June 3, 2020 / 2:04 PM / a month ago

Prudent for EU insurers to suspend dividends - watchdog

LONDON (Reuters) - Insurers should continue to suspend dividends until the extent of economic damage from the coronavirus pandemic becomes clearer, the European Union’s insurance watchdog said on Wednesday.

“We still believe it is a prudent approach... There are still a lot of elements of uncertainty,” Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority (EIOPA), told a webinar held by global financial industry lobby IIF.

EIOPA has asked the sector to suspend dividends to preserve capital, but French insurer Axa said on Wednesday it would press ahead with a dividend for 2019, although it would halve the amount. German insurer Allianz has also said it is paying its 2019 dividend.

Bernardino said insurers in Europe entered the pandemic crisis in a strong position and “for the time being” the regulator was comfortable with how they have managed the challenges, but the levels of uncertainty were too high to be complacent.

If the crisis gets worse, the regulator can give insurers more time to replenish their capital buffers, Bernardino said.

Bernardino said insurers needed to be cautious about the impact of business interruption claims on their solvency positions.

Businesses in Britain, France and the United States are seeking payments from insurers for disruption to their operations as a result of the coronavirus pandemic. Insurers say the businesses are not covered for it.

Reporting by Carolyn Cohn and Huw Jones; Editing by Angus MacSwan

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