The impact of the Lord Chancellor’s decision on Monday to change the personal injury discount rate has already been registered by insurer Hastings Group Holdings PLC (LON:HSTG), which reported a one-off, £20mln pre-tax charge with its 2016 accounts.
On Monday Liz Truss surprised the industry by cutting the so-called Ogden rate from 2.5% to minus 0.75%, providing an increase payments given to victims of life-changing injuries such as medical negligence, car crashes.
Hastings, which announced a 21% increase in annual operating profits to £152.1m, said the cut “is not expected to have a material impact on the group's financial outlook for 2017”.
The impact of the change pales, when compared with Aviva PLC (LON:AV.), which has said it will book a £385mln charge and Direct Line (LON:DLG), which estimates the hit will be in the order of £215-£230mln.
Chief executive Gary Hoffman confirmed there would be no changes following acquisition by RMI of a 29.9% stake in the owner of Hastings Direct in December.
“We will continue to grow the core motor book and plan to grow our home and telematics propositions,” he said in a Q&A carried in the results statement.
“We believe RMI's breadth of experience and capabilities could provide opportunities over time to help us further deliver our growth strategy.”
Worthy of mention from the results is the company's dividend, which at 9.9p means Hastings yields 4.2%.