(Adds CEO comment, detail, share price)
LONDON, March 2 British insurer Hastings Group
Holdings Plc on Thursday reported a 5 percent jump in
2016 operating profit, as it increased customer numbers and
market share, but a charge for a rule change on payments on
certain claims ate into profits.
Hastings said its results included a one-off pre-tax charge
of 20 million pounds ($24.55 million) after Britain's justice
ministry this week changed the rate for calculating lump sum
payments for personal injury claims. This is expected to lead to
sharp increases in the payouts.
"We do not see any material impact on 2017," chief executive
Gary Hoffman told Reuters but he also said: "This puts up claims
costs and as a consequence, premiums are likely to continue to
Consultants PwC said insurance premiums were likely to rise
by 50-75 pounds on an average policy after the discount rate was
cut to -0.75 percent from 2.5 percent, with young drivers likely
to be most affected.
Hastings has already increased its premiums as a result of
the discount rate cut, Hoffman said, though he declined to
disclose the size of the increases.
Hastings, which listed on the London Stock Exchange in
2015, offers private car insurance, home insurance, motorbike
and van insurance and premium financing and ancillary products.
It has made headway in a competitive sector by focusing on
selling motor insurance via price comparison websites.
The company, which mainly operates in the UK motor market,
said operating profit rose to 132.1 million pounds ($162.18
million) for the year ended Dec 31, after taking account of the
discount rate charge.
Gross written premiums rose by 25 percent to 769 million
pounds, with active customer policies rising by 15 percent to
It said it was on track to meet or beat its initial public
offering targets and introduced new targets for 2019, including
increasing customer policies to 3 million, compared with a
target of 2.5 million by the end of 2017.
The discount rate change should support Hastings' business
model in comparison with other insurers as it would encourage
more switching, RBC analysts said in a note, reiterating their
"perform" rating on the stock.
Hastings' shares rose 0.3 percent to 233.3 pence at 0823
GMT, compared with a 0.13 percent drop in the FTSE mid-cap index
. Hastings' shares have risen nearly 40 percent since the
Hastings said it would pay a final dividend of 6.6 pence per
share and total dividend of 9.9 pence.
($1 = 0.8145 pounds)
(Reporting by Carolyn Cohn and Noor Zainab Hussain, editing by
Maiya Keidan and Jane Merriman)