(Corrects impact from lowering discount rate in fifth paragraph)
* Delays 2016 preliminary results by week to March 7
* Awaits new Ogden Rate; says has reduced exposure to change
* Reiterates key performance target; shares up 2.6 pct
By Simon Jessop and Carolyn Cohn
LONDON, Feb 20 (Reuters) - British motor insurer Direct Line said on Monday new rules to determine lump-sum payouts for personal injury claims would have less impact than previously estimated because it had already started to factor in a change, boosting its shares.
A government review into the so-called Ogden Rate is due to be released soon, and most analysts expect the level to fall from its current maximum 2.5 percent, in place since 2001, given a slide in real interest rates since then.
Any downwards move in the rate would require insurers to pay out more in cash to claimants now to ensure that returns over their lifetime met the awarded compensation, a potential hit to motor insurers' profitability.
Given its potential importance to the firm's financial outlook, Direct Line said it had decided to delay the release of its preliminary 2016 results by a week to March 7.
Direct Line said it was already applying a rate of 1.5 percent when calculating its personal injury claims liabilities, which could mitigate the impact of any downward revision of the Ogden Rate.
Direct Line said in its 2015 results that a 100 basis point increase from the 1.5 percent assumed rate would boost pretax profit by 131.9 million pounds, while a 100 bps decrease would hit profits by 190 million pounds.
It said on Monday the impact would now be "materially lower," without giving a figure.
"These sensitivities have reduced over time as claims have been paid and reserves released, and as the Group's lower reinsurance retention has reduced its net exposure on new business," it said.
The company also said it continued to expect to meet its targeted combined operating ratio towards the lower end of a 93 percent to 95 percent range for the year ended December 2016.
A level below 100 percent indicates an underwriting profit.
In response to the statement, shares in Direct Line were up 2.6 percent, among the top gainers in a flat FTSE 100.
"We had been perplexed over the volatility of the Direct Line share price these past few months, seemingly reflecting concerns in the market over the implications of any change to the Ogden discount rate," said Shore Capital analyst Eamonn Flanagan.
"This statement should allay those fears, in our view, and hence dampen this volatility." (Reporting by Simon Jessop; Editing by Mark Potter)