Zurich’s business operating profit fell 40% in the first half, in part driven by losses incurred at its Australia-based travel business Cover-More.

Zurich says a sharp decline in sales at Cover-More on the back of reduced demand for travel insurance, as well as weaker results in its Australian life insurance operations due to adverse disability claims, were behind a 56% decline in earnings in its Asia Pacific business.

Sales at Cover-More halved in March when compared with the same month in 2019 and plunged to less than 10% of year-ago monthly levels in April, May and June, Zurich says.

Cover-More “saw a sharp decline in sales starting from March as a result of widespread travel restrictions which were imposed to counter the COVID-19 outbreak,” it says.

“In light of the expected slow recovery in demand for travel insurance, the group is actively managing costs of the Cover-More business, while positioning the company for longer term recovery by increasing the focus on digital and assistance services.”

Zurich’s overall operating profit plunged to $US1.7 billion ($2.37 billion) as the coronavirus wiped US$686 million ($956.4 million) from the result.

Zurich affirmed an earlier estimate for property and casualty (P&C) claims from COVID-19 of $US750 million ($1.05 billion). That comprised 80% P&C claims, with 8% due to claims in special lines including travel, notably $US37 million at Cover-More.

Life claims made up $US52 million of the figure.

In the first half, the P&C combined ratio widened 4.8 percentage points to 99.8%, from 95.1% a year earlier.

Global CEO Mario Greco says the first half was an unprecedented period with “unforeseeable events” ranging from pandemic and recession, to civil unrest and a higher rate of natural catastrophes.

“The pandemic will have lasting effects,” he says. “We are focused on understanding these and adapting our thinking to ensure that we can continue to drive the business forward and deliver on the plans presented last November.”

Zurich’s P&C commercial business reported strong growth and is positioned to further benefit from an improved pricing environment. Gross written premium in property and casualty was up 4% on a like-for-like basis.

Mr Greco says Zurich’s strong balance sheet has allowed it to fully take advantage of the growth opportunities presented by improved commercial pricing, and the “retrenchment by some competitors”.

Price increases of about 8% overall were achieved, with the level of increases improved across most regions compared with the previous year, particularly in commercial insurance.

Catastrophe claims rose on European and North American weather events and civil unrest in the US.