WINTERTHUR, Switzerland—An insurance pool writing coverage for Swiss aviation risks has fallen victim to heavy competition and a move by the parent of one its members to pull out of the operation.

The Swiss Pool for Aviation Insurance, a 60-year-old facility of 16 insurers that write property/casualty coverages for small airline and aircraft risks, will cease writing June 30 and begin running off its business. The pool is operated by Winterthur Group, the Winterthur, Switzerland-based insurer that was acquired by AXA S.A. last year.

The pool wrote around 80 million Swiss francs ($65.6 million) in annual premiums, and provided hull and liability coverages for small airlines and aircraft owners, personal accident coverage for those policyholders and product liability insurance for manufacturers of aircraft products. Among the pool's policyholders is Zurich-based Helvetic Airways.

In a statement, the pool blamed the closure partly on "cut-throat competition in the domestic market" and a decision by AXA to discontinue Winterthur's participation in the facility.

Martin Ruegg, managing director of the facility, said officials of AXA informed the pool that the Paris-based insurer prefers not to participate in such arrangements.

The pool also was hampered by its own inefficient business procedures and was in the process of restructuring its operations into a managing general agency format when AXA decided it did not want to participate, Mr. Ruegg explained.

When AXA announced it would withdraw Winterthur's participation, other pool insurers decided to follow, he said.

A market still exists for the risks that had coverage through the facility, Mr. Ruegg pointed out. Winterthur and other participants do plan to continue providing aviation coverage for Swiss risks outside the pool, he said.

Zurich Financial Services is among the large pool insurers that will continue to write coverage for Swiss aviation risks after the facility closes, confirmed Axel Schmidt, chief underwriting officer of the Zurich-based insurer's global underwriting operations.