Admiral will suspend only a portion of its planned payout to shareholders this year, saying it is in a strong position to weather the coronavirus lockdown despite forgoing government support and rolling out refunds to customers.
The insurer said on Monday that it was temporarily withholding a special dividend worth around £60m, but would follow through with a normal payout worth £165m to be paid out on 1 June.
That will include a payment of £5m to the chief executive, David Stevens, and his wife, which the couple have pledged to donate to their charitable foundation to help other charities struggling with funding during the Covid-19 outbreak.
Stevens said: “We find ourselves in extraordinary circumstances, and it has been a very difficult decision to suspend the special dividend as we are aware of the importance and impact to our shareholders and staff. However, the board and I believe that this is the prudent and right thing to do at this time.
“We thank our customers, staff and shareholders for their continued support, and we remain committed to making decisions that are in their best interests in the long term.”
Admiral still plans to pay the special dividend later in the year “unless there is a significant deterioration in the company’s financial position, trading or outlook”.
Last month, the Bank of England called on insurers to consider cancelling shareholder payouts due to the coronavirus crisis, prompting a group of insurance firms including Aviva, RSA and Hiscox to scrap a combined £1.3bn in dividends.
Admiral has bucked the trend, but justified the decision by pointing to a package of measures that include refunds to customers and avoiding government assistance.
Last week, the insurer announced it was offering £110m worth of refunds for motor insurance customers who are stuck at home and driving less during the lockdown. It has also committed £80m towards cutting prices and supporting NHS staff by waiving excess fees on claims and offering free courtesy vehicles if their own vehicle is stolen or involved in an accident during the lockdown.
Admiral said it was paying all employees their full salary and was not tapping government funding through the furlough scheme. “Admiral does not expect to require support from any other initiatives funded by the government,” the insurer said.