Aviva's 'solid' first quarter hit by £160m COVID-19 claims
UK insurer Aviva has estimated COVID-19 related losses of £160 million net of reinsurance in its general insurance businesses based on claims in business interruption insurance, other commercial lines and travel insurance.
In addition to the estimated general insurance claims impact from COVID-19, Aviva said that the financial market performance and economic activity are also likely to impact revenues in its savings and asset management businesses, which are sensitive to asset values.
The company stated that it is still in the early stages of claims development on COVID-19, and is taking a prudent approach on capital and cash due to the high level of economic uncertainty.
The company revealed that early Q2 2020 trends have seen new business sales decline across many of its businesses due to worldwide Government enforced confinement measures. Sales volumes for the year overall are likely to remain below expectations, it said.
For the first quarter of 2020, Aviva reported a "strong start to the year". Life new business sales rose 28 percent to £12.3 billion from £9.6 billion in Q1 2019, and value of new business grew 18 percent to £311 million from £263 million in Q1 2019.
General insurance net written premium gained 3 percent to £2.4 billion from £2.3 billion in Q1 2019. Excluding COVID-19 impacts, Canada achieved strong underwriting results while the UK was affected by February storms.
Maurice Tulloch, Aviva Group chief executive officer, said: “In responding to COVID-19, Aviva moved quickly to support our customers, introducing a range of measures to help, including financial assistance. I am proud of how Aviva’s people have adapted and maintained excellent day to day service for our customers when they need us most.”
“Aviva had a solid first quarter of trading. General Insurance sales increased 3% and we had a strong performance in Life Insurance where new business increased 28%. Based on analysis as at 30 April, our estimate of the COVID-19 claims impact on general insurance, incorporating notified and projected claims, is £160 million net of reinsurance.”
Tulloch concluded: “At 31 March, our estimated solvency ratio remains strong at 182% and incorporates COVID-19 related impacts. The economic outlook remains uncertain and will affect our business, however the strength of our capital and liquidity means we are well positioned to manage this crisis and continue to support our customers.”