Suspension of insurers’ dividends as a response to the COVID-19 crisis: Evidence from the European insurance equity market
| Author(s): | doc. PhDr. Ing. Ing. Petr Jakubík Ph.D. Ph.D., Ing. Saida Teleu Ph.D., |
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| Type: | Articles in journals with impact factor |
| Year: | 2021 |
| Number: | 0 |
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| Published in: | The Geneva Papers on Risk and Insurance - Issues and Practice, Geneva Association, Palgrave Macmillan, https://link.springer.com/content/pdf/10.1057/s41288-021-00243-5.pdf |
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| Keywords: | European insurance sector; suspension of dividend distributions, event study, EIOPA statement, equity market |
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| Grants: | GACR 20-00178S - The impact of the normalisation of interest rates on risk management |
| Abstract: | The recent COVID-19 outbreak and significant increase in resulting global uncertainty poses many challenges to financial sectors. Many regulators took measures to safeguard the resilience of financial institutions by requesting postponements of dividend distributions until uncertainties about further development diminished. Specifically, on 2 April 2020, the European Insurance and Occupational Pensions Authority issued a statement requesting that (re)insurers suspend all discretionary dividend distributions and share buybacks aimed at remunerating shareholders. Although the goal was to strengthen the overall financial stability of the sector, it may have negatively influenced insurers’ equity prices in the short-term. Hence, this paper empirically investigates this potential effect using an event study methodology. Although negative drops were observed in some cases, the obtained empirical results suggest that they were not statistically significant for the European insurers’ equity market when considering the event windows covering several days after the statement was published. |
