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Pin to quick picksDirect Line Share News (DLG)

Share Price Information for Direct Line (DLG)

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Direct Line pulls dividend due to coronavirus outbreak

Wed, 08th Apr 2020 07:37

(Sharecast News) - Direct Line said on Wednesday that it was pulling its final dividend due to the coronavirus outbreak and following a request from the Prudential Regulation Authority.
The insurer said: "Notwithstanding the group's strong capital position, in recognition of the regulatory guidance and heightened uncertainty in the macroeconomic environment, the board has decided it will no longer be recommending to shareholders the final dividend for the year ended 31 December 2019."

The situation will be reviewed once the company can get a clearer understanding of the impact of Covid-19 on customers and the business.

The PRA wrote a letter to insurers at the end of March asking that they be "prudent" in their approach to dividends.

Direct Line said travel claims to date continue to develop, reflecting international and domestic travel restrictions and isolation measures. Travel gross reported incurred claims at the end of March were ?22m before reinsurance cover of around ?18.5m.

Early signs across the rest of the group indicate a reduction in claims, particularly in the motor segment, as customers stay at home, it said.

Group chief executive officer Penny James said: "Covid-19 presents an unprecedented global challenge. For DLG, whilst our capital position remains strong and at the upper end of our risk appetite range, we note the letter from the PRA and the guidance to preserve the group's strong balance sheet during this period of heightened uncertainty.

"It is too early to assess the impact of changes in customer behaviour that will arise given the broader consequences of Covid-19."

At 0935 BST, Direct Line shares were down 6.6% at 272.10p.

RSA Insurance, Aviva and Hiscox also pulled their dividends on Wednesday.

William Ryder, equity analyst at Hargreaves Lansdown, said: "The regulator is clearly very keen for insurers to retain capital going into the next few months, and given the number of dividend cuts this morning we suspect some last minute pressure was applied to bring the industry to heel. While both RSA and Direct Line would probably be considered well capitalised for normal operations, the coming months are not going to be normal. Motor insurance claims are falling thanks to empty roads, but it's possible that other claims may rise going forward.

"It's worth remembering that the bailout of American insurer AIG was a key moment in the 2008 financial crisis, and we can't risk a loss of confidence in the industry now. We understand, therefore, why the regulator isn't comfortable leaving it to management to assess their capacity to pay a dividend, but some consideration should be given to shareholders that are relying on dividend income from their pensions to pay bills and for other basic necessities. Diversified portfolios will help mitigate this pain, but given the breadth of cuts over the last few weeks almost every portfolio will be feeling the pinch."

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28 Mar 2024 13:43

UK dividends calendar - next 7 days

Friday 29 March 
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Monday 1 April 
no events scheduled 
Tuesday 2 April 
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Braemar PLCdividend payment date
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Fonix Mobile PLCdividend payment date
JPMorgan European Growth & Income PLCdividend payment date
MJ Gleeson PLCdividend payment date
RM Infrastructure Income PLCdividend payment date
Shoe Zone PLCspecial dividend payment date
Temple Bar Investment Trust PLCdividend payment date
Tritax Big Box REIT PLCdividend payment date
Warehouse REIT PLCdividend payment date
Wheaton Precious Metals Corpex-dividend payment date
Wednesday 3 April 
Barclays PLCdividend payment date
Tetragon Financial Group Ltddividend payment date
Thursday 4 April 
Alpha Group International PLCex-dividend payment date
Apax Global Alpha Ltddividend payment date
BP Marsh & Partners PLCex-dividend payment date
Breedon Group PLCex-dividend payment date
Brunner Investment Trust PLCdividend payment date
Chelverton UK Dividend Trust PLCex-dividend payment date
CT UK High Income Trust  PLC - Class Bex-dividend payment date
Dalata Hotel Group PLCex-dividend payment date
Direct Line Insurance Group PLCex-dividend payment date
Domino's Pizza Group PLCex-dividend payment date
Empiric Student Property PLCex-dividend payment date
European Assets Trust PLCex-dividend payment date
European Smaller Cos Trust PLCex-dividend payment date
Finsbury Growth & Income Trust PLCex-dividend payment date
Games Workshop Group PLCex-dividend payment date
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London Finance & Investment Group PLCdividend payment date
Martin Currie Global Portfolio Trust PLCex-dividend payment date
Mondi PLCex-dividend payment date
Nexus Infrastructure PLCex-dividend payment date
OSB Group PLCex-dividend payment date
Pebble Group PLCex-dividend payment date
PZ Cussons PLCdividend payment date
Real Estate Investors PLCex-dividend payment date
Rentokil Initial PLCex-dividend payment date
RIT Capital Partners PLCex-dividend payment date
Schroder Income Growth Fund PLCex-dividend payment date
Shires Income PLCex-dividend payment date
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US Solar Fund PLCex-dividend payment date
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