Hastings results impacted by persistent claims inflation

Hastings has reported higher claims costs in Q4, with increases in repair and third-party credit hire costs, slightly higher winter frequencies than the year before and a small number of larger bodily injury losses.

The firm expects its adjusted operating profit to be in the region of £110m. 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%. In October, the broker highlighted its objective to remain within the full year 75%-79% target range. Yet it warned that the loss ratio could move "slightly above, should elevated claims inflation continue".

The group stated that, with its focus on pricing discipline, it had maintained its strategy featuring rate increases ahead of the market, resulting in live customer policies remaining broadly flat over H2 2019, at 2.85 million. Live customer policies are 5% up y-o-y, following retention rates characterised as “strong”.

Chief executive officer of Hastings Group, Toby van der Meer said: “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 into account the operating performance in 2019, the board expects the 2019 total dividend to be lower than 2018,” he added. “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.”

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