Hastings Group Holdings plc (LON: HSTG), the technology driven insurance provider, has provided an update on its trading performance for the 9 months ended on the 30th September 2019.
Financial and Operational review
· Live customer policies (‘LCP’) up 5% year on year to 2.84 million as at 30 September 2019. Policy growth has been supported by continued strong retention rates.
· Gross written premiums up 2% to £753.1m for the 9 months ended 30 September 2019. The increase in premium prices have been offset by a change in the risk mix of business that is aimed at lower risk segments and a reduction in younger drivers.
· The Group has continued to prioritise pricing discipline in the third quarter, applying rates in line with the first half claims inflation and ahead of the market. The market has remained competitive, with market premiums continuing to lag claims inflation, and the Group’s new business competitiveness has therefore fallen.
· Claims inflation has elevated in the third quarter to 7%-8% with inflation experienced across third party credit hire cost, repair costs and mid-range bodily injury costs.
· Calendar year loss ratio of 79.1% for the 9 months ended 30 September 2019, before the impact of the Ogden rate change.
· Net revenue down by 2% to £563.8m for the 9 months ended 30 September 2019 due to the impact of lower earned premiums and lower reinsurance commissions.
· Growth in Home to 200,000 LCP, as the Group’s in-house Home underwriting continues to be embedded along with the support of the third-party panel members.
· The Group is supportive of the interim FCA report on general insurance pricing practices. The Group’s agile business model, technology, and focus on price comparison distribution should leave the Group well positioned to respond to the FCA’s final recommendations.
· Successful transition to the Group’s new repair service providers, with an improved customer experience. The final stage of this transition, with non-fault claims services moving to Enterprise Rent-A-Car, remains on track to complete in the fourth quarter.
· Continued execution of the Group’s digital and technology strategy with a 15% reduction in customer service calls per LCP and around 60% of total loss claims now being settled digitally. Investment spend will continue in the rest of 2019 and in 2020 in line with the Group’s strategic initiatives and digital proposition.
· Continued commitment to diversity, with a 10% increase in senior female leaders in 2019, the Group is on track to achieve the 30% Club female leadership commitment target set by the end of 2020.
Toby van der Meer, Chief Executive Officer of Hastings Group Holdings plc, commented:
“I am pleased with the progress the Group continues to make on its strategic initiatives and digital investments. We have successfully transitioned to our new repair partners to benefit customers, while the ongoing digitalisation of the business has been continued by the increasing popularity of our mobile app, with 430,000 downloads since its launch.
“The market remained competitive in the third quarter, with market premium inflation continuing to lag claims inflation. We maintained focus on pricing discipline, applying rates ahead of the market, in line with our stated targets and strategy. We are confident that continuing to invest in our growth opportunities whilst navigating these current market conditions is the right thing to do. As always, I would like to thank the entire Hastings team for their commitment and hard work for customers.”
The Group continues to monitor claims trends and apply price increases to remain within the full year 75%-79% target range. The full year loss ratio outlook will however be dependent upon claims experience during the fourth quarter and the loss ratio, before the impact of the Ogden rate change, could move from the top of the target range to slightly above should elevated claims inflation continue.
Looking ahead, the Group continues to invest in its future and has made good progress on its strategic initiatives including pricing, claims and anti-fraud and maintaining the Group’s position as an agile, technology driven, low cost operator. These initiatives will ensure the Group is well placed to capitalise on its long-term profitable growth opportunities.