COVID-19 related claims in 2020 are expected to remain within the Group's earnings risk tolerance. Experience to date and the Group's scenario analysis suggest that P&C claims could total approximately USD 750 million for the full year, of which USD 280 million has been recognized in the first quarter. The continuing nature of the event means that this is subject to significant uncertainty. This scenario does not include any broader positive or negative impacts resulting from lower economic activity.
Developments in financial markets and ongoing weaker economic activity are also expected to have an adverse impact on both the Group's revenues and earnings through the remainder of the year, the precise magnitude of which will depend on the ultimate levels of financial markets over the year and the extent and duration of the economic downturn.
- P&C gross written premiums (GWP): USD 9,678 million (+7%)
- EMEA: USD 5,337 million (+8%)
- North America: USD 3,354 million (+7%)
- Asia Pacific: USD 769 million (+0%)
- Latin America: USD 632 million (+2%)
- Life annual premium equivalent (APE): USD 958 million (-10%)
- EMEA: USD 637 million (-7%)
- North America: USD 33 million (-39%)
- Asia Pacific: USD 54 million (-15%)
- Latin America: USD 234 million (-11%)
- Farmers Exchange GWP: USD 5,136 million (-1%)
Gross written premiums in Property & Casualty (P&C) for the first three months rose 7% on a like-for-like basis, adjusting for currency movements, acquisitions and disposals. Growth came primarily from Europe, Middle East and Africa (EMEA) and North America. In U.S. dollar terms gross written premiums increased 5% with growth tempered by adverse currency developments in Latin America.
Growth was supported by higher premium rates, with increases achieved in most regions compared to the previous year. Notably, North America experienced a continuation of recent trends, with overall rate increases of 12% in the first quarter, compared to 10% in the fourth quarter of 2019 and 7% for the full year 2019.
In EMEA, gross written premiums increased 8% on a like-for-like basis, with strong growth in the UK, Germany and all other major countries. North America grew 7% on a like-for-like basis compared to the previous year, with the growth driven mainly by rate increases, but also by higher retention and new business. Asia Pacific gross written premiums remained stable on a like-for-like basis, with growth in Japan offset by a slowdown of travel insurance sales as a result of the COVID-19 outbreak. Latin America grew 2% on a like-for-like basis, with reduced economic activity impacting sales in the mass consumer business.
A series of European winter storms together with a number of climatic events in North America, contributed to a relatively elevated level of natural catastrophe and weather-related claims compared to historical first-quarter levels.
In the first quarter, Life new business annual premium equivalent (APE) decreased 10% on a like-for-like basis, adjusting for currency movements, acquisitions and disposals. The decline reflects the first impacts of COVID-19, particularly in the Asia Pacific region and Brazil, due to the impact of government lockdowns on face-to-face distribution channels. The first-quarter development also reflected expected reductions in several markets from exceptional levels in the first quarter of 2019. On a reported basis APE was 19% lower.
In EMEA APE sales decreased by 7% on a like-for-like basis compared to the same period in 2019. Growth in the UK, Germany and Italy was more than offset by a reduction in corporate pensions business in Switzerland from the exceptional levels of the first quarter of 2019. APE sales in Latin America decreased by 11% on a like-for-like basis, mainly driven by lower unit-linked and individual protection sales in Brazil.
In Asia Pacific APE sales decreased 15% on a like-for-like basis, reflecting lower sales volumes in Malaysia and Indonesia driven by the outbreak of the COVID-19 virus and increased competition in Japan. In North America APE sales were 39% lower than in the prior year due to reduced sales of corporate protection business ahead of the sale of the Group life business to Aflac Incorporated, announced on March 19.
The new business margin remained on an attractive level at 23.7% as reported or 24.1% on a like-for-like basis. New business value (NBV) decreased 19% on a like-for-like basis, driven by lower new business volumes and a morbidity assumption change in Japan. On a reported basis NBV declined 24%.
"Throughout this crisis our priority has been to support our customers and local communities, while ensuring the safety and wellbeing of our colleagues. (...) In this environment, our investments in the digitalization of our business are paying off.
We have responded to the heightened need for remote and flexible services by creating or expanding our digital offering for individual and business customers alike. We expect the crisis to strengthen demand for digital interactions and better tailored services and are committed to the expansion of our digital offering as this trend gathers pace. Our flexible and resilient business model positions the Group well to quickly adapt to changing situations and requirements to deliver continued success."