Top insurers allay fears of dividend cut

MAJOR European insurers yesterday hiked their year-end dividend, reassuring investors who feared the industry may cut returns in the face of low bond yields.

Axa and Swiss Re both raised their payout as they announced bumper full-year results for 2012, while Germany’s Allianz maintained its healthy return to shareholders.

Insurance investors were spooked on Wednesday when Britain’s RSA said it would slash its dividend by a third in the face of weak investment returns, sending its share price down 14 per cent. Traders then drove down shares in other UK insurers amid fears they may take similar action.

However, it appears that while the entire industry is battling low bond yields, major insurers on the continent have not felt the same squeeze on returns.

Swiss Re said it would pay a special dividend of four Swiss francs a share, costing the company about $2.8bn (£1.8bn), as well as raising its annual payout by 17 per cent to SFr3.50.

The announcement came as Swiss Re unveiled a 60 per cent rise in full-year net income to $4.2bn thanks to a substantial rise in premium rates and relatively few natural disasters.

Meanwhile, Axa announced a small fall in net income but still upped its dividend by four per cent.

Allianz said profits doubled to €5.2bn but faced criticism from analysts who wanted the company to return more of its reserves to shareholders.