Hastings (HSTG) continued to tighten its grip on the general insurance market, and in the two years since flotation it now has 7 per cent of the UK private car insurance market.
Adjusted operating profit in the six months to June rose by more than a fifth to £86.5m, boosted by a 15 per cent rise in live customer policies to 2.54m. But none of this was achieved by putting volume ahead of quality when writing new business, with half of policy applications being rejected. The calendar year loss ratio – a measure of underwriting performance representing net claims incurred divided by net earned premiums – narrowed to 73.4 per cent from 74 per cent a year earlier; that’s below the 75-79 per cent target range.
Premiums rose as a result of a change in the Ogden rate used to calculate compensation payments and also higher insurance premium tax. The rise prompted greater use by customers of price comparison websites, which suits Hastings well as 90 per cent of its business is generated in this way.
Group solvency showed a sharp improvement, with the Solvency II coverage ratio jumping from 140 per cent to 173 per cent after the company was granted the right to use its own data and experience to determine premium and reserve risk.
Prior to these numbers, analysts at Barclays were forecasting earnings per share for the year to December 2017 of 17.6p, from 11.9p in 2016.
| HASTINGS (HSTG) | ||||
| ORD PRICE: | 327.3p | MARKET VALUE: | £2.15bn | |
| TOUCH: | 325.9-327.3 | 12-MONTH HIGH: | 331p | LOW: 196p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 87p* | COMBINED RATIO: | 88.9% | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Investment return (£m) | Dividend per share (p) |
| 2016 | 361 | 51.4 | 2.9 | 3.3 |
| 2017 | 462 | 68.9 | 3.1 | 4.1 |
| % change | +28 | +34 | +7 | +24 |
| Ex-div: | 05 Oct | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £560m, or 85p a share | ||||
