Global insurance giant Zurich has recognised COVID-19 related claims within its P&C business of $280 million in the first-quarter of 2020, and has said that for the full year, this figure could rise to approximately $750 million.
Overall, the company expects claims from the ongoing COVID-19 pandemic to remain within its earnings risk tolerance for the year.
The 2020 total of $750 million of P&C claims is based on experience to date and the Group’s scenario analysis, although, the continuing nature of the crisis means that this is subject to considerable uncertainty.
In addition, Zurich notes that this scenario does not include any broader positive or negative impacts resulting from lower economy activity.
COVID-19-induced financial market volatility has been significant in the first-quarter of the year, although there’s been signs of somewhat of a recovery in certain areas. In its Q1 announcement, Zurich highlights ongoing weaker economic activity, which it says is expected to adversely impact its revenues and earnings for the year.
Turning to key figures for Q1 2020, and the company has reported P&C gross written premium (GWP) growth of 7% on a like-for-like basis to roughly $9.7 billion, against $9.2 billion in Q1 2019.
Within P&C, growth was evident in all geographies on a like-for-like basis, with the exception of Asia Pacific, while all regions experienced a positive rate change during the quarter.
When compared with historical first-quarters, Zurich notes that its P&C unit experienced an elevated level of catastrophe losses and weather-related claims, owing to a series of European windstorms and numerous climatic events in North America.
In Life operations, Zurich has recorded new business annual premium equivalent of $958 million, which represents a decline of 10% from the $1.2 billion posted a year earlier. Zurich says that the decline is attributable to the impact of COVID-19, particularly in the Asia Pacific region and Brazil, due to the impacts of government lockdowns on face-to-face distribution channels.
Mario Greco, Zurich’s Group Chief Executive Officer (CEO), commented: “Throughout this crisis our priority has been to support our customers and local communities, while ensuring the safety and wellbeing of our colleagues. We acted in a socially responsible way by closing our offices early to work remotely, keeping our business fully operational. In this environment, our investments in the digitalization of our business are paying off.
“We have responded to the heightened need for remote and flexible services by creating or expanding our digital offering for individual and business customers alike. We expect the crisis to strengthen demand for digital interactions and better tailored services and are committed to the expansion of our digital offering as this trend gathers pace. Our flexible and resilient business model positions the Group well to quickly adapt to changing situations and requirements to deliver continued success.”
George Quinn, Group Chief Financial Officer (CFO), added: “The Group reported a solid start to the year with P&C growth and pricing remaining favorable, a steady performance from Farmers, while life performed well against a very strong first quarter in 2019.
“The impact of claims related to the COVID-19 outbreak and the sharp falls in financial markets in the latter part of the first quarter are expected to remain a 2020 earnings event. Group solvency remains strong and together with the diversity of our business and our conservative balance sheet, I am confident that the Group is well placed to manage the current challenges.”