Insurers took a pasting from investors after Hastings served up a profit warning and cut its dividend. The FTSE 250 car insurer’s results were damaged by a rise in claims for injuries and car repairs, so profit for the year will come in at £110 million — 12% below what analysts in the City had calculated.
The car industry has whinged for some time that claim costs are on the rise because tech-engineered cars like Tesla’s are more expensive to repair. The Government has also changed the way damages are paid to those who have serious injuries in accidents.
Analysts at Barclays cut Hastings’ outlook for the year ahead and shares tumbled 8% or 15.2p at 170p.
Rival Direct Line was down 1.8p at 329p and Admiral fell 45p at 2279p.
On London’s blue-chip index, the FTSE 100 lacked any real direction once again — up 47.40 points at 7657.21.
Mining giant Rio Tinto was on the rise, despite reporting a 3% fall in iron ore shipments in 2019 as a cyclone and a fire at a port facility disrupted operations. Investors were buoyed by the company, saying it expected 2020 shipments to be 330 million to 343 million tonnes, an improvement on last year. Rio Tinto rose 112p at 4648p.
But there are concerns among investors that miners could be affected by the wildfires and crippling drought in eastern Australia, which has threatened production of commodities. The drought is expected to persist and miners are scrambling for water to keep their operations going.
Pearson was the surprise riser after a dismal update yesterday. The rumour among brokers is that the education publisher is very near to naming a replacement to current chief executive John Fallon. Shares added 16.4p at 579p.
Further down the league table and sausage maker Cranswick made hay after a profit upgrade following a top performance by its exports division. The company’s fortunes have been boosted by African swine flu, which has increased demand for its uninfected pigs in the Far East.
Cranswick said export sales have continued to be “exceptionally strong” after the spread of African swine flu to pigs in Asia.
Analysts at Shore Capital waxed lyrical, saying the profit upgrade was “very welcome” and they viewed the stock as “a core component of any mid-cap UK equity portfolio”.
“Cranswick is a class act with excellent management,” the broker added. Shares gained 6% or 192p at 3588p.