British insurer Aviva expects 160 million pounds ($195 million) in claims related to the coronavirus pandemic and weaker second quarter sales, it said on Thursday, as government lockdowns aimed at containing the virus hit the global economy.
Insurers globally are likely to face more than $107 billion in underwriting losses due to the pandemic this year, similar in size to major hurricane years, the Lloyd’s of London insurance market said last week.
“We’ve had a pretty good first quarter,” Aviva Chief Financial Officer Jason Windsor told Reuters.
“Q2 could look pretty different, we know there will be materially lower activity.”
Aviva, which has operations in Asia, mainland Europe and Canada as well as Britain, said new life insurance sales rose by 28% to 12.3 billion pounds [US$15 billion] in the first quarter, helped by a strong performance in bulk annuities, which involve taking on the risk of company defined benefit pension schemes.
General insurance net written premiums rose 3% to 2.4 billion pounds [US$2.9 billion].
Aviva’s shares were up 2% to 244 pence at 0718 GMT, one of the biggest gains on the FTSE 100, with Shore Capital analysts describing the results as “solid.”
Most of the COVID-19 claims are coming from lines such as business interruption and travel insurance, Aviva said.
A number of top insurers are facing possible legal action from small firms in Britain which have not received payments for their business interruption insurance due to the pandemic.
Law firm Mishcon de Reya, which is advising a group of British hospitality businesses, said this week it was narrowing its focus for a potential claim on Aviva and QBE.
Aviva said on Thursday the “vast majority” of its commercial policies did not cover business interruption claims arising from COVID-19, but it had paid some claims in Britain and Canada where cover was in place.
QBE declined to comment.
($1 = 0.8201 pounds) (Additional reporting by Kirstin Ridley and Muvija M., editing by Sinead Cruise and Mark Potter)
Photograph: Aviva’s head office in London. Photo credit: Aviva
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