 | 200 million reasons not to believe insurers when they talk about the discount rate |
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| Posted By : Bill On 28/02/2018 19:00:00 | |
| There was an article in the Law Gazette the other day headlining that Direct Line profits were up £200m in a year – described as an enormous rise in profits – one year on from reforms that were predicted to catastrophically reduce sector profits, leading to premium increases for all of us. Naturally the insurance industry spin was that it was all due to claimants and their lawyers. Specifically, Direct Line reported that it expects operating profits for the full 2017 year to be £610.9m - a leap of 51.4% on 2016. Also, dividends have risen this year by 40%, and Direct Line added it would pay a special dividend of 15p, up from the 10p it paid a year earlier. Last week, Allianz UK announced that operating profits for 2017 had increased 26% - but added that they would have been £22m higher but for the change in the discount rate – I wonder how they calculated that. I agree with Sam Hemsley from Thompsons, who pointed out that the insurance sector benefitted from the 2.5% rate for 16 years before last year’s change. | |
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