(Adds central banks, analysts, Swiss Re)
By Alexander Hübner and Huw Jones
MUNICH/LONDON April 3 (Reuters) - Shares in Europe's
insurers fell sharply on Friday after the EU regulator said they
should temporarily halt payouts to shareholders during the
coronavirus epidemic, although Germany backed Allianz's decision
to go ahead with a dividend.
Shares of Dutch insurers NN Group and Aegon
slumped around 10% while France's CNP Assurances fell
7% and AXA was down 4%. British insurers - which still
need to follow EU insurance regulation during the Brexit
transition period - also fell with Aviva and Prudential
down 4%.
The European Insurance and Occupational Pensions Authority
(EIOPA) said late on Thursday that it was essential to ensure
insurers and reinsurers hold a "robust level" of reserves to
protect policyholders and absorb potential losses.
The move followed the European Central Bank telling banks
last week to halt shareholder payouts.
But while most major banks in the euro zone have heeded
calls to suspend their dividends, insurers may put up more of a
battle.
Germany's financial regulator BaFin said on Friday that a
general payout ban for insurers and pension funds is currently
not necessary after the EU's insurance regulator said dividends
and share buybacks should be suspended during the coronavirus
pandemic.
"BaFin does not see a blanket distribution ban for insurers
and pension funds as necessary," the German watchog said.
Analysts at JPMorgan Cazenove said halting dividends would
remove one of the sector’s main attractions.
IN GOOD SHAPE
Italian financial group Unipol Gruppo said on
Thursday it was suspending its dividend payment in line with
requests from national regulators, while its insurance unit
UnipoSAI would pay one despite Italy's insurance
watchdog IVASS calling on companies to be prudent.
Allianz, the region's biggest insurer, told Reuters it
wanted to maintain both its dividend for 2019 and a share
buyback worth 1.5 billion euros ($1.6 billion).
"Allianz is in good shape," its spokesman Holger Klotz said.
German reinsurer Munich Re, which declined to
comment on the EIOPA statement, announced on Tuesday it was
scrapping a share buyback but keeping a 9.8 euros per share
dividend, despite a profit warning.
Although BaFin is the direct regulator for German insurers,
it is also a member of EIOPA, which groups national insurance
regulators from the 27-member bloc.
The Dutch central bank said late on Thursday that it
supported EIOPA's call "to the utmost".
In response to EIOPA's guidance, the Bank of England said on
Friday that it, like the EU watchdog, expects insurers to pay
close attention to the need to protect policyholders when making
any decisions on the distribution of profits.
"We therefore expect firms to be prudent in deciding on
dividend payments or variable remuneration in view of the
elevated levels of uncertainty presented by coronavirus and its
impact on the global economy," the BoE said.
Britain no longer has a seat at EIOPA but it is still
required to follow EU rules until the end of December under the
transition deal that followed Britain's exit from the European
Union in January.
Although Switzerland is not an EU member, its regulator
FINMA has urged financial institutions to carefully consider
dividends. Reinsurer Swiss Re and Swiss Life,
however, are both sticking to their dividend proposals.
EIOPA said the suspensions should be reviewed as the
financial and economic impact of the COVID-19 epidemic starts to
become clearer.
($1 = 0.9251 euros)
(Reporting by Alexander Huebner in Frankfurt, Toby Sterling in
Amsterdam, Oliver Hirt in Zurich, Valentina Za in Milan, Huw
Jones in London,
Writing by Rachel Armstrong, editing by Susan Fenton)