Berenberg slightly raises target price on Sabre Insurance

Analysts at Berenberg modestly raised their target price on car and motors insurer Sabre Insurance from 195.0p to 205.0p on Thursday, stating its deal with motorcycle insurance outfit MCE Insurance was a good one.

Berenberg said Sabre's surprise announcement that it had struck a deal with MCE, one of the largest distributors of motorcycle insurance in the UK, to become its exclusive underwriter had been "well received" by the market.

The analysts noted that the deal was "particularly attractive" because Sabre had gained access to all of MCE's claims experience, enabling it to fast-forward its entry into the motorcycle insurance market.

As a result, Berenberg raised its earnings expectations for the stock by 6% in 2022, the principal driver for the target price increase, but stated questions regarding the group's future still remained.

The German bank, which reiterated its 'sell' rating on the stock, said the move still failed to answer its big questions - will Sabre be able to regain the policy count lost over the past four years and will its combined ratio return toward 75%? Berenberg even noted that the latter may actually be "more difficult" given that the MCE deal was written at roughly 80%.