(Alliance News) - Insurer Hastings Group Holdings PLC on Friday warned of a steep drop in annual profit, with claims in the last-quarter of 2019 rising.
The firm has also warned of a lower dividend for 2019 than the prior year.
Hastings reported "elevated" claims in the fourth-quarter, meaning its annual loss ratio, before a change in the Ogden rate last July, will be between 81% and 82% and adjusted operating profit will be GBP110 million, suggesting a 42% fall from 2018.
This compares to a loss ratio in 2018 of 75%.
Hastings saw higher repair and third-party credit hire costs, as well as "slightly" higher winter frequencies. Further, there was a small number of larger bodily injury losses.
The Ogden rate is a calculation used by courts to work out how much insurance companies need to pay out in the event of life-changing injuries to customers, taking into account the likely return from the investment of such awards.
Customer policies were broadly flat over the second-half, Hastings noted.
Hastings said the firm remains in a "strong" capital position, with an underwriting Solvency II coverage ratio within the target range as of December.
Chief Executive Toby van der Meer commented: "Whilst the market environment has been challenging, with elevated claims inflation in the fourth quarter, we remained focused on our strategy of maintaining pricing discipline, applying rate increases ahead of the market.
"During the year we have also continued to make progress on our technology, operational and strategic initiatives. We have started to see the initial benefits of this come through, including our ability to maintain strong retention rates over the year, which I will talk about more at the full year results."
"Taking in to account the operating performance in 2019, the board expects the 2019 total dividend to be lower than 2018," van der Meer continued.
"However, the board remains confident in the group's ability to capitalise on its long term profitable growth opportunities, and therefore expects to pay a total dividend above the group's stated 65% to 75% target payout range. 2020 trading has started in line with expectations."
By George Collard; georgecollard@alliancenews.com
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