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(Sharecast News) - Analysts at Berenberg slightly lowered their target price on car insurer Sabre Insurance from 123.0p to 119.0p on Monday, stating the group's strategy was "consistent" but telematics still posed a risk.
Berenberg said Sabre's nine-month trading update was "more of the same", with the group's core motor book reporting a 16% decline, only partly offset by better motorcycle volumes.
The German bank, which reiterated its 'hold' rating on the stock, highlighted that market pricing had continued to improve, which has gone a way to reduce the gap to claims inflation.
"We remain cautious on Sabre given we are unconvinced about its ability to meet its long-term combined ratio guidance and believe competition from telematics providers will continue to be a headwind," said the analysts.
"We reduce our group premium estimates by £8.0m, as described above, which causes earnings per share to fall by circa 2%. We maintain our combined ratio estimates for 2022 (96.0% versus guidance of mid-90%) and 2023 (87.0%), but forecast Sabre to miss its long-term guidance of 70-80% from 2024 onwards. We reverse the government policy change in corporation tax rate and use a 25% tax rate from 2023 onwards."
Berenberg added that it remains "cautious" on the outlook for the company given its concerns about long-term combined ratio guidance.
Reporting by Iain Gilbert at Sharecast.com
