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* EU watchdog tells insurers: halt payouts over coronavirus
* Several insurers reluctant or opposed to recommendation
* French, Dutch regulators back EIOPA; Germany against
* Swiss, UK, Italian watchdogs broadly supportive
(Adds Legal & General, Zurich Insurance)
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
fell as much as 10% in early trade while France's CNP
Assurances fell 7%. British insurers - which still need to
follow EU insurance regulation during the Brexit transition
period - also fell with Aviva and M&G closing
down more than 6%.
The European Insurance and Occupational Pensions Authority
(EIOPA) said late on Thursday it was essential for insurers and
reinsurers to hold a "robust level" of reserves to protect
policyholders and absorb potential losses.
Last week the European Central Bank told banks to halt
shareholder payouts, and most major euro zone lenders have done
that.
However, insurers may put up more of a fight, and analysts
at JPMorgan Cazenove said halting dividends would remove one of
the sector’s main attractions.
MIXED MESSAGES
French regulator ACPR, part of the Bank of France, backed
EIOPA, but its German counterpart BaFin - a member of EIOPA -
said a general payout ban for insurers and pension funds was
currently not necessary.
Germany's Allianz, the region's biggest insurer, told
Reuters it was in "good shape" and wanted to maintain both its
dividend for 2019 and a 1.5 billion euro ($1.6 billion) share
buyback.
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.
France's biggest insurer AXA said it postponed its annual
meeting until June 30 to allow time for discussions with
European regulators, though draft resolutions to pay a dividend
remained unchanged. Its shares retraced some earlier losses to
trade down 3%.
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. Italy's insurance watchdog IVASS called on
companies to be prudent.
The Dutch central bank said it supported EIOPA's call "to
the utmost".
The Bank of England said on Friday that it, like the EU
watchdog, expected insurers to pay close attention to the need
to protect policyholders.
"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 is required to
follow EU rules until the end of December under its Brexit
transition deal.
RSA said it was reviewing the EIOPA letter, and
Direct Line, which pulled a planned 150-million-pound
($184 million) share buyback last month, said it was monitoring
the issue.
But Legal & General said late on Friday it still
planned to pay its 2019 dividend. Its shares closed more than
10% lower before its announcement.
Although Switzerland is not an EU member, its regulator
FINMA has urged financial institutions to carefully consider
dividends.
Swiss Life and reinsurer Swiss Re,
however, are all sticking to their dividend proposals, while
Zurich Insurance shareholders approved the firm's
dividend at its annual general meeting earlier this week.
EIOPA said the suspensions should be reviewed as the
financial and economic impact of the COVID-19 epidemic started
to become clearer.
($1 = 0.9251 euros)
($1 = 0.8154 pounds)
(Reporting by Alexander Huebner in Frankfurt, Toby Sterling in
Amsterdam, Oliver Hirt in Zurich, Maya Nikolaeva in Paris,
Valentina Za in Milan, Huw Jones and Carolyn Cohn in London and
Muvija M. in Bengaluru
Writing by Rachel Armstrong, editing by Susan Fenton and John
Stonestreet)
