(Reuters) — American International Group Inc. on Monday posted a 93% drop in quarterly adjusted profit, as it set aside money to cover claims related to the COVID-19 outbreak, which it called the single largest catastrophe loss the industry has ever seen.

AIG, one of the largest U.S. insurers, posted an underwriting loss of $87 million in its general insurance business in the first quarter, compared with a profit of $179 million a year earlier, mainly due to losses related to the outbreak.

AIG set aside $419 million in catastrophe losses in the unit, which included $272 million of estimated COVID-19-related losses such as on travel, trade credit and workers compensation. The remainder was mainly weather-related, the company said.

Global insurers are waking up to the prospect of a double whammy — a sharp rise in payouts at a time of big investment losses as insurers' investments come under pressure and the investments they rely on to pay the claims unravel.

As recession threatens the global economy along with rising insolvencies, all sorts of companies with trade credit insurance, from airlines to retailers, are coming under strain.

Adding to the pressure, U.S. commercial insurers are facing mounting political pressure to cover claims from businesses that are losing revenue because of coronavirus-led shutdowns ordered by state and local governments.

"We believe COVID-19 will be the single largest CAT (catastrophe) loss the industry has ever seen," AIG Chief Executive Officer Brian Duperreault said in a statement. AIG's total net investment income, on an adjusted basis, fell by $1 billion, to $2.7 billion, from a year ago.

The insurer'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.

A ratio below 100 means the insurer earns more in premiums than it pays out in claims.

AIG also said it decided to place Blackboard U.S. Holdings Inc., the company's technology-driven subsidiary, into run-off. AIG recognized a pretax loss of $210 million, mainly consisting of asset impairment charges. This charge did not impact adjusted pretax income, the company said.

Adjusted net income attributable to AIG common shareholders fell to $99 million, or 11 cents per share, in the first quarter ended March 31, from $1.39 billion, or $1.58 per share, a year earlier.

More insurance and risk management news on the coronavirus crisis here.