AXA cuts dividend in wake of €1.2bn Covid-19 claims estimate

AXA is cutting its proposed dividend from €1.43 per share to €0.73 per share following communications from the European Insurance and Occupational Pensions Authority (EIOPA) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR), relating to the adoption of a prudent approach towards dividend distributions during the Covid-19 pandemic.

The announcement comes as AXA revealed that it was anticipating €1.2bn in overall claims costs post-tax and net of reinsurance as a result of the coronavirus pandemic.

The insurer expects the most material impacts to come from business interruption and event cancellation business, with a smaller impact from other lines including D&O, liability and travel.

AXA said it expected this to be partly offset by reduced claims in some areas, most notably from motor.

AXA chairman Denis Duverne said it had always been AXA’s aim to act fair and responsibly towards all of its stakeholders during the current crisis.

“From the very beginning of the Covid-19 crisis, AXA’s priority has been to act responsibly towards all its stakeholders,” he said. “AXA’s first priority has been to help its customers navigate through this crisis and to protect the safety of its employees, including guaranteeing their full employment for the duration of the confinement period. The Group also continues to support its most impacted customers by taking a range of exceptional measures beyond its contractual obligations, and the wider community by participating in national solidarity efforts including contributions to various public funds. Reflecting the strength of the Group’s balance sheet, AXA has fulfilled these undertakings without requesting any government aid.

“The Board of Directors’ decision to reduce the proposed dividend demonstrates the same sense of responsibility towards AXA’s institutional and individual shareholders, while adopting a prudent approach in the current environment.”

The AXA board has said that it may consider proposing an additional payment to shareholders in 4Q 2020, up to €0.70 per share, as an exceptional distribution of reserves, subject to favorable market and regulatory conditions at that time.

The proposal to cut the dividend is still subject to approval by shareholders at AXA’s Annual General Meeting on June 30, 2020.