Motoring insurer Hastings to go private in £1.7bn deal


Motoring insurer Hastings set to be taken over by Finnish and South African duo in £1.7bn deal

  • Finnish and South African consortium bid 250p a share in cash for the group
  • FTSE 250-listed Hastings’ share price has jumped to reflect this
  • Hastings shareholders will still get their dividend paid out

Motoring insurance firm Hastings Group has seen its share price jump sharply today after agreeing to be taken over in a £1.66billion deal.

Finnish insurer Sampo Oyj and South Africa’s Rand Merchant Investment, which already own a 29.7 per cent stake in Hastings, have offered 250p per share in cash for the company.

This marks a 16 per cent premium on Hastings’ closing share price yesterday and is nearly 50 per cent higher than the price on 28 July. 

FTSE 250-listed Hastings has seen its share price rise over 17 per cent or 37.6 points to 252.6p today, while a year ago the price stood closer to 189.5p.

On the up: Motoring insurance firm Hastings Group has seen its share price jump sharply today

Hastings chairman Thomas Colraine said the cash offer ‘represents a very attractive proposition’, with the premium above the recent price ‘in line with our focus of generating value for shareholders and reflects the quality of our business.’

Top brass at Hastings said they intend to recommend unanimously that shareholders vote in favour of the proposed deal.

Hastings’ shareholders will also be entitled to a 4.5p a share interim dividend after it posted a pre-tax profit of £63.5million for the first half, marking a 37 per cent increase on a year ago. 

The firm’s gross written premiums increased by 3 per cent to £514million on a year ago, with the group reporting a drop in claims from customers involved in incidents during the height of lockdown when traffic levels plummeted.

Since the easing of certain lockdown restrictions, however, Hastings said claims frequencies had started creeping up again, but ‘remain lower than the equivalent period last year.’

The company said: ‘Claim severities continued to increase predominantly as a result of the underlying inflation in repair costs, combined with interruptions in the repair networks and supply of parts caused by COVID-19 and increased car rental costs, with repairs typically taking longer than anticipated.’

Hastings, which had been struggling with tough competition and price pressures in the UK motor insurance market, has nearly 3million live customer policies and a market share of 8.1 per cent. 

Rising: The number of claims has started to rise since lockdown easing, Hastings said today

Rising: The number of claims has started to rise since lockdown easing, Hastings said today

On the technology front, Hastings said: ‘There have also been further increases in digital adoption with 950,000 mobile app downloads and a 45% reduction in customer service calls per LCP.’

The company said its net debt remained ‘stable’ at £239.4million. 

Earlier this week, rival insurer Direct Line hiked its interim payout and set a special dividend after reporting better than expected first-half earnings on lower motor insurance claims.

Data published by the Society for Motor Manufacturers and Traders today revealed that new UK car registrations went up in July for the first time this year.

Around 174,887 cars were registered in July, marking a 11.3 per cent rise on the same month a year ago.The last time there was an increase was in December last year. 


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