2 March 2017News

XL assesses UK impact of Ogden rate change

XL Group has said that it expects the UK’s Ogden rate change decision to cost it around $75 million.

On February 27 Justice Secretary Elizabeth Truss and the UK’s Lord Chancellor decided to change the Ogden discount rate from 2.5 percent to -0.75 percent. The so-called Ogden tables are used to calculate compensation awards for serious personal injuries. The change exceeded the level expected by the industry.

Consequently XL now estimates that the pre-tax impact of the rate change on the company’s carried reserves for relevant lines of business could be $75 million, adding that it will be recognised in the first quarter of 2017. The charge is primarily related to XL’s UK motor business in the reinsurance segment.

Classes of business impacted by this rate change include UK motor bodily injury, UK employer’s liability, and UK public liability. The impact on the insurance segment is expected to be modest due to the low level of UK bodily injury claims in the company’s portfolio as well as reinsurance protections.

XL has not been a large writer of UK motor business, but has some exposure from business written on a non-proportional reinsurance basis. This portfolio was scaled back beginning in 2009 as periodical payment orders, or PPOs, became more prevalent and more costly. For the year ended December 31, 2016, XL’s gross UK motor premiums were under $10 million.




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6 March 2017   AXIS Capital Holdings has predicted that it could be hit with a bill of up to $50 million from the recent decision to slash the Ogden rate by more than was anticipated.
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7 March 2017   XL Catlin has announced details of the family leave benefits that it is offering employees as a part of its ongoing diversity and inclusion strategy.

More on this story

News
23 February 2017   XL Group has announced that chief financial officer (CFO) Peter Porrino is set to retire in May 2017. He will be succeeded by current ‎global corporate controller Stephen Robb, who will report to CEO Mike McGavick.
News
6 March 2017   AXIS Capital Holdings has predicted that it could be hit with a bill of up to $50 million from the recent decision to slash the Ogden rate by more than was anticipated.
News
7 March 2017   XL Catlin has announced details of the family leave benefits that it is offering employees as a part of its ongoing diversity and inclusion strategy.