European insurers eager to pay dividends next year

Posted on Nov 12, 2020 at 5:46 p.m.Updated Nov 12, 2020, 7:14 PM

Major European insurers are keen to remunerate their shareholders next year. Latest example: Generali said it was ready, Thursday, to pay a dividend in 2021 after having had to give up distributing its 2019 dividend in full this year, under pressure from supervisors worried about the impact of the Covid crisis. 19 on the sector.

“Subject to a favorable position from the regulator, the group intends to obtain the approval of its shareholders for the distribution of the second tranche of the 2019 dividend”, said the Italian insurer on the occasion of the presentation of its quarterly results. Arguing from its financial strength in September (with a solvency ratio of 203%), the group, which assesses the impact of the pandemic at 125 million euros on its operating profit, is also maintaining its shareholder compensation objectives for the period 2019-2021.

Caution of European supervisors

Generali says it has stopped distributing the second tranche of its 2019 dividend this year in response to a letter from the Italian insurance regulator (Ivass) in November. This echoed a recommendation from the European Systemic Risk Board (ESRB) of June, recommending that banks and insurers not pay dividends or buy back shares, ” at least »Until January 1, 2021.

As in the banking sector, Generali is not the only group to give shareholders hope for remuneration next year and to prepare a showdown with the European authorities. “If we look at the profitability, solvency and liquidity of the group, there is no problem to distribute a dividend next year”, declared at the beginning of November, Etienne Bouas-Laurent, the financial director of AXA. The French insurer cut its dividend in half before waiving, this summer, a payment at the end of the year.

See you at the end of the year

Last week, the French reinsurer SCOR also showed itself eager to be able to gratify its shareholders. His boss Denis Kessler explained that he had been “Infuriating” to have to waive the 2019 dividend following requests from the French regulator, when other players in the sector had not had to do so. Allianz and Munich Ré thus remunerated their shareholders despite the call for moderation from the European insurance supervisor (Eiopa).

These different policies have highlighted the fact that the supervision of the insurance sector in Europe is not as integrated as for the big banks, directly supervised by the European Central Bank (ECB) and for which the suspension of dividends s ‘is imposed. The crisis does not weigh in the same way on the banks and the insurers, and the latter are several to show themselves confident for the future.

AXA says it is better equipped than in the spring to face the crisis, because many claims are behind the group and the prices of business insurance are on the rise. The supervisors of the two sectors should however wait to see more clearly on the economic situation at the end of the year to pronounce themselves. The head of banking supervision at the ECB recently indicated that there would be no decision before December 10.

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