August 8, 2018 / 6:42 AM / 4 months ago

Hastings profit climbs as insurance demand offsets drop in prices

(Reuters) - Insurer Hastings Group Holdings Plc (HSTG.L) reported on Wednesday a 22 percent jump in first-half adjusted operating profit, as demand for its insurance products helped offset lower motor insurance prices and bad weather claims.

Gross written premiums rose 5 percent to 485.6 million pounds in the six months ended June, softening the blow from adverse weather, fraud activity, and an increase in the cost of repairs and bodily injury claims.

“This (profit growth) has been in an environment where we have seen market prices come down from the highs of 2017, driven by lower claims frequencies, the prospect of regulatory reform, and competition,” Chief Executive Officer Toby van der Meer said.

The cost of motor insurance in Britain has been pushed down because of expected changes in the rate used to calculate compensation for personal injuries, reforms likely to reduce claims for whiplash injuries, as well as a reduction in the volume of claims.

The insurer nudged up its full-year claims inflation outlook towards the upper end of a 3-5 percent range.

The company, which mainly sells motor insurance in the UK, said adjusted operating profit rose to 105.1 million pounds in the period, from 86.5 million pounds a year earlier.

Hastings, which offers motor and home insurance, and premium financing and ancillary products, has made headway in a competitive sector by focusing on selling motor insurance via price comparison websites.

Rival insurer Direct Line (DLGD.L) said last week that its first-half profit took a beating from a cold winter as the weather system dubbed “the Beast from the East” brought rare snow and sub-zero temperatures to much of Britain in late February and early March.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri

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