Insurance giant Aviva scraps its dividend payments to shareholders because of coronavirus
PUBLISHED: 08:48 08 April 2020 | UPDATED: 08:53 08 April 2020
Aviva, with its HQ in Norwich, has cancelled its June dividend to shareholders as a result of the coronavirus pandemic.
Aviva announced its board of directors had “agreed to withdraw its recommendation to pay the 2019 final dividend to ordinary shareholders in June 2020”.
Other firms such as First Direct are also holding back payments after guidance from regulators because of the uncertainty over coronavirus, although rival Legal & General said it would be making its payment.
Aviva said it would reconsider the decision in the fourth quarter of 2020.
Kirstine Cooper, group general counsel and company secretary for Aviva plc, said: “The board has taken this decision in the wake of the unprecedented challenges Covid-19 presents for businesses, households and customers and the adverse and highly uncertain impact on the global economy.
“Regulatory authorities, including EIOPA, European Insurance and Occupational Pensions Authority, the PRA, Prudential Regulation Authority, and supervisors of other Aviva subsidiaries, have responded by publicly urging restraint on dividend payments by insurers to shareholders. 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.”
Aviva added it “remains well capitalised with strong liquidity. By retaining the final dividend, the estimated group capital ratio will increase by circa 7% to approximately 182%.”
But it said it was too early to quantify the impact of coronavirus on its overall business such as on its claims expenses in its life and general insurance sector as well as the potential effect of capital markets and economic trends on its results.
“Given the change in the economic outlook, we are reviewing all material discretionary and project expenditure. We intend to provide an operational update for investors in the second half of May.”
The previous dividend was 9.5p paid eight months ago.
For more updates on coronavirus in Norfolk see the Facebook page here
If you value what this story gives you, please consider supporting the Eastern Daily Press. Click the link in the orange box above for details.