Travelers Notes Impact of Cut in UK Discount Rate for Lump Sum Payouts

March 20, 2017

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

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