Aviva Predicts 12% Slide in U.K. Residential Property Market --Financial News
May 21 2020 - 11:14AM
Dow Jones News
By Berengere Sim
Of Financial News
The U.K.'s largest insurer, which has a property fund that
invests in real estate across the country, is warning the U.K.
property market could face a 12% slump in the fallout from the
coronavirus pandemic alongside a 15% drop in commercial
property.
As it released its first-quarter results Thursday, Aviva PLC
said that Covid-19 related claims will cost it 160 million pounds
($196 million) as the insurance sector reels from the impact of the
coronavirus pandemic and global lockdowns. The insurer's property
fund is currently suspended--meaning money cannot be withdrawn by
investors--as of March 18, amid pandemic-triggered market
volatility.
In line with Aviva's predictions, U.K. residential property
transactions in April slumped by 53% compared to the same period
last year, according to figures released Thursday by the U.K.
government, which tracks the figures using property tax
payments.
Aviva said that its solvency ratio--which indicates whether or
not a company's cash flow is sufficient to meet its
liabilities--which is inclusive of the pandemic's impacts, is
estimated at 182% as of March 31, down from 206% as of Dec. 31,
2019. The FTSE-100 company reported that, as of April 30, its
company liquidity was GBP2.5 billion.
"At 31 March, our estimated solvency ratio remains strong at
182% and incorporates Covid-19 related impacts," said the chief
executive, Maurice Tulloch, in a statement.
He added: "The economic outlook remains uncertain and will
affect our business, however the strength of our capital and
liquidity means we are well positioned to manage this crisis and
continue to support our customers."
Lloyd's of London, the insurance marketplace, said on May 14
that it is set to pay between $3 billion and $4.3 billion to
customers as a result of the pandemic. It also predicted a $203
billion loss for the insurance sectors over 2020.
Other insurance firms around the world have also reported
similar challenges: German reinsurance company Munich Re said
earlier this month that it had received 800 million euros ($876.9
million) in claims related to the virus and reinsurance heavyweight
Swiss Re reported a $467 million hit to its underwriting
business.
Looking ahead, Aviva reported early trends that have seen new
business sales decline due to government-enforced confinement
measures.
"Sales volumes for the year overall are likely to remain below
expectations," Aviva's statement said.
Website: www.fnlondon.com
(END) Dow Jones Newswires
May 21, 2020 10:59 ET (14:59 GMT)
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