Profits at Direct Line plunge 30%
Insurance giant Direct Line has posted a 30% slump in annual profits after taking a hit of more than £217m following Government changes to the way personal injury claims are calculated.
The company reported pre-tax profits of £353m for 2016, down sharply on the £507.5m seen a year earlier after a cut to the so-called Ogden discount rate calculation.
The insurance sector was sent reeling last week after Lord Chancellor Liz Truss put forward changes to the discount rate calculation, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.
Ms Truss said, from March 20, the rate would be cut from 2.5% to minus 0.75%, reflecting the changes in gilt yields.
But boss Paul Geddes insisted Direct Line had a successful year in a market "disrupted" by the change.
Direct Line said it did not expect any further "material" impact in 2017 from the Ogden rate.
It added it hoped a consultation on the change to the rate would lead to a "better and fairer framework".