By Ranamita Chakraborty
Aviva estimates that its non-life COVID-19 related claims would amount to GBP160m ($195m) net of reinsurance, based on analysis as at 30 April.
Most of the claims are expected to be in business interruption and travel insurance, and allows for favourable impacts in other product lines.
According to an official update on its operating performance, Aviva said it is still in the early stages of claims development on COVID-19 and therefore the ultimate impact still has a high level of uncertainty.
In addition to the estimated general insurance claims impact from COVID-19, financial market performance and economic activity are also likely to impact revenues in Aviva’s savings and asset management businesses, which are sensitive to asset values.
The insurer also stated the possibility of a severe economic downturn caused by COVID-19 to impact its results – notably leading to potential changes in investment performance, capital generation and remittances.
Early 2Q20 trends have seen new business sales decline across many of Aviva’s businesses due to worldwide government-enforced confinement measures. With the insurer helping distributors and customers manage through these measures, customer activity levels have risen to some extent more recently. However, sales volumes for the year overall are likely to remain below expectations.
Commenting on Aviva’s operating performance and outlook, group CEO Maurice Tulloch said, “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%. 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.”
Asia Insurance Review