Insurance Times looks across insurers’ H1 financial results, revealing the initial impact of the coronavirus pandemic on business bottom lines

As the Covid-19 pandemic incessantly continues to rumble on, insurers and brokers have been forced to acknowledge the financial fallout caused by the virus as half year results published last month paint a vivid picture of how Covid-19 has affected profits, losses and reserving measures.

For example, insurer Hiscox – one of the eight insurers that faced the FCA in July’s virtual High Court hearing centred on business interruption (BI) wording clarity – has increased its reserving for Covid-19-related claims from $150m (£114m) to $232m (£174m). This will cover classes such as event cancellation and abandonment, media and entertainment and travel.

Its H1 results, published on 3 August, showed an incline in its combined operating ratio (COR) as a result of this, from 98.8% last year to 114.6%. The business was also $138.9m in the red for H1, compared with a profit of $168m for H1 2019.

The FCA test case – as well as legal action being undertaken by policyholder group the Hiscox Action Group (HAG) – has a lot to answer for in terms of Hiscox’s BI exposure for coronavirus claims, which chairman Robert Childs said is between £10m and £250m, net of reinsurance.

Childs added that the FCA test case may also affect Hiscox’s reinsurance portfolio, written by Hiscox Re and ILS, as “some of its clients are primary insurers operating in the UK market, which may be impacted by this judgment”.

Charity-owned insurer Ecclesiastical, another test case participant, has also been hit hard by Covid-19. In its H1 results, published on 21 August, the insurer reported a £59.7m loss before tax for the first half of 2020, compared to a £42.8m profit before tax at this point last year. It attributed this decline to the impact of coronavirus on financial markets.

The story doesn’t end there, however. Ecclesiastical also recorded an investment loss of £48.9m and an underwriting loss of £1.3m, compared to a profitable £9.5m in H1 2019.

These figures lead to a group COR of 101.1%, an increase on last year’s 91.4% figure. This includes a reserve of £14m for Covid-19-related claims. Excluding this amount, Ecclesiastical said that its group COR would sit at 89.5%.

The insurer added that it “has a comprehensive programme of reinsurance to mitigate any further claim development that may be incurred over the months ahead”.

Mark Hews, group chief executive at Ecclesiastical, described the firm’s top-line figures as “disappointing”, acknowledging the “uniquely challenging” environment arising from the pandemic.

Covid-19 claims have also pushed insurer Zurich into the red for the first half of the year, with a reported operating loss of £63m. Zurich UK chief executive Tulsi Naidu blamed the pandemic for this figure.

She told Insurance Times: “The singular contribution to the operating loss is [the] £212m of Covid-related items. Excluding the Covid-19-related items, we would have made a profit of £149m, across life and [GI].”

This £212m of Covid-19 related items includes “Covid claims, market impacts, declines and fee income on businesses that weren’t able to operate during the pandemic. They include our community support contribution, so there are a variety of different impacts”, Naidu continued.

In addition, the earnings impact of Covid-19 claims within Zurich’s general insurance business in the first half of the year amounted to £140m, across “personal travel, school trips, event cancellation, and, where policies respond to the pandemic, business interruption”.

Zurich was also involved in the FCA’s test case.

Aviva, which published its H1 results on 6 August, has also seen its UK general insurance COR impacted by the pandemic. This deteriorated to 106.3% compared to 97.2% last year.

Jason Windsor, Aviva’s chief financial officer, attributed this primarily to the impacts of Covid-19 as well as the unusual weather conditions the UK experienced earlier in the year. The figures are more positive if these contributing factors are removed, he added.

Aviva also estimated the impact of Covid-19 on claims at around £165m, which Windsor explained covered a range of potential scenarios – this includes the potential fallout from the FCA’s test case, despite Aviva not participating in the legal action, and how this could affect Aviva’s UK and Canadian businesses.

The impact of the pandemic saw Aviva’s operating profit decline to £1.2bn.

Motor market buoyancy

One area of the insurance market that has, perhaps, seen more resilience is the motor sector – this has been influenced by the nationwide lockdown and the fact that more policyholders remained at home rather that causing claims out on the road.

For example, Direct Line Group reported in its H1 results that its gross written premium (GWP) had grown by 0.4% to £1.58bn, while COR had dipped to 90.3% from 92.5% - this means that the insurer earned more in premiums than it paid out in claims.

The insurer added that the Covid-19 pandemic has had a “broadly neutral” effect on the group’s operating profit due to additional travel and business interruption claims, as well as a decrease in its investment asset returns being offset by “favourable claims frequencies” in both motor and commercial lines.

Motor insurer Admiral even improved its H1 figures from last year, as its COR reached 83% - versus 92.3% last year – while statutory pre-tax profit rose steadily to £286.1m, compared to the £218.2m it recorded in H1 of 2019.

At AXA, its personal motor book stayed steady at €678m (£613.5m), despite the fact that its underlying group earnings dropped by 48% to €1.9bn (£1.71bn), again attributed to the impact of the Covid-19 pandemic.

Market-wide ripple effect

Allianz Holdings

Allianz Holdings, which owns Allianz Insurance and LV= GI, had to juggle its reserving to accommodate Covid-related BI claims, according to its H1 results published on 5 August.

The company set aside £80m, net of reinsurance, to pay Covid-19 BI claims - £14m of which has already been paid out.

The insurer has received 950 Covid BI claims to date; the figure it expects to pay out does not take into account its exposure should there be a negative outcome from the FCA test case.

It also took a £10m hit on travel insurance claims from Covid, donated a further £10m to the Covid-19 Support Fund and offered car and motorbike customers £30m in support.


Brit has reported a “significant” financial impact from Covid-19 claims in the first half of the year.

The insurer reported $127.9m (£97m) worth of major losses in its contingency (event cancellation) and casualty treaty books.

The losses added 15.7 percentage points to its combined ratio, which increased to 106.7% from 94.4% for the same half last year.

Overall, Brit posted a loss after tax of $227.4m, compared with a profit of $120.3m in the first half of last year.


In H1 of 2020, RSA booked 39,000 travel claims at an estimated cost of £26m (with £1m net of reinsurance) as well as 2,700 wedding cancellation claims, amounting to an estimated £9m.

Furthermore, RSA estimated that the impact of the pandemic has reduced its net written premiums (NWP) by £110m “consisting of price reductions, refunds, coverage changes and specific business line volume impacts”.