The Agency exceptionally allows any of the supervised entities not to comply with this recommendation.
On Friday, Triglav received a letter from the Slovenian Insurance Supervision Agency stating that due to the uncertain situation regarding the spread of the COVID-19 pandemic and the consequent unclear impacts on the economy and the insurance industry, the Agency expects that until 30 September 2021 insurance, reinsurance and pension companies (supervised entities) suspend dividend payments and undertake no irrevocable commitments to pay out dividends. The Agency exceptionally allows any of the supervised entities not to comply with this recommendation.
The Management Board of Triglav is expected to inform its shareholders about the proposal for the distribution of accumulated profit for 2020 at the end of March when publishing the 2020 Annual Report. In their proposal, the Management Board and the Supervisory Board will take into account both the Company’s dividend policy and the positions of the regulator.
If the the insurers decide not to abide by the recommendation they must demonstrate to the Agency that it has complied with the precautionary principle in its decision, which includes the following aspects:
- solvency (even in the event of a possible new financial crisis and regardless of the payment of dividends, the supervised entity must still maintain capital strength and the solvency ratio above 150% in the observed period);
- capital (the supervised entity will not reduce its basic own funds by more than 10% by paying dividends);
- liquidity (the liquidity position of the supervised entity after the dividend payment must not be poorer than the liquidity position before the pandemic);
- profitability (the supervised entity must show profit in both 2019 and 2020 and ensure that the amount of the planned dividend paid does not exceed the average dividend paid in 2017, 2018 and 2019).
As a reminder, Triglav has set the minimum dividend payout of 50% of consolidated net profit for the previous year, with the note that the company will not strive to reduce its dividend payment below the level of the previous year. Since 2015 (for net profit of the previous year), Triglav has been paying out a constant dividend of EUR 2.5 per share, which implied a high single digit dividend yield each year ranging from 7.3% to 9.5%. To see Triglav’s historic dividend payments click here. Besides that, Triglav targets a capital adequacy of 200 – 250% (in 2018 amounted to 216% – representing a solid level of capitalization).
Sava Re’s strategic plan for 2020 – 2022 states that the company will ensure its shareholders stable growth in dividends (on average by 10% annually) therefore distributing between 35% and 45% of Sava Insurance Group’s profits. To see Sava Re’s historic dividend payments click here.