Upgrade to 'Hold'#
Jefferies has upgraded Sabre Insurance Group's rating from "underperform" to "hold" after the company reported second-half earnings for 2025 that exceeded analyst expectations by 16%. This positive performance was largely attributed to stronger underwriting results, which refer to the process of evaluating and assuming risk in insurance.
Earnings Projections and Price Target#
Following the earnings report, Jefferies raised its price target for Sabre shares to 152 pence from 110 pence. The brokerage also increased its earnings per share (EPS) estimates by an average of 15% across forecast years, projecting EPS at 15.68 pence for 2026, 17.41 pence for 2027, and 18.79 pence for 2028. As of the last close, Sabre shares were at 145.80 pence, suggesting a potential upside of about 4% to the new target.
Positive Developments#
Several positive factors contributed to the upgrade. Sabre achieved a net insurance margin of 19.2% for the full year of 2025, surpassing Jefferies' previous estimate of 17.9%. Additionally, gross written premiums, which represent the total amount of premiums written by the insurer, grew by 2.6% in the fourth quarter, with further growth of over 5% noted in early 2026. The company also announced a surprising £5 million share buyback, increasing the total capital return yield to approximately 9.5%.
Concerns and Future Outlook#
Despite the positives, Jefferies highlighted three concerns. The cost ratio rose by 2.7 percentage points year-on-year, and the solvency capital requirement increased even with lower volumes, which could limit capital deployment. Furthermore, Sabre's new pricing model aimed at expanding its market presence is taking longer to implement than anticipated, with limited financial impact expected in 2026. Jefferies set a cost of equity at 11.5%, reflecting the risks involved in execution. Overall, while the outlook is cautiously optimistic, Jefferies refrained from a "buy" rating, citing execution risks and ambitious profit targets for the future.