The QBE Insurance Group Ltd (ASX: QBE) share price is up 1.6% after the Ogden discount rate decision has been announced.
QBE is Australia’s largest global insurer, it operates in 31 countries and is one of the top 20 global insurance and reinsurance companies. QBE has been operating since 1886 and got its name when the North Queensland Insurance Company and Bankers’ and Traders’ Insurance Company (both set up by James Burns and Robert Philp) merged with The Equitable Probate and General Insurance Company.
QBE’s Ogden Discount Rate Decision
QBE said that on 15 July 2019, the UK Ministry of Justice announced a charge in the statutory discount rate for use in the determination of lump sum payments in relation to UK personal injury claims.
The company has been using a discount rate of 0.25% for the purposes of determining Ogden related lump sum payments.
The adoption of the revised statutory rate of -0.25% is expected to result in a one-off increase in QBE’s net central estimate of outstanding claims liabilities of approximately $60 million.
This outcome was not allowed for in QBE’s 2019 targeted combined operating ratio range of 94.5% to 96.5%, which will be reported an adjustment in its half year and full year 2019 results.
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