PEMBROKE, Bermuda--(BUSINESS WIRE)--AXIS Capital Holdings Limited (“AXIS Capital”) (NYSE: AXS) today announced the estimated impact of the recent UK Ministry of Justice’s reduction of the discount rate used to calculate lump sum awards in UK bodily injury cases, known as the Ogden Rate.
AXIS Capital estimates that the pre-tax impact of the Ogden rate change on the Company’s carried reserves for relevant lines of business is approximately $50 million, to be recognized in the first quarter of 2017. This relates primarily to AXIS Capital’s UK motor non-proportional business in its Reinsurance segment. The main classes of business in the UK expected to be impacted by this rate change are motor bodily injury, employers’ liability and public liability. Our carried motor reinsurance reserves as at December 31, 2016 reflected a range of risks that may or may not materialize, including a potential reduction in the Ogden rate. However, the recently announced Ogden rate change was higher than scenarios considered most likely, none of which included negative rate scenarios. This increase to carried motor reserves adjusts for this higher reduction in the Ogden rate which has materialized.
UK motor non-proportional reinsurance business represents approximately 1% of AXIS Capital’s net premiums written. For the year ended December 31, 2016, AXIS’s UK motor non-proportional reinsurance premiums were approximately $40 million.
AXIS Capital is a Bermuda-based global provider of specialty lines insurance and treaty reinsurance with shareholders’ equity at December 31, 2016 of $6.3 billion and locations in Bermuda, the United States, Europe, Singapore, Middle East, Canada and Latin America. Its operating subsidiaries have been assigned a rating of “A+” (“Strong”) by Standard & Poor’s and “A+” (“Superior”) by A.M. Best.
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This release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements contained in this release include our expectations regarding market conditions and information relating to future losses. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “should,” “could,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,” “potential,” “outlook,” “seeks,” “approximately” and “intend.” Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Accordingly there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in this press release. We believe these factors include but are not limited to those described under the caption “Risk Factors” set forth in our most recent report on Form 10-K and other documents on file with the Securities and Exchange Commission. These factors should not be construed as exhaustive. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.