory developments in the last couple of weeks. I draw the short straw and be the first one to talk about this as a results session. Two things really from the FBA. One on the retail market review.

Operator

Second one on the interim premium finance review. I think both generally positive and helpful for the industry. On the retail market review, the FCA really confirmed that claims inflation is real, and it's driven by factors outside insurers control. So the premium increases were matching claims inflation rather than

Speaker 1

any form of profit here. The

Operator

second report also confirmed the importance of premium finance to customers, in terms of ability to pay for premiums. And it specifically, ruled out some of the market wide interventions. It feels to us like the likely way forward from here is for the fair value assessments to do quite a lot of heavy lifting from here. And that the reports we have to send back are very detailed. DSA get a very granular view on where people's margins are coming from.

Operator

And I suspect conversations from here may go on behind closed doors. Worth restating my favor on this. We took a view a couple of years ago that the fair thing to do was to earn exactly the same margin on our core product as all our ancillary products and premium finance, and that's exactly what we do. That has clearly cost us some profit, but we think leaves us in a very stable, very defendable, very good, very customer focused, position on fair value that it's the same margin on our core and core products. Hopefully, an investor level, this takes me quite a lot of regulatory risk overhang.

Operator

So if you look at our competitive edge given those market dynamics, where does that leave us? We think we are a strong player in a pretty attractive and perhaps undervalued market sector. Motion source is a mandatory product. I think we've taken away some of the regulatory overhang in the last couple of weeks. We're in a niche part of that market.

Operator

We're happy to stay in our lane. Not looking to become a mass market insurer. We specialize in high premium, high margin policies. Probably high premium, higher risk, high margin policies would be an accurate description. High return on equity, that's due to being very focused on margins, efficient capital management, and consistent smart underwriting and claims handling.

Operator

We're very focused on dividend. We wanna pay a reliable and growing dividend based on 70 to 80% of profit after tax, plus a regular return of surplus capital. We've now, updated our policy so that it can be special dividends or buybacks as a decision we'll make we'll make every year. Really key to us is we've been doing this for long time. The management team here have all been here at least seven, eight years.

Operator

Very experienced staff sitting outside my door here. We've also been here a long time and add a huge amount of value every day. We've got an incredible depth of accurate, reliable, relevant data and very consistent expert claims handling. I think Trevor Woodheader is only, say the second only claims director. And that level of consistency means we don't get unexpected claim movements or reserving shocks.

Operator

A very cautious improvement well informed and consistent reserving methodology lessens the impact of adverse developments. I was talking to an investor recently. He said the eighth wonder of the world was insurance accounting. Does that disagree slightly? I think the eighth wonder of the world is claims reserving.

Operator

And really claims reserving is the question investors should be asking of how solid, how safe, how cautious are you on the claims reserving because that drives everything else that we do. We've got an ambitious, but we think very achievable five year plan. We've grown consistently since 02/2002. Well, I say consistently. We've grown on average since 02/2002.

Operator

You'll see from these dips, we're very happy to let premium subside in unattractive market conditions and then pick up the pace again later. So, we're not obsessed with keeping top line growing with consistent basis. Overall, we want the average to be growing like that. Growth is gonna come from two things. Expanding our addressable market.

Operator

That's becoming slightly more competitive, perhaps a slightly lower premium, lower risk business, and the launch of the direct motorcycle product expanding motorcycle into growth panels as well. Very good progress to date. The SABR direct motorcycle product launched in April. It's quite unusual that it's online only, web chat supported rather than call center. We think that might be unique in the market.

Operator

Very good sales volumes on restricted quotes so far. We're restricting our quote ability as we test and roll out and evolve the the rates on that. We'll gradually increase those volumes through the second half of this year and into next year. All the systems working incredibly well, rock solid, and really good support by the in house team. On enhanced pricing for the core product, the technology stack is already now, and that testing is gonna be we'll be testing those rates later this year.

Operator

There won't be much impact on the premium, if any, this year. That will start to impact from next year. We're still very confident in our ability to get to at least 80,000,000 of profit by 02/1930. I think importantly, we're gonna stay very true to our DNA as we grow. That really means high margin business.

Operator

We're not looking to drift into the mass market, low cost operating structure. We're gonna continue to keep profit as the target and volume as the output. I know it's a bit of a strapline, but it's one we we truly live by. And we'll continue to maintain cautious assumptions to ensure long term sustainable profitability. We don't wanna get into a boom and bust, Jim.

Operator

So to summarize this brief run through, quite a simple story in some ways. Good profit for the half year, well up on last year. Full year earnings, we've given some pretty tight guidance. We expect them to be very similar to last year despite the market pricing weakness. Ambition 30 projects on track.

Operator

Growth in half two were dependent on the market. Not particularly profitable. We're not particularly bothered by that. We expect to write a bit more in the second half than the first half, but let's see where that goes and a good margin. So overall, quite a simple story.

Operator

We're very happy where we are and very happy what this suggests for full year and into next year. Now at that point, I am going to pause. I can already see some hands, going up. So, Hanrow, I will pass to you to, introduce and unmute people as we go.

Speaker 3

Yes, Jeff. First person for with a question is Ivan Bokhmat from Barclays. Ivan, you can unmute yourself.

Speaker 4

Good morning. Hopefully, you can hear me now. Thank you very much. Well, my first question actually is more of a big picture one regarding the 2030 ambition. I mean, we've since then, since December, when it was published, I mean, we've seen a bit of a decline both in the GWP, which I'm sure you're fine with, but also in policy count.

Speaker 4

Do you think that retention needs to increase for you to hit that target? Because that clearly implies some punchy growth. And on the side comment, the regulator seems to be quite happy with how loyal customers have been treated. Do you think that will make acquiring new customers harder for you? And a couple more questions.

Speaker 4

One, perhaps you could comment on the outcome of the July 1 reinsurance renewals and maybe give some some outcome, you know, the shape of your reinsurance program. Mhmm. And the final one, I think you say that you're sound quite pleased with how the share buyback's been going. We're almost halfway halfway through it right now. I mean, does it look like for you, it's a it's a preferred way to return capital, you know, like, the the special dividend is less attractive than the share buyback?

Speaker 4

Thanks.

Operator

Okay. I'll start. Please, Tim, kick in as we go.

Speaker 2

Policy count, the harder to

Operator

get new customers. Perhaps different for us compared to some, Ivan, in that we tend to attract people who've got quirky circumstances. Most people will continue to come to market. We don't expect to be in the mass market sort of trading people for the sake of 10 or £15 every year annually. So we have new drivers coming to market and people who bought new types of cars, people who may have picked up new convictions, a whole host of things.

Operator

So I don't think we're gonna find it harder to attract new business. I do understand why that might be a market phenomenon in the in the completely, straightforward mass market. Matt, do have anything you wanna add to that? On the reinsurance side, we had a good placement. I didn't really talk about I'll say it.

Operator

When we we had a we had a price Our price went down through insurance this year based on our, you generally good good results and good market conditions. So we were very pleased with our reinsurance. We are gradually, very gently increasing our retention, but only moderately. So that's a path we'll probably continue on for a couple of years. So good reduction and a very slight increase in retention.

Operator

The buyback has gone well. I don't think it'll be our preferred way forward. I think our policy will always be ordinary dividend, good special dividend, anything surplus will consider a special special dividend or a buyback at that point. So buyback will be definitely part of our thinking, but not at the expense of a of a good dividend. Ivan, did that ask you a question?

Operator

Was conscious there's a few in there. I'll hit them all.

Speaker 4

No. No. You did. It's for sure. Maybe I can just follow-up on the reinsurance answer.

Speaker 4

So maybe I think in the past, you've had a $1,000,000 retention. I mean, are we now on that, on individual excessive loss?

Operator

David, do wanna take that one?

Speaker 5

Yeah. Yeah, Ivan. So we're still got an index retention of a million pounds, but we partially placed that 1,000,000 over 1,000,000 there. So it's a bit of way of, us taking more of the risk at that, at that lower layer, but not exposing ourselves to a frequency.

Speaker 1

Thanks a lot. Thank you. Thanks, Simon. Handwriting?

Speaker 3

Next question is from Emily Dravkovic from Deutsche Munir.

Operator

Nimis?

Speaker 6

Yes. Hello. Good morning. It's Emily from Deutsche Bank. Thank you for taking my questions, and well done today.

Speaker 6

So just on on GWP, I mean, it's down again, but it's but it's sort of slowing from from the first four months of the year. I mean, if we think about the sort of the full year guidance, how should we think about that in terms of of volume and price increases for GWP? And then if I can just ask a bit on the very strong reserve release. I mean, Adam, you spoke a bit about about it, but if we can have sort of any color on this, is it are there any one offs, or is this predominantly from sort of prudent reserving, in prior years? Thank you.

Operator

Okay. Thanks. Matt, I'll let you take the reserve question in a second. On the price increases, I mean, we, as I've mentioned, have fully covered clients' inflation. So we need to keep keep actually tickling prices forward during the second half of the year, but we don't have any price correction to do.

Operator

Our view is there is a catch up price correction for many in the market, which we don't need to do. When will premiums increase in the second half is an unknown point. They should be increasing now. They may not. In our view, they don't happen.

Operator

I think we've seen a very similar thing to the last market upturn. The the longer it takes, the steeper that that increase will be when it happens. So we're pretty relaxed about this. Yes. So for us, we just we'll just keep we'll just keep tickling prices forward in a second half.

Operator

We don't need to take a big correction within the market the market does, which is where our increased competitiveness will come from, we think, at some point in half two. Matt, reserve releases, one offs, or prudent? It's it's two part

Speaker 7

of things. So we'd expect the prior years to have the risk adjustment runoff. So we'd expect to see prior years always releasing a little bit each quarter. There's also some one off prior releases from experience being more favorable than expected.

Speaker 1

Thank you. Did

Operator

that answer the question?

Speaker 6

Yeah. Thank you. Very clear.

Speaker 1

Thank you. Alright.

Speaker 3

Next up is Karl of Tachen from Berenberg.

Speaker 8

Yes. Hi. Morning all, and, thank you for taking my question. Can I just on on the prior year, sorry to follow-up again? Is are you able to highlight which accident years this relates to?

Speaker 8

And I mean, sorry if you if I misunderstood. Are you are you saying this is this a few large claims, you know, essentially settling more favorably? And then just on on kind of the inflation piece, we've seen a pretty big jump in Chinese electric vehicle sales over the past twelve months. I mean, essentially, zero to now accounting for almost 5% of new car sales. I appreciate it's still small, but are are you seeing some early kind of issues there, concerns with access to parts and high repair costs in these cars and and kind of, yeah, just thinking around, you know, as this grows, what could be the impact?

Speaker 8

Thank you.

Operator

Yeah. Thanks. I'll I'll answer the second one, and Matt, you can pick up the reserve one again. I think the Chinese vehicles are really interesting. I'm like, whichever you wanna come this in a second.

Operator

In that, they're very cost effective to buy. I think the repair we were very concerned about a year ago that there weren't repair methods being published. I think talking to Thatcham, that's improving. There is, think, some questions around the possibility of parts between models. So, you know, if you have a I'm like, so the Ford Focus and the Ford Fiesta may have had common parts between those vehicles in the past.

Operator

I think there's less of that on Chinese vehicles. So parts supply is definitely gonna be an issue. Depreciation is pretty steep. On some of these things, they're quite cheap cars. So, relatively small claim could lead to things like an increase in write offs, the total loss.

Operator

Trevor, anything

Speaker 1

you wanna pick up from there?

Operator

Yeah. I I I guess there are sort

Speaker 5

of EV issues, and then there there are Chinese issues or Chinese vehicle issues. So sort of EV issues really are around the weight of these vehicles, the transportation issues, and the specialist repairs, and what the body shops need. I think just pretty much now the issues that we've seen with the Chinese vehicles, just to sort of, expand on that in in part, a lot of the panels or a lot of components, for example, bumpers will come as huge pressed components, whereas they may may in some more traditional vehicles be made up of a number of smaller parts. So we end up having to replace a a larger, more expensive component than perhaps is necessary. And that that's probably something that is specific to Chinese EVs.

Operator

I think, Carter, it it's all the way conservative to be concerned to get the premium right. That's our general approach. Seems there's no such thing as a bad risk or a bad car. It's just a bad price for it. So but, Matt, do I just follow-up on prior year reserve release?

Speaker 7

Yes. So the prior year reserve release is predominantly driven by the most recent accident year. As the claims develop, we get less uncertainty, so we get more certainty in the eventual result. So where we've seen this first half this year is that some of that uncertainty has unwound, so we're more confident in the, absolute level field for claims now. So that's multiple perils, not just one driver.

Operator

And it isn't one just big claim that's driven it. It's just a general confidence in the year.

Speaker 1

Yes. Great.

Operator

Thank you. Thank you. And, Jeff, can I cut in

Speaker 2

there quickly on the prior year level, please?

Operator

Just just to make

Speaker 2

a small point. At the half year, the impact of individual power movement prior year reserve changes is more significant on the ratio. So if we were to look at 2024, for example, accident year, and move in the ultimate expected claims cost by, say, a million pounds, that might have a 1% prior impact at the six month period, but a half a percent at the full year period because the net term premium that is offset against is is lower. So it may not be quite as large a change as it looks just because it's a half year period, not a full year period we're looking at.

Operator

That's Adam. That's a good point. Thank you for that.

Speaker 3

Okay. Next up is Adith Hussain from Panmure.

Speaker 9

Hi. Good morning all. Thanks for taking my question. I've got three. Some of them are follow ups.

Speaker 9

Just the first one is on growth versus the pricing environment. You're suggesting that prices, might increase in the second half. It looks like there's some evidence of that starting to come through and great if it does. But I'm just wondering on the flip side, what would you do if prices stay flat, or even continue to nudge down? Will you are you willing to let the top line reduce further?

Speaker 9

So just sort of any more color on your thoughts, on how you're going to manage that? That's the first question. The second one is just a quick follow-up on the reserve releases. I think you're suggesting that if we look at a sort of full year basis, there's a sort of long term average that we should be thinking about. I'm just wondering what is that long term average for reserve releases?

Speaker 9

Is that sort of around the two to 3% mark? That's the second question. And then the third question, is on the motorcycle, book. I think the undiscounted combined ratio was around a 104%, above a 100%. What's your thinking around when that business might break even?

Speaker 9

And then more broadly, how are you thinking about the profitability of both the bike and the taxi business? Thank you.

Operator

Sure. If I start, Adam, maybe you said the long term reserve release, and Matt, you know what's about this in the motorcycle and how it looks like for a five year type period? So on growth versus, focusing, thanks a bit for the question. I suppose we're fairly chilled out about when premium actually moves. We we know our profit's gonna be good for this year.

Operator

Even if we wrote the same level of premium going forward, we'd be pretty happy with our outlook for the next the next year or so. Would we reduce the top line? Yes. We absolutely would. If we needed to, we'll focus on the profitability.

Operator

Top line will always bounce back. It's very easy to grow an insurance company. We just don't do anything stupid. I think another thing we should probably say, but it's that we haven't unpacked any of our new pricing innovations yet. We'll start to test those in the second half of the year, but it'll have much more impact in next year.

Operator

So we think we've got plenty of levers to pull to, hit medium term growth. So we don't see short term market softness as being any inhibitor on our 2030 strategy at all. It's just the timing thing. If we're wrong with our inflation, and others are right, then we're gonna deliver some fantastic wash ratios going forward and go to cut prices. If we're right and we think we are, others will have to increase their prices at some point.

Operator

On the reserve release on sell average, Adam, do wanna take that one?

Speaker 1

I'll come in off mute first. Adam, you're on mute.

Speaker 2

Thank you. I know I'll be the first. I think it's absolutely right. If we, we're reserving absolutely perfectly on the best estimate, with no additional prudence on on the best estimate, then we would have a runoff of the risk adjustment every year, and that will probably be in the region of sort of three ish percent depending on some of the number of factors, but but thereabouts. Now, historically, it's always been a bubble blow that, and it it sort of always will be.

Speaker 2

But that is, I guess, a a good way of thinking about the kind of quantum of risk adjustment runoff that we might have. We tend not to sort of book any or bank any additional runoff beyond the risk adjustment, whereas we've seen in in in the first half this year that that can happen.

Operator

And, Matt, do want talk about how you sort of think about BIKE as it grows as an account? Yeah. So if we look

Speaker 7

at the BIKE performance in the first half this year, the poor loss ratio is driven by a couple of larger claims. What we look at at bike is the long term average. So we know with bike due to the size of the accounts that it will be a bit more volatile. So say, sorry, we have a large claim. The loss ratio is quite poor.

Speaker 7

But other years where we don't have those large claims, we expect loss ratio to look quite good. So kind of that three to five year horizon, we expect the loss ratio to deliver along that target. Some years will be slightly better. Some years will be much worse. So we're quite comfortable where we are in the first half this year given the drivers of that poor performance.

Speaker 1

Yeah. Exactly. And and as that account

Operator

grows over time, those peaks and troughs will sort of shrink a bit as there's more premium, we'll get a bit less volatility. So, yeah. So as Max says, we're very happy with the online performance on on bike. On taxi, we think the market's still even more underpriced than private car. And we're happy with the volumes we're writing.

Operator

We're happy with the underlying loss rates. We're very happy with our distributor and the product. We're happy to keep keep our footing on this one for a bit and probably get some of the some of the profitability I can see a lot of players in that market, it doesn't look great. So, you know, from an underwriting perspective. So you would have to hope that that corrects at some point.

Operator

Okay. Thanks a bit. Andrew?

Speaker 3

No more questions from the audience, and I cannot see anything in q and a's.

Operator

I'll just pause for ten seconds to make sure no one changes their mind. No. In that case, thank you very much for your time and for your questions this morning. We're about the next couple of weeks. If you have any follow-up questions, very happy to pick them up.

Operator

If not, speak to

Speaker 2

you there for you, I

Speaker 1

guess. Catch you later. Cheers now. Bye.

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