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London (Reuters) – The European insurance industry is warning of a general ban on profit distributions due to the Corona crisis.
The pandemic could lead to insurance losses of between 50 and 100 billion dollars, but the effects on the individual insurers are very different, the industry association Insurance Europe said on Monday. In addition, companies have a responsibility to their shareholders, many of whom have relied on dividend payments in their pension plans. The supervisors should therefore refrain from blanket nationwide or regional bans on profit distributions and should only prohibit them in individual cases if this shrinks the capital cushion too much.
The European supervisory authority EIOPA recommended that insurers refrain from paying dividends in view of the corona pandemic. However, insurers such as Allianz, Munich Re, Italian Generali and French AXA are paying dividends for 2019. The German financial regulator BaFin does not consider a blanket distribution prohibition necessary. On the other hand, she is demanding that the banks waive dividends.
The crisis hits the industry twice: on the one hand as an investor, on the other hand in the core business, which is characterized by high payouts due to the failure of major events. Insurance Europe therefore called for the supervisors to be accommodating. “A certain degree of regulatory flexibility is crucial to enable insurers to adapt their products and services to new market realities,” the association said.