AXIS Estimate Impact Of Ogden Rate Change
Bermuda-based AXIS Capital Holdings Limited announced the estimated impact of the recent UK Ministry of Justice’s reduction of the discount rate used to calculate lump sum awards in UK bodily injury cases, known as the Ogden Rate.
“AXIS Capital estimates that the pre-tax impact of the Ogden rate change on the Company’s carried reserves for relevant lines of business is approximately $50 million, to be recognized in the first quarter of 2017. This relates primarily to AXIS Capital’s UK motor non-proportional business in its Reinsurance segment,” the company said.
“The main classes of business in the UK expected to be impacted by this rate change are motor bodily injury, employers’ liability and public liability. Our carried motor reinsurance reserves as at December 31, 2016 reflected a range of risks that may or may not materialize, including a potential reduction in the Ogden rate.
“However, the recently announced Ogden rate change was higher than scenarios considered most likely, none of which included negative rate scenarios. This increase to carried motor reserves adjusts for this higher reduction in the Ogden rate which has materialized.
“UK motor non-proportional reinsurance business represents approximately 1% of AXIS Capital’s net premiums written. For the year ended December 31, 2016, AXIS’s UK motor non-proportional reinsurance premiums were approximately $40 million.”
