Hastings Group posts impressive rise in profit

General insurance provider Hastings Group Holdings announced its interim results for the six months to 30 June on Wednesday, with the board claiming “impressive momentum”.

The FTSE 250 firm said gross written premiums were up by 28% to £360.6m, with net revenue up by 27% to £282.7m compared to a year earlier.

Group operating profit was up by 20% to £70.8m.

Hastings reported a continuing increase in customers and market share, with live customer policies up by 17% to 2.2 million and market share of UK private car insurance increasing to 6.2%.

There was also continued growth in home and telematics, with live customer policies increasing by 67% and 73% respectively, as Hastings claimed to benefit from continued growth in price comparison website penetration.

Its calendar year loss ratio for the period was 74.0%, below the 75% to 79% target range over the insurance market cycle, with strong operational performance and lower financing costs increasing net income by 55% to £51.9m.

Hastings’ board reported ongoing cash generation and accelerated debt repayment, with retail cash generation up 29% to £49.1m and net debt leverage multiple reduced to 1.9x, from 3.2x.

The company’s Solvency II coverage remained stable at 156%.

It declared an interim dividend of 3.3p per share, in line with the group's dividend policy and reflecting the ongoing cash-generative nature of the business.

“Our agile, digital and data-driven approach continues to deliver strong profitable growth in line with our IPO promises, with operating profit increasing by 20% to £70.8m for the period,” said CEO Gary Hoffman.

“Customer numbers are now 2.2 million reflecting both market share gains from price comparison website penetration and our focus on excellent customer service driving above industry-average retention rates.

“Gross written premiums were 28% higher which, combined with our sophisticated risk selection process and award winning counter-fraud operations, helped us deliver a loss ratio of 74.0%, below our target range,” Hoffman added.

He said the company was continuing to invest for the future, with more than 700 colleagues now in Leicester, providing additional capacity for growth.

Guidewire, the firm’s next-generation claims and broker platform, was already handling all new claims and is now being rolled out to Hastings’ retail operation for broking and billing, Hoffman added.

“These investments will continue to deliver significant benefits and efficiencies for our colleagues, customers and the company.

“Our profitable, cash generative operations have allowed us to further strengthen our balance sheet and reduce leverage whilst delivering on our dividend policy by declaring an interim dividend of 3.3p per share,” Hoffman explained.

He said the group's strong growth trajectory is driven by the commitment of its 2,700 colleagues as Hastings remains focused on providing competitively priced insurance to UK customers.

“We remain well positioned to deliver continued profitable growth in 2016; the increases in premiums we've written will continue to earn through over the life of the policies, and we've seen no significant changes to the premium and claim inflation trends since the period end.

“We are firmly on track to meet, or beat, all of our targets,” Hoffman affirmed.