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Hastings profit rises but premium growth disappoints
FTSE 250 insurer Hastings posted a rise in full-year profit on Thursday as it continued to grow its share of the UK private car insurance market, but growth in gross written premiums left investors disappointed.
In its preliminary results for the year to the end of December 2017, the company said pre-tax profit increased to £149m from £94.3m as net revenue pushed up 21% to £715.6m. Meanwhile, gross written premiums were also up 21%, to £930.8m and Hastings grew its market share to 7.3% from 6.5% the year before.
RBC Capital Markets said gross written premiums were 4% below its estimate and 2% below consensus.
Live customer policies increased by 13% to 2.64m, which was a touch below RBC's forecast of 2.66m and consensus of 2.68m.
Adjusted operating profit was up 39% to £184.1m and the combined operating ratio improved to 87% from 91.3%. A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above means that it is paying out more money in claims than it is receiving from premiums.
The company proposed a final dividend for 2017 of 8.5p per share, up from 6.6p in 2016 and taking the total dividend to 12.6p from 9.9p.
Hastings' outlook was cautious. It said the competitive environment continues to be intense, with slower premium inflation since the end of the third quarter than that experienced in the first half of 2017 following the proposed Ogden rate review.
Chief executive Toby van der Meer, who took on his new role as CEO on Thursday as planned, said: "We have great momentum and our 2017 record profits are testament to our agile, data driven business model and the passion and commitment of our 3,100 colleagues.
"Over the last few years we have grown from a small private company to a plc with over 2.6 million customer policies. With over 31 million cars and 20 million homes in the UK, and increased consumer switching through digital channels, we have plenty of opportunity for further growth. Looking ahead I want to ensure Hastings remains a leader in using digital and technology to make insurance straightforward for customers."
At 1010 GMT, the shares were down 7.2% to 290.20p.