EU regulator urges re/insurers to halt dividend, buybacks amid COVID-19 crisis
The European Insurance and Occupational Pensions Authority (EIOPA) has urged re/insurers to temporarily suspend all discretionary dividend distributions and share buy backs aimed at remunerating shareholders in wake of the ongoing pandemic.
The decision takes into account the current level of uncertainty due to the impact of COVID-19 in financial markets and on the economy.
EIOPA stressed the importance of insurers preserving their capital position in balance with the protection of the insured. It also asked for insurers to apply a "prudent approach" to the variable remuneration policies.
In order to mitigate the impact of COVID-19 outbreak on the insurance sector, policyholders and beneficiaries, the authority says re/insurers must take "all necessary steps to continue to ensure a robust level of own funds to be able to protect policyholders and absorb potential losses".
It said: "EIOPA considers that it is essential to ensure the access to and continuity of insurance services, safeguarding the ability of the insurance sector to continue to perform its role as risk transfer mechanism."
