Rating agency says the insurance group’s slick operating model allows aggressive pricing
Recently-floated insurance group Hastings will continue to aggressively compete on price while posting better than average performance, says Moody’s.
A Moody’s report on the insurance outfit says the key to Hastings’ success was a low-cost operating model, state-of-the art technology and favourable reinsurance arrangements.
“Moody’s Investors Service expects Hastings Group to continue to grow profitability in the competitive UK private motor insurance market.
“The rating agency expects the company to maintain its better than industry average combined ratios whilst aggressively competing on price owing to its sophisticated pricing tools, the group’s lean cost base and reinsurance arrangements.
“The group also benefits from the legal separation of the its two operating segments, which enables ’Retail’ to compete on price and to absorb any premium discounts thereby protecting the loss ratios reported by ’Underwriting’,” the report says.
Analyst Helena Pavicic said: “Technology has given Hastings a competitive edge, enabling it to effectively compete on price and rapidly grow its market share.
“In addition, the lean operating model and favourable reinsurance arrangements allow the group to remain highly profitable in a very competitive market.”
Moody’s warned that risks for Hastings include a reduction in reinsurance capacity or increase in reinsurance costs, growth in renewals falling short of expectations or failure of Hastings to adapt to technological changes.
In October, Moody’s upgraded Hastings’s senior secured debt rating by two notches to Ba3 financial strength and the insurance financial strength rating of Advantage Insurance Company Limited by two notches to Ba1.
Hastings launched on the stock market last month a 170p. It currently stands at 160p.