Hastings plans dividend payout in spite of Bank of England warning
Car insurer Hastings has revealed it plans to go ahead with its final dividend in spite of a recent warning from the Bank of England to the sector over shareholder payouts.
The group confirmed it intends to pay a 5.5p a share final divi – a 39% reduction on the previous year – and will seek shareholder approval for the move at its annual general meeting on May 21.
It stressed the group has no direct claims cost exposure to coronavirus, such as travel or business interruption insurance.
Hastings also added that it does not plan to access any Government funding support and is continuing to employ all its staff on full pay.
Shares in the group rose 5%.
Its decision comes in spite of a letter from the Bank of England’s Prudential Regulation Authority to insurance bosses last month urging them to think carefully before making shareholder dividend payouts and handing out staff bonuses amid the coronavirus crisis.
Big insurers such as More Than owner RSA, Direct Line and Aviva have scrapped their dividends in response.
But Hastings said it “remains confident of the group’s robust capital position, current outlook and ongoing ability to support policyholders and continue to invest in the wider economy”.
In an update on trading, the group said gross written premiums remained flat at £234.3 million in the three months to March 21.
It has seen a drop in motor accidents last month, which is expected to continue amid the lockdown as Britons stay at home.
But it added it was bracing for the trend for increased severity of accidents to continue after the lockdown is lifted and is looking at the cost implications – particularly due to disruption to repair networks and parts supply.
Toby van der Meer, chief executive of Hastings Group, said: “The first quarter of 2020 has been unprecedented with the Covid-19 outbreak placing additional operational challenges on top of recent industry headwinds.”
He added: “We have minimised any interruption for customers, supported by our digital investments, with even more customers now using our online services and mobile app.
“We intend to continue to employ all of our colleagues on their full salaries, and do not currently intend to take advantage of any Government funding support.”