German insurer Talanx says the coronavirus pandemic has cost it €824 million ($1.36 billion) in the first half, while bushfires in NSW cost it €40 million ($66.03 million).

Talanx says coming quarters will also be hit by additional, although not easily foreseeable, financial effects from the pandemic, and that the economic and capital market environment “will deteriorate.”

“The impact in the second quarter in particular – the height of the lockdown in Europe – was enormous and clearly exceeded our loss budget,” Chairman Torsten Leue said. “We must also be prepared for a challenging second half of the year,” he said.

Talanx had budgeted €594 million ($980.52 million) to cover costs.

Net income dropped by a third to €325 million ($536.48 million) in the half while gross written premium rose by 5.5% to €22 billion ($36.32 billion).

The combined ratio widened to 101.3% from 97.5% a year earlier. Stripping-out the effects of the coronavirus, it was stable.

Talanx says Roland Vogel, the CFO of subsidiary company Hannover Re, will retire at the end of September after 30 years in the business.

He will be succeeded by HDI Global CFO Clemens Jungsthöfel while Christian Hermelingmeier, the Head of Talanx’s Retail Germany division, will take the top role at HDI from next month.