Liability Market

Short-term knock to earnings for US and Bermuda (re)insurers over discount rate


Fitch Ratings believes that US and Bermuda insurers and reinsurers that cover bodily injury claims in the UK will have a short-term knock to their earnings as a result of the cut in the Ogden discount rate, but will adapt quickly to higher costs. However, the need to set aside extra reserves for UK risks adds to the pressure they are facing from declining reserve margins, low investment yields and competitive pricing, it said.