Hastings Group posts strong first half as market share improves

General insurance provider Hastings Group Holdings said it had continued to maintain its “strong momentum” through its first half on Wednesday, adding it was on track for another year of “profitable growth” as gross written premiums improved 28% to £462m.

The FTSE 250 company said net revenue was up 22% year-on-year to £345.2m in the six months to 30 June, while adjusted operating profit was also 22% higher at £86.5m.

Live customer policies were up 15% to 2.54 million, while the company’s share of the UK private car insurance market grew to 7% from 6.2% a year earlier.

Hastings said it calendar year loss ratio was 73.4% for the period, which was below the target range of between 75% and 79% and lower than the 74% reported at the interim in 2016.

“I am delighted that Hastings continues on its profitable growth trajectory,” said chief executive Gary Hoffman.

“We've delivered another strong financial performance for the first half of 2017 with net revenue increasing by 22% to £345.2m, live customer policies up by 15% and adjusted operating profit 22% higher at £86.5m for the period.

“Our significant presence and strategic focus on price comparison websites, together with our straightforward insurance offering appeals to customers and we continue to grow our market share by both attracting new customers and maintaining strong retention levels.”

The company described “consistent growth” in profitability, with an increase in its profit after tax 0f 36% to £57.9m.

It also reported ongoing cash generation and a reduction in its net debt leverage multiple, with free cash generated up 34% to £65.8m while its multiple reduced to 1.7x from 1.9x.

Hastings’ board said it made continued investment in the business during the period, including in its “next generation” claims and broking platform ‘Guidewire’, which it said would enable future growth opportunities and operational efficiencies.

There was a “significant improvement” in solvency, the board added, with a Solvency II coverage ratio of 173% - up from 140% at the start of the period - which benefitted from the use of ‘Undertaking Specific Parameters’ in the calculation.

Hastings’ board declared an interim dividend of 4.1p per share, up from 3.3p a year ago, which it said reflected increased earnings and “strong” cash generation.

“We continue to invest in our digital and data-driven model to ensure that we price our business in an agile and responsive manner,” Gary Hoffman explained.

“This approach allows us to maintain our robust underwriting discipline and has delivered a loss ratio for the period of 73.4%, which is below our target range.”

Hoffman said the company’s “profitable business model” was highly cash generative, and the company had further reduced its net debt in line with internal targets whilst improving the solvency coverage ratio to 173%.

“Our profitability and healthy financial position means we are declaring an interim dividend of 4.1p per share, a 24% increase from 2016.

“Supported by our 2,900 colleagues, we are well on course to deliver on our ambitious 2019 targets and continue our strong momentum into the second half.”