Aspen expects $30m charge from UK Ogden rate change
Bermuda-based Aspen Insurance Holdings 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 in the UK.
UK Ministry of Justice recently decided to cut the discount rate used to calculate lump sum awards in UK bodily injury cases.
Aspen 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 the company’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, the company said.
"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," the company added.
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