Allianz, AXA dividends help allay sector worries

Thu Feb 21, 2013 9:23am EST
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By Christian Plumb and Jonathan Gould

PARIS/MUNICH (Reuters) - Europe's top two insurers at least maintained their dividends for the past year, helping allay concerns that insurer payouts were being threatened by a malign combination of low bond yields and tighter regulatory requirements.

Germany's Allianz (ALVG.DE: Quote) kept its payout steady at 4.5 euros per share, while French rival AXA (AXAF.PA: Quote) raised its shareholder reward 4 percent to 0.72 cents, easing fears about the sustainability of insurance sector payouts highlighted by a surprise cut on Wednesday from Britain's Royal & Sun Alliance (RSA) (RSA.L: Quote).

Elsewhere in Europe, reinsurer Swiss Re SRENH.VX set out plans for a hefty special dividend and announced a 17 percent rise in its regular yearly payment.

Allianz Chief Financial Officer Dieter Wemmer defended the company's decision to pay out 40 percent of earnings against some criticism it could afford to dole out even more.

"The 40 percent is a very solid and sustainable number," Wemmer told Reuters Insider TV, adding that Allianz's main competitors also were paying dividends around this level.

"What was disappointing with Allianz was the flat dividend," said Harry Wolhandler, managing director at Amilton Asset Management in Paris. "It was a bit surprising that the dividend wasn't raised, given that the yield was already unremarkable and it now remains quite weak compared with the other insurers.

"In terms of quality and solidity, Allianz is definitely by far the strongest insurer in Europe."

The dividend issue came into focus when RSA, Britain's biggest business insurer, unexpectedly cut its dividend by a fifth after weak investment returns, sending its shares sharply lower.   Continued...

A logo of Europe's biggest insurer Allianz is pictured in Tokyo October 19, 2012. REUTERS/Yuriko Nakao