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Law360, London (February 12, 2021, 2:45 PM GMT) -- The U.K. division of insurance giant Zurich said its operating profit fell 73% last year as a result of the impact of COVID-19 on the business, including event insurance and business interruption.
Zurich UK said in its full-year results for 2020 that profit fell from £413 million ($570 million) in 2019 to £111 million. The company said it paid out a total of £1.8 billion, from conventional claims and those connected to the pandemic, across its life and property and casualty businesses.
Tim Bailey, chief executive of Zurich UK, said on Thursday that the company had acted to exit unprofitable lines of business and invested in new digital services that had boosted customer numbers.
"Excluding the effects of COVID-19, all our key indicators are green," he added.
The biggest claims were in travel, event cancellation and business interruption insurance.
Zurich was one of eight insurers involved in a High Court test case brought by the Financial Conduct Authority on insurance for business interrupted by the coronavirus outbreak. The ruling in September confirmed that one of Zurich's disputed business policies, which offers cover against closures ordered by a public authority, does not protect companies forced to close during the pandemic.
The U.K. Supreme Court upheld the ruling in January. Zurich said after the ruling was handed down on Jan. 15 that it was considering whether there was any impact on claims from a "small number of customers" on other types of business interruption policies.
The company also said in its Thursday results that its combined ratio for its property and casualty business was 97.8% in 2020, up from 91% in 2019. The ratio is an indicator of underwriting success: a figure under 100% represents profit, while a ratio of above 100% indicates loss. The 6.8 percentage point rise therefore represents a worsening in profit, but not a loss.
Zurich said its gross written premium — an indicator of its sales revenue — increased 11% to £2.7 billion, from £2.4 billion in 2019.
--Editing by Joe Millis.
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