Hastings posts rise in nine-month written premiums but outlook cautious

(Sharecast News) - FTSE 250 insurer Hastings Group posted a rise in nine-month gross written premiums on Thursday but struck a cautious note on the wider outlook for the market.In the nine months to 30 September, gross written premiums were up 3% to £738.5m, while net revenue rose 7% to £574.1m.Live customer policies were 2.70 million as at 30 September, up 4% on the year and Hastings' share of the UK private car insurance market was 7.5%.Hastings said that despite pricing actions taken during the year, claims inflation is expected to continue to exceed premium inflation and the group's loss ratio for the full year is expected to be at the lower end of the target range of 75% to 79% and trends towards the middle of the target range for the year ending 31 December 2019.The insurer said it was confident of the underlying momentum of the business and continues to work towards its target of 3 million live customer policies in 2019 and ongoing growth beyond. This will be delivered through a combination of the launch of enhanced price comparison website pricing, additional anti-fraud capabilities, initiatives to enhance customer service and retention, the roll out of the new home panel and an enhancement of the direct and multi-car product offering.Chief executive officer Toby van der Meer said: "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."Our focus remains on continuing to profitably grow our successful, technology led business with sophisticated and disciplined pricing at its core."At 1110 BST, the shares were down 10% to 198.30p. RBC Capital Markets said nine-month premiums came in below its expectations of £762.5m while live customer policies also fell short of its expectation of 2.80 million.The bank said the company's 2019 loss ratio outlook "feels disappointing" and looks weaker than it had hoped as it had pencilled in 75.4%."Hastings is a nimble player in a price comparison focused UK motor insurance market. Whilst, we see Hastings as having strong ability in its core markets, we believe that the current valuation already gives the company credit for its data driven approach and near term growth potential," said analyst Kamran Hossain.UBS said: "The key question we have looking at these results, and recent industry data from Confused/AA, is how quickly pricing will catch up with claims inflation. Hastings flags its expectation that the price increases it is seeing will not be enough to offset claims inflation in 2H18E, suggesting market competition may be prohibiting this 'catch-up'. The outlook for UK motor insurers remains mixed, albeit there are some signs of a stabilising pricing outlook."