Hastings Group Holdings PLC (LON:HSTG) has become the latest UK insurer to report a strong start to 2017, with gross written premiums, net revenue and profits all jumping in the first half of the year.
In the six months ended 30 June, Hastings reported a pre-tax profit of £68.9mln, more than a third ahead of the £51.4mln it posted at the same stage last year.
READ: Analysts weigh in on insurers Hastings and Esure after government cuts Ogden discount rate
Gross written premiums also surged by 28% to £462mln (H1 2016: £360.6mln), while net revenue increased by 22% to £345.2mln (H1 2016: £282.7mln).
The FTSE 250-listed insurer said it enjoyed a “strong trading performance” during the period, as adjusted operating profit also grew by 22% to reach £86.5mln (H1 2016: £70.8mln).
Rising customer numbers were partly responsible for the healthy financials; live customer policies grew by 15% to 2.54mln (H1 2016: 2.2mln).
That, in turn, helped Hastings beef up its share of the market which now stands at 7% of UK private car insurance (H1 2016: 6.2%).
The board hiked the dividend by 24% to 4.1p per share (H1 2016: 3.3p), which it said reflected the company’s “profitability and healthy financial position”.
As expected, net claims incurred rose to £143.4mln from £115.5mln for the same period of 2016.
‘Another strong performance’
“I am delighted that Hastings continues on its profitable growth trajectory. We’ve delivered another strong financial performance for the first half of 2017,” said chief executive Gary Hoffman.
“Our significant presence and strategic focus on price comparison websites, together with our straightforward insurance offering appeals to customers and we continue to grow our market share by both attracting new customers and maintaining strong retention levels.
‘’We continue to invest in our digital and data-driven model to ensure that we price our business in an agile and responsive manner.”
Strong cash generation and improved solvency
The group’s calendar year loss ratio was 73.4% for the period, which was below the target range of between 75% and 79% and lower than the 74% reported at the interim in 2016.
Hastings also reported ongoing “strong” cash generation with free cash generated up 34% to £65.8mln.
The board added that there was a “significant improvement” in solvency with a Solvency II coverage ratio of 173% – up from 140% at the start of the period.
Motor insurance competition to hurt Hastings, says broker
“Hastings reported a good set of 2017 interims which slightly exceeded our and the market’s expectations at the operating profit and dividend levels,” said Liberum analyst Eamonn Flanagan this morning.
“This was driven by better than we had expected motor underwriting results which offset weaker than we had anticipated investment income.
“Much progress was delivered on the growth within motor but, not surprisingly Hastings, like others, continues to struggle in UK household.
“However, the recent announcement from LV and Allianz regarding the establishment of a joint venture materially increases the competitive pressures in the UK personal lines market, especially in motor.”
Shares edged 0.6% higher to 325p in early deals, although they’re up more than 6% over the past week or so in anticipation of today’s results.
--Updates for broker comment and share price--