HSTG.L Regulatory News (HSTG)

Hastings Group Holdings plc

This Announcement Contains Inside Information

Trading update for the year ended 31 December 2019

17 January 2020

Hastings Group Holdings plc ('the Group', or 'Hastings'), the technology driven insurance provider, today provides an update on its trading performance for the year ended 31 December 2019. 

Group performance

The Group has seen elevated claims costs in the fourth quarter, with increases in repair and third party credit hire costs, slightly higher winter frequencies than the prior year, and a small number of larger bodily injury losses. As a result, the 2019 calendar year loss ratio, before the impact of the July Ogden rate change, is expected to be in the range of 81%-82% and adjusted operating profit in the region of £110m.

With the Group's focus on pricing discipline, we have continued to apply price increases ahead of the market, resulting in live customer policies remaining broadly flat over the second half of 2019 at 2.85 million. Compared with the prior year, live customer policies are 5% up, supported by strong retention rates during the year.

The Group continues to maintain a strong capital position, with the Underwriting subsidiary Solvency II coverage ratio within the target range as at December 2019, and remains strongly cash generative.

Toby van der Meer, Chief Executive Officer of Hastings Group Holdings plc, 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. 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 65-75% target payout range. 2020 trading has started in line with expectations."

Information communicated in this announcement is inside information under the provisions of Article 7 of the Market Abuse Regulation ((EU) No 596/2014).

Management will host an update conference call for investors and analysts at 7.45am GMT on 17 January 2020. The call can be accessed on +44 (0)330 336 9411, confirmation code 2736605.

 For more information, please contact:  

Hastings Group

John Worth

Chief Financial Officer 

T: +44 (0)1424 738366 ir@hastingsplc.com

John Armstrong

Head of Investor Relations

T: +44 (0)1424 738244 ir@hastingsplc.com

Instinctif Partners   

Tim Linacre/Lewis Hill 

T: +44 (0)207 457 2020 hastings@instinctif.com 

About Hastings

Founded in 1996 in Bexhill-on-Sea on the Sussex coast, the Hastings Group is one of the leading general insurance providers to the UK market, with 2.85 million live customer policies and employing over 3,300 colleagues at sites in Bexhill, Leicester, Gibraltar and London.

Hastings provides straightforward products and services to UK car, bike, van and home insurance customers with around 90% of policies directly underwritten by Group's Gibraltar based Underwriting business, Advantage Insurance Company Limited.

Hastings Direct is a trading name of Hastings Insurance Services Limited, the Group's UK broker, which also trades via 'Hastings Premier', 'Hastings Essential', 'Hastings Direct SmartMiles', 'People's Choice' and 'insurePink'.

The Group operates as an insurance provider with two separate businesses. The Group's Retail business, Hastings Insurance Services Limited, is responsible for the end customer pricing, fraud management, product design, distribution and management of the underlying customer relationships. The Group's Underwriting business, Advantage Insurance Company Limited, engages in risk selection, underlying technical pricing, reserving and claims handling.

Retail is supported by, and benefits from, Underwriting's prudent approach to risk and reserving and also benefits from a panel of insurance partners who provide additional underwriting capacity. The Group's integrated model deliberately separates underlying product manufacturing from its distribution.

Forward-looking statements

This trading update may contain forward-looking statements about current expectations, intentions or forecasts of future events, including statements about market trends and our strategy, investments, future operations, industry forecasts and regulatory framework. Forward-looking statements include statements about expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not statements of historical fact. Words or phrases such as "anticipate", "believe", "continue", "ongoing", "estimate", "expect", "intend", "may", "plan", "potential", "predict", "project", "target", "seek" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in our forward-looking statements for many reasons, including the factors described in the section entitled "Managing our risks" in our 2018 Annual Report. In addition, even if our actual results are consistent with the forward-looking statements, those results or developments may not be indicative of results or developments in subsequent periods.