The National Bank extends its recommendation to temporarily suspend dividend payments within the insurance sector
The insurance sector, like other economic sectors, is affected by the consequences of the COVID-19 pandemic. Although the solvency of the insurance sector remains at an adequate level, there is still considerable uncertainty about the long-term impact of the COVID-19 pandemic on this sector. The insurers’ financial and prudential statements are characterised by a high degree of uncertainty in the assumptions underlying the long-term projections needed to set up the balance sheet. This gives rise to additional complexity and uncertainty in estimating the impact of the COVID-19 pandemic on the insurers’ financial position.
In line with the ESRB recommendations of 27 May, the Bank therefore continues to insist that insurers suspend their planned dividend payments, and extends its recommendation until at least 1 January 2021. Furthermore, the Bank continues to call for a prudent and conservative attitude towards variable remuneration and profit sharing. The (re)insurers' statutory governing body should take all relevant and necessary measures to follow the Bank's recommendations.
In order to implement these recommendations, the Bank will make the necessary amendments to Circular NBB_2020_12.