The Travelers Companies Inc. has estimated impact of the recent decision by the UK Ministry of Justice to reduce the discount rate applied to lump-sum bodily injury payouts, known as the Ogden rate, from +2.5 percent to -0.75 percent.
Travelers said it expects to record an increase to prior year loss reserves of approximately $62 million pre-tax ($51 million after-tax) in its first quarter 2017 operating results as a result of the change in discount rate, relating primarily to its public liability and commercial auto liability lines of business in the United Kingdom.
Approximately two-thirds of the impact relates to certain books of business that the company had previously exited and are currently in run-off. The company said it expects that any impact to its future operating results as a result of this change will be insignificant.
Source: Travelers Companies 8-K filing