Lock in an 11% yield with Sabre

Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?

Model Car on money inside transparent piggy bank
(Image credit: Getty Images)

A good piece of advice for investors in general is to avoid the motor insurance industry. It has a terrible record when it comes to making money. Since 2008, the UK motor insurance industry has reported an average combined ratio of 104%.

A combined ratio is a key metric of profitability for the insurance sector. It tells us how much a company pays out in insurance claims compared with how much it receives from premiums. If the ratio is consistently above 100%, that’s not a good sign, as it means the company is consistently losing money on an underwriting (pure insurance) basis.

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Rupert Hargreaves
Contributor and former deputy digital editor of MoneyWeek

Rupert is the former deputy digital editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.

Rupert has written for many UK and international publications including the Motley Fool, Gurufocus and ValueWalk, aimed at a range of readers; from the first timers to experienced high-net-worth individuals. Rupert has also founded and managed several businesses, including the New York-based hedge fund newsletter, Hidden Value Stocks. He has written over 20 ebooks and appeared as an expert commentator on the BBC World Service.