QBE reveals US$60m UK hit

July 22 2019 by InsuranceAsia News Staff

QBE has seen a US$60 million (A$85.2 million) impact on claims liabilities.

The UK government last week changed the Ogden rate, from which personal injury calculations are made, from minus 0.75% to minus 0.25%.

The discount rate reflects the return that personal injury claimants can expect to receive when they invest compensation funds; the lower the rate the higher the payout from insurers.

Last week the company said in a statement to the Australian Securities Exchange: “As previously disclosed, QBE has been using a discount rate of 0.25% for the purposes of determining Ogden related lump sum payments.”

Adoption of the minus 0.25% rate would result in the announced one-off increase in the group’s net central estimate of outstanding claims liabilities.

The new rate level was also not allowed for in QBE’s targeted combined operating ratio range of 94.5% to 96.5% for this financial year.

Timothy Prince, QBE’s director of analytics, commented: “The alteration is likely to have a minor one-off earnings impact on some companies through strengthening or release of reserves.”

QBE said the impact of the change would be reported as an adjustment in its first-half and full-year results.

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