LV=, Ageas and Admiral Reveal ‘Ogden Impact’ in More H1 Results

On 5 August 2019, the personal injury discount rate (PIDR) increased to (─)0.25% from (─)0.75%.

This marked 140 days since the former Lord Chancellor, David Gauke MP, commenced the first rate review under the new procedure (19 March), laid out in the Civil Liability Act 2018.

After the new PIDR was determined, on 15 July (see our report in BC Disease News here), Hastings and Direct Line published their half-year financial statements and revealed that the cost of under-reserving, in expectation of more significant rate change, was £8.4 million and £16.9 million, respectively.

Over the past fortnight, more insurers have published their H1 results.

Last week, LV= celebrated operating profit of £35 million, which is 55% greater than the figure reported in H1 of 2018 (£23 million). In spite of this, the business has been ‘negatively impacted’ by a so-called ‘Ogden impact’ of £13 million, which contributed towards a 28% decrease in underwriting profit (£19 million in H1 of 2019 versus £26 million in H1 of 2018).[i]

Reflecting on the results (ending 30 June 2019), Chief Financial Officer of General Insurance, Kevin Wenzel, welcomed the H1 operating profit figure as a ‘great achievement’. Having speculated that, but for a lower-than-anticipated PIDR, profit could have been 109% higher than in 2018, he effectively downplayed the impact of the new Ogden rate.

The following day, Ageas UK published its half year statement, with Chief Executive, Tom Watson, hailing a ‘one-off benefit’, after having ‘held firm on ... reserving assumptions in anticipation of ... Ogden rate change’. [ii]

Even though the financial implications of PIDR change on the business are not explicitly quantified, it would be fair to assume that the damage done was minimal. This is because Ageas reported a 70% increase in net profit to £45.4 million in H1 of 2019, having reported net profit of £26.8 million in H1 of the previous year.

Most recently, on Wednesday of this week, The Telegraph reported that the upshot of Ogden rate change for Admiral is a loss of £33 million, albeit with pre-tax profits having risen by 4%, to £218 million.[iii] If the insurer’s calculations, based on a 0% PIDR, had been correct, profits would have been inflated to £253 million.

Chief Executive of Admiral, David Stevens, professed that the business’ H1 results were ‘a bit dull’.

External analysts at Peel Hunt, by contrast, were less critical of economic performance. They accepted that Admiral had been ‘weighed down’ by the extent of discount rate change, but this did not detract from ‘a solid set of results’.

Mr. Stevens stated that, unless the results were ‘a can’t-put-down, read-in-one-go page-turner’, they ‘don’t fit the bill’:

‘Turnover up mid-single digits, profit up low-single digits. Hardly “hold the front page”’.

It is apparent from the CEO’s reaction that Mr. Stevens is striving to maintain high standards for the company, but they simply could not be met after the Government elected not to follow the advice of the Government Actuary.


[i] ‘LV= General Insurance increases operating profit by 55%’ (6 August 2019 LV=) <> accessed 15 August 2019.

[ii] ‘Ageas UK delivers profitable half year performance’ (7 August 2019 Ageas) <> accessed 15 August 2019.

[iii] Harriet Russell, ‘Admiral boss admits 'we're a bit dull' as profits hold up’ (14 August 2019 The Telegraph) <> accessed 15 August 2019.