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Hastings Insurance shares plunge on outlook concerns amid growing competition

The insurer said claims inflation was expected to continue to exceed premium inflation and that its loss ratio for the full year was expected to be at the lower end of its target range

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Hastings customer policy numbers were broadly flat in the third quarter

Hastings Insurance Group PLC (LON:HSTG) said it had grown revenues and customer numbers in 2018 but warned that the outlook was uncertain due to the impact of intense competition in the insurance market, knocking its shares.

The technology-driven insurance provider said on Thursday that live customer policies had increased 4% to 2.70mln in the nine months to September 30 as gross written premiums jumped 3% to £738.5mln.

READ: Hastings sees strong growth in half-year revenue, profit despite adverse weather, competitive markets

The FTSE 250-listed firm said that while market conditions had remained competitive during the third quarter, with falling average market premiums, it had maintained its underwriting discipline, resulting in average written premium inflation of 2% for the nine-month period.

Its net revenue increased by 7% to £574.1mln during the period.

For the quarter, customer policy numbers were broadly flat, due to a combination of applying premium rate increases and the 0.5% growth in car customers being offset by a small reduction in the home, it said.

Hastings said ongoing investment into the group's technology programme, including additional investment in its anti-fraud capability and development of new underwriting and retail pricing models, would support profitable growth in 2019 and beyond.

During the period, the group further improved its digital proposition, rolling out a mobile app and online portal enhancements for customers, and completed testing of a new digital claims notification system.

Looking ahead, the insurer said it expects to maintain its disciplined pricing strategy in a competitive market that is likely to continue for the rest of the year. It added that despite the pricing actions taken during the year, claims inflation is expected to continue to exceed premium inflation and that its loss ratio for the full year was expected to be at the lower end of the target range of 75% to 79% and trend towards the middle of the target range for the year ending December 2019.

"We remain well positioned in a very large market with 31 million cars on the road, growing consumer adoption of digital channels and continued media and regulatory focus on consumer switching,” CEO Toby van der Meer said in a statement.

"Our focus remains on continuing to profitably grow our successful, technology led business with sophisticated and disciplined pricing at its core.”

Shares lower ​

Analysts at Shore Capital said their forecasts for Hastings were under review after the key metrics reported by the insurance firm came in below the brokerage's expectations

“Hastings remains confident in its ability to reach 3mln customer policies in 2019 but the slow down seen in this quarter will not be reassuring for investors, in our view,” Shore Capital analysts wrote in a note to clients.

“Unfortunately for Hastings, there is little in this trading update to indicate a turnaround in fortunes in the short-term,” they added.

Shares in Hastings were 9.2% down at 20.20p in early afternoon trade.

- Updates to add analyst comment, share price - 

Quick facts: Hastings Group Holdings PLC

Price: 171.4 GBX

LSE:HSTG
Market: LSE
Market Cap: £11.51 m
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