DNB resumes assessment of insurers' dividends
De Nederlandsche Bank (DNB) will review dividend proposals from insurers under its supervision as usual. This step follows the call from the beginning of April for to temporarily suspend the distribution of dividends and the buying back of own shares until there is more clarity about the impact of COVID-19.
DNB supports the recent ESRB recommendation that financial institutions (including insurers) should refrain from distributing dividends or buying back shares until at least the end of this year, in order to better withstand the potentially severe economic shock caused by the coronavirus crisis. It is necessary that financial institutions hold sufficient capital to mitigate potential systemic risk. This call is therefore explicitly linked to the coronavirus crisis.
With regard to insurers, DNB also notes that the recommendation is being implemented in different ways in Europe. In addition, unlike banks, insurers did not receive any capital relief, and the direct impact of the coronavirus crisis on insurers in a general sense has so far been limited. Against this background, DNB will again assess dividend proposals from insurers as per usual.
Insurers who, despite the ESRB's call, are still considering distributing dividends or buying back shares will in any case need to make a thorough, forward-looking analysis in the light of the coronavirus crisis and, for example, the sustained low-interest rate environment. In doing so, DNB expects a careful analysis of the uncertain outlook based on the supervisory framework and its own capital policy.