Car insurer Hastings has already raised its prices to take account of the jump in personal injury compensation payments announced this week.
The government on Monday changed the way that payments for injuries are calculated, which will result in much higher claims costs for the insurance industry.
Gary Hoffman, Hastings chief executive, on Thursday said the company had already reacted. “We put a price increase in on the day,” he said. “We needed to take action and we did so quickly.” He declined to comment on the size of the rise.
He said he expected Hastings to do well out of the change as higher prices prompted people to shop around on price comparison sites.
“Our proposition is built for price comparison sites so we’d expect to be net winners from this,” he said. “In the past year the number of people searching for insurance on price comparison sites has gone up from 66 per cent to 68 per cent. We rise with that tide. Our market share in UK motor has gone up from 5.8 per cent to 6.5 per cent.”
In the short term the changes to the compensation rules depressed Hastings’ 2016 results as the numbers included a one-off charge of £20m to cover the impact of the expected jump in the size of lump sum payments.
Before that charge, the results beat analysts’ expectations. Operating profit grew by a fifth to £152m, slightly ahead of consensus forecasts. Earnings per share came in at 11.5p, up from 0.5p the previous year.
The company, which floated in 2015, raised some of its financial goals on the back of the numbers. “It is 18 months since the IPO,” said Mr Hoffman. “By setting new targets, we are declaring victory on the IPO targets.”
Hastings has increased its target for policy numbers from 2.5m by the end of 2017 to 3m by 2019. It ended 2016 with 2.35m customers. It has also pledged to cut its debt to a lower level than previously promised.
The company declared a final dividend of 6.6p, up from 2.2p last year.
Eamonn Flanagan, analyst at Shore Capital, said it was “a good set” of results. “This was driven by better than we had expected premiums and underwriting results which offset lower than we had expected ancillary/instalment income,” he said.
The shares rose 1 per cent and are now 40 per cent ahead of the IPO price.
Mr Hoffman said that South African investment group RMI had on Wednesday completed its acquisition of just under 30 per cent of Hastings’ shares. It bought them from the founders of the group and Goldman Sachs’ private equity arm. Herman Bosman, RMI’s chief executive, is to join Hastings’ board.
source http://www.omnipopmag.com/2017/03/02/hastings-bumps-up-prices-on-injury-payout-shake-up/
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