Ageas global performance hit as UK operations swing into the red
Insurance giant Ageas today revealed profits had tumbled over the last year with losses spiralling in the UK while the firm works through a painful restructuring and prepares for regulatory changes.
The net result of the Belgium-headquartered group plummeted to €127m (£108m), down from €770m.
UK operations swung from black to red, posting a €56m loss in 2016, compared with a €30m profit 12 months before.
“2016 has been an eventful year for Ageas," said chief executive Bart De Smet. He added:
With the exception of the UK, [Ageas has] achieved very good results. In the UK a number of exceptional events forced the group to take significant one-off charges for restructuring and reserve strengthening partly in anticipation of changing regulations.
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Exceptional charges in the UK totalled €113m: the previously announced closure of its Glasgow office cost €27m, "exceptional underwriting losses" costing €25m and €55m of losses booked on the anticipation of changes to the Ogden discount rate.
Ogden changes
The government is considering changing the Ogden rate – the amount by which insurers discount expected future payouts on personal injury and fatal accident policies.
The rate has been at 2.5 per cent since 2001 and given the current lower for longer interest rate environment there have been calls to reduce the rate, a move that could cost insurers hundreds of millions of pounds by increasing the amount that needs to be allocated to cover future losses.
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In November, Ageas revealed plans to close its Kwik Fit insurance services operations in Scotland. The move was confirmed last month with 521 jobs set to be lost.
Shares in Ageas, which is Belgium's largest insurer and listed on the Brussels stock exchange, fell nearly five per cent following the results announcement.