Global insurer AXA has estimated that the COVID-19 pandemic will result in an overall P&C claims cost of €1.2 billion, post-tax and net of reinsurance.
The figure came alongside news that the company will cut its dividend almost in half, from €1.43 per share to €0.73 per share.
This decision, approved by AXA’s Board of Diretors on June 2nd, followed communications from the European Insurance and Occupational Pensions Authority (EIOPA) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR).
AXA is anticipating that most of the impact to its P&C business will come from business interruption and event cancellation lines.
Other lines, such as D&O, liability and travel, will also produce some losses, the company said, although these will be partly offset by reduced claims in some areas, most notably in motor.
AXA has experienced no material deviation in claims for life and health business, but it did record an additional €300 million impact due to solidarity measures, including the extension of health and disability coverage to vulnerable customers, particularly in France.
“From the very beginning of the Covid-19 crisis, AXA’s priority has been to act responsibly towards all its stakeholders,” said Denis Duverne, Chairman of the Board of Directors of AXA.
“AXA’s first priority has been to help its customers navigate through this crisis and to protect the safety of its employees, including guaranteeing their full employment for the duration of the confinement period,” he continued.
“The Group also continues to support its most impacted customers by taking a range of exceptional measures beyond its contractual obligations, and the wider community by participating in national solidarity efforts including contributions to various public funds. Reflecting the strength of the Group’s balance sheet, AXA has fulfilled these undertakings without requesting any government aid.
“The Board of Directors’ decision to reduce the proposed dividend demonstrates the same sense of responsibility towards AXA’s institutional and individual shareholders, while adopting a prudent approach in the current environment.”
The reduced dividend is expected to be paid on July 9, 2020 with an ex-dividend date of July 7,2020.
But the Board may consider proposing an additional payment to shareholders in 4Q 2020, up to €0.70 per share, as an exceptional distribution of reserves.