Tuesday 17 March 2020 4:35 pm

Aviva confirms it will still pay dividend despite fall in cash

Insurance giant Aviva confirmed today that it is still planning on paying its dividend in May despite its financial position contracting.

Speaking at the Morgan Stanley Financial Services Conference, which was held remotely, the firm said that its solvency cover ratio had fallen to 175 per cent, down from 206 per cent on 31 December.

Read more: Aviva shares rise on record profit but insurer takes £500,000 coronavirus hit

The ration is a measure of the insurer’s ability to meet all of its claims.

Despite the fall, Aviva reassured investors that the ratio remained close to the top of its 160 to 180 per cent range.

The firm said that its estimate “does not allow for any increase in insurance claims or changes in experience or assumptions that may arise from Covid-19”.

Sign up to City A.M.’s Midday Update newsletter, delivered to your inbox every lunchtime

At the moment, Aviva will pay out a dividend of 21.4p – three per cent up on last year – shortly after its AGM on 26 May.

The payout will reduce the solvency ration by seven per cent, the insurer added.

In a statement, the firm said: “It remains too early to quantify the potential impact on our financial performance arising from Covid-19.

Read more: Britain’s biggest banks warn coronavirus pandemic will hit income

“The effect on our financial results will depend on a range of factors, including the extent and duration of the period of disruption and the impact on the global economy”. 

Shares in Aviva fell nearly three per cent today.