Hastings ups dividend payout guidance as profit pushes higher

(Sharecast News) - Profit and customer numbers at Hastings grew in 2018, the insurer said on Thursday, as it upgraded its dividend payout guidance.In the year to 31 December 2018, pre-tax profit was up 3% to £130.6m, with adjusted operating profit 4% higher at £190.6m, in line with consensus expectations of £190m. Meanwhile, live customer policies grew 2.5% from 2017 to 2.71 million.Gross written premiums pushed up 3% during the year to £958.3m, while net revenue was 6% higher at £756.4m.In addition, Hastings upped its dividend payout ratio guidance for 2019 to between 65% and 75% from a previous range of 50% to 60%.Chief executive officer Toby van der Meer said: "I am pleased to announce a solid set of results for 2018, continuing our track record of profitable growth."We remain focused on long term profitable growth, with our price comparison website and digital focused business model built to take advantage of an increasingly digital landscape."We have made good progress on building our next generation technology solutions including our core platform, pricing, anti-fraud and digital capabilities in particular. Now our Guidewire programme is complete, it provides us with a scalable platform for future growth and we continue to deliver major milestones for customer digitalisation. This includes the launch of our new mobile app that has already been downloaded over 150,000 times, and our new online self-serve functionality and digital claims notification and tracking. I am also delighted that our colleagues have given us our highest ever colleague engagement score, at a level associated with best in class employers."Shore Capital pointed out that when it resumed coverage of Hastings in October 2018, the shares had fallen significantly on the back of slowing motor prices and the knock-on impact on growth."Since then the shares have rallied by 20% and reached our fair value of 220p. Despite this the shares are still only trading at 9.8x adjusted price-to-earnings ratio for 2019F and the payout ratio increase should drive the yield above the current 6.2% so there is scope for further improvement if the pricing environment improves."RBC Capital Markets said the increase in the dividend payout ratio guidance is positive for holders of the stock focused on income but perhaps signifies a pivot away from the strong growth trajectory that the company has enjoyed in recent years."Whilst Hasting has delivered good bottom line profits, we believe that the share price strength year to date in 2019 has revolved around the company seeing growth pick up again in a slightly hardening motor market. An increase in the target payout ratio is positive but could suggest that the high-paced growth profile of the company has changed for the medium term."At 1025 GMT, the shares were up 0.3% to 219.60p.