In its supervision release 9/2020 of 24 March 2020, the Financial Supervisory Authority recommended that under the prevailing exceptional circumstances, non-life and life insurance companies show significant restraint in the profit distribution and payment of variable remuneration.
The European Insurance and Occupational Pensions Authority (EIOPA) published a statement on 2 March 2020 on dividends distribution and variable remuneration policies in the context of COVID-19.
In line with the statement by EIOPA, the FIN-FSA recommends that life-insurance companies and insurance groups, where applicable:
- temporarily suspend all discretionary dividend distributions or other similar transactions,
- temporarily suspend all share buy backs or redemption of shares or participations, aimed at remunerating shareholders, and
- set the variable part under their remuneration policies at a conservative level and ensure that they reflect the current economic situation and the related uncertainties, and consider the postponement of the variable part of remuneration policies.
The recommendation is valid until the uncertainties caused by COVID-19 are assessed as having disappeared.
In the event that an insurance company has not complied, or does not intend to comply, with this recommendation, it must inform its assigned supervisor without undue delay and provide written detailed grounds for non-compliance of the recommendation. The supervised entity must by the end of April, at the very latest, inform its assigned supervisor about decisions already taken, and give prior notice on new decisions.
For further information, please contact
Teija Korpiaho, Head of Division, telephone +358 9 183 5528, or teija.korpiaho(at)fiva.fi
- FIN-FSA Supervision release 24 March 2020 – 9/2020: Extension of time for reporting by non-life and life insurance companies to minimise the impacts of the coronavirus situation
- EIOPA statement 2 April 2020: EIOPA statement on dividends distribution and variable remuneration policies in the context of COVID-19
- EIOPA statement 17 March 2020: EIOPA statement on actions to mitigate the impact of Coronavirus/COVID-19 on the EU insurance sector