UK insurers RSA, Aviva and Direct Line have today announced that they will suspend their final dividend payment of 2019 due to the challenges presented by the coronavirus (COVID-19) pandemic.
The news comes after Hiscox decided earlier today to suspend dividends and withdraw all its financial guidance and targets for 2020, in light of the virus outbreak.
Other major insurers have now followed suit, with some citing the guidance from UK regulator the Prudential Regulation Authority (PRA), which requested on 31 March that all insurers remain prudent in their approach to dividends.
RSA explained that the COVID-19 crisis had put special focus on the insurance industry sutaining confidence in its ability to serve society reliably through this period and beyond.
The company’s 15.6p per ordinary share full year 2019 dividend would have been due for payment on 14 May 2020, but the declaration of this dividend will now be withdrawn from the annual general meeting, which is scheduled for 7 May.
While RSA intends to recommence dividend payments as soon as it is prudent to do so, the company warned that it is too early to predict the timing of resumption.
“This is a difficult decision, not least in terms of the initial impact it will have on shareholders,” said RSA Chairman Martin Scicluna. “The Company has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support as well as wider stakeholders, to take these steps now, and ensure that RSA is well placed to continue doing what we can to help through this crisis.”
In announcing its decision, Aviva similarly cited “the unprecedented challenges COVID-19 presents for businesses, households and customers, and the adverse and highly uncertain impact on the global economy.”
“In light of the significant uncertainties presented by COVID-19, the Board agrees with our regulators that it is prudent to suspend dividend payments at this time,” the insurer said, adding that it remains too early to quantify the impact of the pandemic on its claims expenses.
“For DLG, whilst our capital position remains strong and at the upper end of our risk appetite range, we note the letter from the PRA and the guidance to preserve the Group’s strong balance sheet during this period of heightened uncertainty,” concurred Direct Line Group CEO Penny James.
“We understand that these are challenging times for everyone in the country and we will continue to make the decisions needed to protect the long-term interests of the Group for the good of our customers, our people and our investors.”
