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esure notes impact of new PI discount rate

27 February 2017 08:02

esure Group has confirmed that the Lord Chancellor's decision to change the discount rate for personal injury damages to minus 0.75 was lower than the group had allowed for as at 31 December 2016.

The group's reserve margin included an allowance of £2m (net) for a change in the Ogden discount rate to 0%.

The group said the Lord Chancellor's decision to change the rate from plus 2.5% to minus 0.75% would see a further net impact of £1m in 2017.

The group said it continued to expect its combined operating ratio for 2016 to be within its original guidance of 98-99%.

A statement said: "As at 31 December 2016, the group's solvency coverage above its solvency capital requirement (SCR) included an allowance of £3m for a change in the Ogden discount rate to 0%.

"As a consequence of the discount rate moving to minus 0.75%, the group's capital position in 2017 will be impacted by £2m.

"The group's 2016 solvency position will be in the upper half of its stated risk appetite (130-150% coverage of its SCR)."

The group also issued a trading update for 2016 which said that gross written premiums were up 19% to £655m (2015: £550m) and in-force policies were up 9% to 2.2 million (2015: 2.0 million).

It said the group's profit will be ahead of market expectations largely driven by a strong investment return and the Group's solvency position will be in the upper half of its stated risk appetite (130-150% coverage of its SCR).

Chief executive Stuart Vann said: "We are now in full growth mode and have pushed forward with our strategy in 2016 delivering strong growth in premiums and profitability.

"Our footprint expansion programmes are building momentum with further segments released towards the end of the year, giving us opportunities to continue our growth ambitions.

"Our low risk approach to underwriting and conservative reinsurance programme mitigated much of our exposure to the change in the Ogden discount rate and leaves us well placed within the market compared to our peers.

"Through our focused and controlled approach to underwriting, underpinned by our contribution focus, we are on track to deliver increased value in 2017 and beyond."

At 8:02am: (LON:ESUR) esure Group plc share price was -3.55p at 203.95p

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