Hiscox cancels dividend amid crisis uncertainty
Hiscox has cancelled a scheduled dividend and withdrawn financial guidance for the time being due to uncertainty created by the Covid-19 crisis.
In a statement, Hiscox said its board had decided that the resolution to pay a 29.6 cents per share dividend on June 10 would not now be put to shareholders, “in order to help Hiscox serve the needs of businesses and households through the extraordinary challenges presented by Covid-19”.
The Bermudian-based re/insurer said the move had the support of its regulators.
The board also agreed that for 2020 Hiscox will not propose an interim dividend payment, or repurchase its own shares.
The statement added: “Hiscox’s capital, liquidity and funding positions remain strong. Trading across the group for the first two months of the year was ahead of expectations, however in view of the uncertain impact of Covid-19 on the global economy, the group is unable to accurately forecast the outlook for 2020.
“As such, we are withdrawing all financial guidance for 2020 until there is more clarity. We remain confident in our ability to return to our normal 90 to 95 per cent combined ratio target range for the retail business in 2022.”
The Bank of England had written to several insurers in late March, urging them to suspend dividend payments during the crisis to preserve cash for meeting potential coronavirus-related claims.
Hiscox joined Aviva, Direct Line and RSA in following that advice. Britain’s Prudential Regulation Authority welcomed their decisions.
“Insurers should pay close attention to the need to protect policyholders and maintain safety and soundness,” the PRA stated.
“Decisions regarding capital or significant risk management issues need to be informed by a range of scenarios, including very severe ones.”
In early March, Hiscox stated that it expected its exposure to Covid-19 to be “manageable”.
In an interview with The Royal Gazette at the time, Rob Childs, chairman of Hiscox, said the most likely type of coverage to generate claims was insurance covering events against cancellation.
“The main thing is that we always give people the option to buy insurance against pandemic, but 90 per cent of them don’t buy it,” Mr Childs said, adding that the company was not offering such coverage now.
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