Hastings (HSTG) cemented its position in 2016 as one of the fastest-growing general insurance providers, with gross written premiums up by a quarter and adjusted operating profit ahead by 21 per cent at £152.1m. However, £20m was cut from this total following a change in the Ogden discount rate used to calculate interest payments on compensation payments.
The combined ratio (of claims and expenses as a percentage of premium income) remained highly profitable at 87.3 per cent, although this was 91.3 per cent after the impact of the rate change. The effects of Ogden will be temporary, with Hastings increasing car insurance premiums soon after the announcement.
Live policy numbers grew by 15 per cent to 2.3m, and, with a view to continuing its growth strategy, Hastings has employed 340 new workers at its site in Leicester as part of the new operating platform Guidewire. This is a system that currently processes 80 per cent of claims, and while there will be dual running costs in 2017 as the old system is phased out, there will be significant operational leverage the following year when there is just one system operating.
Analysts at Shore Capital are forecasting adjusted EPS for the year to December 2017 of 19.4p (from 14.7p in 2016).
| HASTINGS (HSTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £1.56bn | |
| TOUCH: | 236.5-237p | 12-MONTH HIGH: | 253p | LOW: 147p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 84p* | COMBINED RATIO: | 91.3% | |
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
|---|---|---|---|---|
| 2012** | 264 | 55.9 | 3.7 | nil |
| 2013** | 407 | 56.0 | 4.2 | nil |
| 2014** | 475 | -1.4 | 3.7 | nil |
| 2015 | 615 | 5.0 | 5.3 | 2.2 |
| 2016 | 769 | 94.3 | 7.2 | 9.9 |
| % change | +25 | - | +36 | - |
Ex-div: 4 May Payment: 31 May *Includes intangible assets of £567m, or 86p a share **Pre-IPO figures | ||||
