YORK-based insurer Aviva expects to pay £160 million of claims related to the coronavirus pandemic.

The majority of the COVID-19 claims will be in business interruption, commercial lines and travel insurance.

The news highlights how the government lockdown, designed to contain the virus, has impacted on the economy.

The FTSE100 company which employs 2,000 people in York said sales in the second quarter have already been hit, with the crisis posing challenges to meeting its 2022 targets.

Its latest operating report looks at the future outlook for the company, saying: "COVID-19 provides unprecedented uncertainty and could give rise to a severe economic downturn.

"This may adversely impact our results, not least potential changes in investment performance, capital generation and remittances. Early 2Q20 trends have seen new business sales decline across many of our businesses due to worldwide Government enforced confinement measures."

Chief executive Maurice Tulloch said: "In responding to COVID-19, Aviva moved quickly to support our customers, introducing a range of measures to help, including financial assistance. I am proud of how Aviva’s people have adapted and maintained excellent day to day service for our customers when they need us most.

“Aviva had a solid first quarter of trading. General Insurance sales increased 3% and we had a strong performance in Life Insurance where new business increased 28%.

"Based on analysis as at 30 April, our estimate of the COVID-19 claims impact on general insurance, incorporating notified and projected claims, is £160 million net of reinsurance.

“At 31 March, our estimated solvency ratio remains strong at 182% and incorporates COVID-19 related impacts. 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.”

A key point of the report is the impact of the coronavirus outbreak on general insurance claims.

It states: "We are still in the early stages of claims development on COVID-19 and so its ultimate impact on Aviva still has a high level of uncertainty.

"However, based on analysis as at 30 April, our estimate of COVID-19-related claims in our general insurance businesses, incorporating notified and projected claims, is £160 million net of reinsurance.

"This is based on estimated claims in business interruption insurance, other commercial lines and travel insurance and allows for favourable impacts in other product lines."

The report adds: "While customer activity levels have risen somewhat more recently as we help distributors and customers manage through these measures, sales volumes for the year overall are likely to remain below expectations.

"In addition to the estimated general insurance claims impact from COVID-19, financial market performance and economic activity are also likely to impact revenues in our savings and asset management businesses, which are sensitive to asset values.

"In life insurance, mortality and longevity claims experience arising from COVID-19 are expected to broadly offset.

"We are supporting customers and the broader community, not least through our £43 million contribution to various funds and charities, and our numerous customer support initiatives.

"We remain committed to achieving our 2022 targets, however, COVID-19 is expected to provide additional challenges to achieving these targets."

Aviva announced on Tuesday that George Culmer, former Lloyd's of London chief financial officer, would become the insurance firm's chairman.