Discount rate fallout begins

Post reports that Gibraltar insurer – Casualty & General Insurance Company Europe (CGICE) – has withdrawn £20m capacity to a UK managing general agent in the wake of the discount rate cut.

According to CGICE the £20m capacity withdrawal from Hawkwell, a specialist motor MGA launched in 2014, is a result of the decision to reduce to Ogden discount rate from 2.5% to minus 0.75% which has made the motor market ‘unviable’.

CGICE CEO Danny Gibson said, ‘The recent decision by the Ministry of Justice to change the discount rate has made the motor business we write unviable, as a result we have to deploy our capital in our other classes of business.

‘CGICE will of course maintain its services for existing policyholders for the duration of current policies.’

At the time of going to press, Post understood Hawkwell was looking for alternative provider.

Meanwhile, Post reports Bermuda-based motor reinsurer Axis Capital claims it will take a £41m hit from the reduction in the Ogden discount rate.