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Zurich Insurance sees $750 million in 2020 COVID-19 claims

Brenna Hughes Neghaiwi and Carolyn Cohn
·2-min read

By Brenna Hughes Neghaiwi and Carolyn Cohn

ZURICH/LONDON (Reuters) - Zurich Insurance Group <ZURN.S> on Thursday said property and casualty claims related to the coronavirus pandemic could total around $750 million (£614 million) this year, after booking $280 million such claims in the first quarter.

Insurers across the globe are feeling the impact of the pandemic, with economies locked down and travel and events cancelled.

Lloyd's of London said on Thursday it saw global industry insured losses of $107 billion from the virus.

Zurich's estimate puts the impact of the pandemic at a similar level to that of U.S. hurricanes Harvey, Irma and Maria in 2017, whose cost it pegged at some $700 million.

"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," Zurich Chief Financial Officer George Quinn said in a statement.

"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."

The group's solvency ratio tumbled to 101% from 129% under the Swiss insurer's own economic modelling, towards the bottom of its target range of 100-120%. Quinn told Reuters the ratio remained within "green tolerance" levels.

The bulk of the coronavirus claims came from property business interruption, followed by travel insurance, Quinn said.

Small businesses in Britain are battling insurers such as Zurich, who they say have denied them payments for disruption. The insurers say most small business policies do not cover the pandemic.

The Financial Conduct Authority is seeking clarity from the courts about whether the wording of some business interruption policies should provide cover as a result of the pandemic and has written to some insurers.

Quinn said Zurich was among those asked for their stance on the topic and the insurer "would do everything to cooperate" with the FCA.

Barclays analysts said the COVID-19 impact for Zurich was "manageable", reiterating their "overweight" rating on the stock.

Premiums in the P&C business rose 5% on the back of rate increases in North America as well as strong premiums growth in Britain, Germany and elsewhere in Europe.

Life insurance, meanwhile, saw a 24% slump in new business, bringing annual premium equivalent down 19% to $958 million as lockdowns affected face-to-face sales, particularly in Asia Pacific and Brazil.

Zurich's shares were down 0.9% at 274.70 Swiss francs at 0805 GMT, outperforming a 2% drop in European insurance stocks. <.SXIP>.

(Additional reporting by Paul Arnold in Zurich; Editing by John Miller and Jan Harvey)