Aspen announces how Ogden rate change will impact it
Aspen Insurance Holdings has released its view on the estimated financial impact of the recent UK Ministry of Justice decision to decrease the discount rate used to calculate lump sum awards in UK bodily injury cases, better known as the Ogden rate.
Aspen said that it expects to increase carried reserves for impacted lines of business by approximately $30 million, on a pre-tax basis, in the first quarter of 2017 as a result of the change in the Ogden rate.
The company said that approximately half of the impact relates to business that it has either exited and is in run-off or where Aspen has scaled back significantly over a number of years.
The Ogden rate change impacts Aspen’s Insurance segment via its UK employer’s liability and UK public liability business. In Aspen Reinsurance, exposure to the Ogden rate change comes from reinsurance of UK employer’s liability and UK public liability business and to a lesser degree UK motor liability reinsurance. Aspen has not been a significant reinsurer of UK motor liability for a number of years and has limited exposure to this business.
Aspen’s estimate of the financial impact of the Ogden rate change for the first quarter of 2017 is based, among other factors, on a review of its open claims in relevant classes of business. Due to the complexity of factors contributing to the preliminary nature of the information used to prepare this estimate, there can be no assurance that the ultimate impact of the change in the Ogden rate on Aspen’s reserves will remain within the stated amount.