Car insurer Direct Line is likely to have a moan in its results statement about the recent change to the Ogden actuarial discount rate.
Lord Chancellor Liz Truss recently rocked the car insurance sector by altering the discount rate used by courts in England and Wales to calculate personal injury damages awards.
Direct Line, the first of a batch of car insurers set to report this week, gets the chance to pitch its point of view first, and there seems little doubt it will call on the government to have a rethink.
As for Direct Line’s numbers, the market expects revenue in 2016 will have dipped a bit to £3.07bn from £3.11bn in 2015.
Analysts have pencilled in £528.0mln for headline pre-tax profit, versus £507.5mln in 2015; the full-year pay-out is seen rising to 32.21p, which includes a previously announced 10p a share special dividend, from 13.8p the year before.
The Ogden discount rate decision has muddied the waters, however.
“Direct Line had a large exposure to Ogden, with an estimated charge of £215 to £230m, c4% of market cap. While the company has increased its reinsurance coverage in recent years, the company has a lot of exposure from when it was 30% of the market with very high reinsurance attachment points,” notes Alan Devlin at Barclays.
Before the Lord Chancellor stuck her oar in, Direct Line had hinted another special divi might be unveiled at the time of the full-year results; Barclays no longer thinks that is on the cards.
Significant announcements expected
Finals: Aggreko PLC (LON:AGK), Apax Global Alpha Ltd (LON:APAX), Autins Group PLC (LON:AUTG), Direct Line Insurance Group PLC (LON:DLG) , Escher Group (LON:ESCH), Headlam Group PLC (LON:HEAD), Ibstock Plc (LON:IBST), Intertek Group PLC (LON:ITRK), John Laing Group PLC (LON:JLG), Just Eat (LON:JE.), LSL Property Services PLC (LON:LSL) Paddy Power Betfair (LON:PPB), SDL Plc (LON:SDL), Servelec Group (LON:SERV), Shawbrook Group Plc (LON:SHAW), Tritax Big Box Reit PLC (LON:BBOX), Worldpay Group PLC (LON:WPG), XLMedia PLC (LON:XLM)
Interims: Ashtead Group PLC (LON:AHT), St Ives PLC (LON:SIV)