The UK arm of European insurer Ageas suffered a 96% decline in profit in the first quarter of the year, taking a massive hit from the government’s decision to slash the personal injury discount rate.

 

Revealing its first quarter results on Wednesday, Ageas reported a €1 million (£0.8 million) profit for its UK operations, down from €25 million (£21 million) over the same period in 2016.
 

According to Ageas, the Ogden rate cut had a negative impact of €21 million. The insurer said the discount rate revision will continue to affect the UK results throughout 2017 by €20 million to €25 million.

 

The discount rate cut also added 7.6 percentage points to the combined operating ratio of Ageas UK, which increased from 99% to 110%. The insurer has injected €77 million capital to strengthen its solvency position in the UK.

 

For the first quarter, Ageas posted an overall insurance net profit of €222 million, up from €201 last year. The company said higher realised net capital gains and good performance in Continental Europe more than offset the negative Ogden impact.

 

“All segments achieved solid results with the exception of the UK. The UK’s result was affected by the residual impact of the regulatory discount rate revision by the UK government,” said Ageas CEO Bart De Smet said.

“Although various mitigating actions have already been taken, the impact will continue to be felt throughout the year,” he added.


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