(Sharecast News) - Hastings Group said gross written premiums remained "stable" at £961.6m in 2019 in its preliminary results on Thursday, while underlying average premiums were up 5%, with the increase in prices being offset by a change in the risk mix of business.
The FTSE 250 insurer reported growth in live customer policies to 2.85 million for the year ended 31 December, which was a year-on-year improvement of 5%, driven by continued strong retention rates.
It reported further growth in home to 209,000 policies, a 27% increase year-on-year, as it continued to enhance the capabilities of its in-house underwriting team and work with third party panel members.
Adjusted operating profit fell to £109.7m from £190.6m, or to £118.1m before the impact of the Ogden rate change, from £176.0m in 2018 before the one-off VAT recovery.
Profit after tax for the year plunged to £69.7m from £130.6m.
Hastings said its calendar year loss ratio before the impact of the Ogden rate change was 81.6%, compared to 2018's 75.0%, or was 82.6% after the impact of the rate change.
That, the board said, was driven by elevated market claims inflation, with increases in repair and third party credit hire costs, and a small number of larger bodily injury losses.
Free cash generation was £141.0m for the year ended, down from £167.7m.
It described its solvency position as "strong", with its underwriting subsidiary achieving a Solvency II coverage ratio of 151%, down from 161%, or 156% before deducting the anticipated dividend due to be paid to the group entity in the first half of 2020.
The board proposed a final dividend of 5.5p per share, down from 9.0p per share at the end of 2018.
Together with the interim dividend of 4.5p per share, it would equate to a total dividend payout ratio of 88.0% of adjusted profit after tax, compared to 58.9% in 2018.
On the operational front, Hastings said pricing discipline remained a priority, with the group continuing to increase rates during 2019 ahead of the market, alongside continued development of enhanced risk selection and pricing capabilities.
It said its 2020 reinsurance programme had been successfully placed, with strong demand.
The firm also reported "strong" customer retention over the second half of the year, and up five percentage points since 2018, which reportedly reflected the new pricing models and operational initiatives implemented during the year.
Hastings said it remained supportive of the ongoing FCA work on general insurance pricing practices.
The group said its "agile" business model, technology, and focus on price comparison website distribution should leave it well positioned to respond to the FCA's final recommendations.
It also reported a successful transition to its new repair service and mobility providers, supporting improved customer service and helping to increase its claims customer net promoter score by six points.
Hastings said its "next generation" anti-fraud platform had been able to detect sophisticated types of policy and claims fraud through the use of social network analytics, and new data point connections, with a 96% increase in the number of fraud cases identified during 2019.
There was a "continued focus" on the company's digital investments and strategic initiatives , with 550,000 mobile app downloads since its launch, which had contributed towards an 18% reduction in customer service calls per live customer policy.
Hastings said it had a "continued drive" to do business "in the right way", successfully achieving the 30% Club gender diversity target, and continued progress on its environmental, social and governance agenda.
"As outlined in our January trading statement, the market environment was challenging in 2019, particularly due to elevated claims inflation which has impacted our loss ratio for the year and our adjusted operating profit," said chief executive officer Toby van der Meer.
"We remain focused on pricing discipline and are applying rate ahead of the market.
"Against this backdrop, I'm really pleased by the progress the Hastings team has made delivering on our strategy during 2019, which positions us well for 2020 and beyond."
Van der Meer said policy numbers had increased 5% to 2.85 million, with that growth delivered through more of its existing customers choosing to stay with Hastings, leading to a five percentage point improvement in its customer retention rates.
"We have improved our digital proposition, with record levels of digital adoption.
"Our continued investment in technology, data and modelling techniques has also enhanced our capabilities in pricing and fraud detection, with 96% more cases of fraud identified in 2019 compared to 2018."
Van der Meer added that the company's colleagues and culture were "fundamental" to its success, noting that Hastings had achieved the second highest colleague engagement score in its history, and met the 30% Club target a year early.
"It's an honour and privilege to lead such a great team and my thanks go to our 3,300 colleagues for what they do every day for our customers and each other."
At 1110 GMT, shares in Hastings Group Holdings were down 1.97% at 169.1p.
11 Jan 2019 07:27
Hoskins out, John Worth in as Hastings finance chief
(Sharecast News) - Hastings Group announced on Friday that Richard Hoskins, who had been with the business since April 2015, was retiring from his position as group chief financial officer.
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