Shares in Hastings Group Holdings PLC (LON:HSTG) tanked on Thursday after the British insurer said heavy snow resulted in higher-than-expected claims costs in the first quarter.
The so-called Beast from the East brought over icy winds and snowfall from Siberia to Europe in February and March.
In a trading update, Hastings said while the cold weather pushed up claims costs in the first quarter to March 31, it remains confident of delivering a loss ratio “just below or within” the target range of 75-79% for the full year.
The company also said the quarter was hit by continued price competition.
Price competition could hurt full year profits, says analyst
Mike van Dulken, head of Research at Accendo Markets, said the remarks amid price competition is code for “we had to offer lower premiums to secure business”.
"This trend may have since improved, but any return of more 'challenging' pricing conditions could weigh on full year profitability," he said.
READ: Hastings Group on track to meet targets as it reveals strong nine months
Shares fell 5.7% to 263.2p in morning trading.
Despite the price competition and rise in claims costs, the group reported a 12% year-on-year increase in revenue to £184mln for the quarter, boosted by a rise in its customer base and market share.
Live customer policies rose by 10% to 2.67mln while the market share grew to 7.4% from 6.7% last year.
Gross written premiums climbed 5% to £226mln.
On track to meet 2019 targets
“We remain on track to deliver on our targets, including achieving 3 million customers during 2019 whilst maintaining our underwriting discipline and strong capital position,” said chief executive Toby van der Meer.
“We effectively traded through another competitive period for UK motor insurance, seeing good growth, in particular, in March and April.”
Hastings improved its digital offering during the period to allow customers to make claims and changes to policies online. The group also launched a new digital customer feedback platform and new software to test mobile and web applications.
“Our digital, data driven and agile business model leaves us well positioned to take advantage of continued consumer switching and growth of digital channels,” said Van der Meer.