Insurance giants scrap dividends after regulator urges caution on payouts

INURANCE giant Aviva, which has significant operations in Scotland, has scrapped its final dividend citing the unprecedented challenges posed for consumers, businesses and the economy by the

Covid-19 coronavirus.

The company noted it made the move after regulators had publicly urged restraint on dividend payments by insurers to shareholders.

“In light of the significant uncertainties presented by Covid19, the Board agrees with our regulators that it is prudent to suspend dividend payments at this time”, it said.

Aviva said it also plans to curb spending in response to the change in the economic outlook but does not intend to use the UK Government funded scheme to furlough any employees.

The company employs 1,000 people in Perth and 800 in Bishopbriggs

Two other big insurers also announced plans to suspend dividend payments.

Direct Line Group said its board would no longer be recommending the final dividend proposed for 2019. It cited regulatory guidance and heightened uncertainty in the macroeconomic environment

Chief executive Penny James said: “We know that dividend income from DLG is important to our investors and through them the people who may look to that income to support their pensions and savings, but we have taken the prudent and difficult decision to withdraw the full year

2019 dividend.”

RSA’S board suspended its recommendation that the company should pay a final dividend for 2019 noting the insurance industry needed to maintain confidence in its ability to serve society through the current period and beyond.

Its chairman Martin Scicluna said: “This is a difficult decision, not least in terms of the initial impact it will have on shareholders... 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.”

The UK’S Prudential Regulation Authority told insurers last month that they should consider dividends carefully amid the disruption arising from the coronavirus.

Standard Life Aberdeen last week said it would go ahead with a

£300m final dividend payment for 2019. Chairman Douglas Flint said the company was in a strong position and dividends were important to pensioners and savers.