Zurich says its property and casualty (P&C) arm suffered a 28% decline in business operating profit to $US2.08 billion ($2.68 billion) last year, as pandemic-related impacts and higher catastrophe losses took a toll on earnings.

COVID-19 claims, net of reinsurance and related reductions in claim frequency, cost the P&C business about $US450 million ($580.6 million), as was forecast when the Swiss insurer released its half-year earnings.

Catastrophe losses last year increased by $US588 million ($759 million) from 2019.

Despite the weaker results, Zurich says the business has turned in a strong underlying performance and, going forward, will be well supported by strong commercial pricing growth.

Commercial insurance gross written premiums, which make up around two-thirds of P&C premiums, grew by 7% on a like-for-like basis last year.

“This was supported by significant rate increases in North America and Europe, as well as by improved customer retention,” Zurich says. “These trends led to a further improvement in underlying profitability, adjusted for COVID-19 and catastrophes.

“Following improvements to the commercial portfolio during 2016-2019, the group is well placed to benefit further from the continuation of these trends in 2021.”

Overall gross written premium grew 4% to $US35.5 billion ($45.8 billion) from a year earlier, and the business achieved price increases of 8%. The P&C combined operation deteriorated two percentage points to 98.4%, reflecting the impact of COVID and higher catastrophe losses.

At the group level, the insurer’s total business operating profit declined 20% to $4.24 billion ($5.47 billion) and net income fell 8% to $US3.83 billion ($4.94 billion).

The total COVID impact was $US852 million ($1.1 billion), including $US450 million to the P&C arm.