The COVID-19 pandemic will create unprecedented catastrophe losses for insurers, AIG says.

The New York-based global insurance giant has set aside $US419 million ($641.24 million) for catastrophe losses in the first quarter. That includes $US272 million ($416.36 million) of estimated COVID-19-related losses on travel, trade credit and workers’ compensation, with the balance mainly weather-related.

AIG posted an underwriting loss of $US87 million ($133.17 million) in its general insurance business in the first quarter, compared with a profit of $US179 million ($274 million) a year earlier, as it set aside money to cover claims related to the coronavirus crisis.

“We believe COVID-19 will be the single largest catastrophe loss the industry has ever seen,” CEO Brian Duperreault said.

“However, we do expect to see continued improvement in general insurance, particularly in the adjusted combined ratio. In life and retirement, we do not believe that the impact of COVID-19 will result in a material reduction of our long-term return profile.”

Net investment income was down $US1 billion ($1.53 billion) from a year ago to $US2.7 billion ($4.13 billion).

General Insurance posted a combined ratio of 101.5%, compared to 97.4% a year earlier. AIG’s general insurance accident year combined ratio – which excludes changes from losses incurred in past years – was 95.5% for the quarter, compared with 96.1% a year ago, “reflecting disciplined underwriting and expense management”.

“The COVID-19 crisis has created significant uncertainty and it will take time to understand its broader ramifications,” AIG says.