COVID-19 – Regulated Firms FAQ

COVID-19 FAQ Regulated Firms

Last updated: 26 July 2021

The Central Bank continues its ongoing engagement with firms and their representative bodies. We continue to work in the public interest to deliver on our mandate of protecting consumers and financial stability.

General

Business Interruption Insurance

Payment Breaks

Reporting Requirements

Dividends and Remuneration

Our core focus is on ensuring that the financial system can continue to provide services to households and business in this difficult time. The impact of COVID-19 on solvency and liquidity positions of insurance firms remains uncertain, but it may still be significant for many of the insurance firms under our supervision. In this context, we consider that insurance firms should continue to postpone payments of dividend distributions or similar transactions until they can forecast their costs and future revenues with a greater degree of certainty. Where the board of an insurance firm forms the view that a high level of certainty has been reached and wishes to make a distribution, the Bank expects the firm to engage with their supervision team before proceeding with the distribution, demonstrating satisfactory forward looking solvency, liquidity and operational resilience positions in light of the current environment.

Furthermore, firms are expected to continue to exercise prudence in respect of their variable remuneration policies, including considering whether postponement of related payments would be appropriate during this time.

For more significant insurance firms, in addition to the above mentioned expectations, the Bank also expects that, between 1 January 2021 and at least until 30 September 2021, total dividends, share buy-backs and variable remuneration to material risk takers should in no event result in a reduction in solvency ratio of more than 15 percentage points from its pre-distribution solvency ratio, and overall distributions should be significantly lower than in recent years prior to the COVID-19 crisis.

This approach is consistent with the statement published by EIOPA on 2 April 2020, its press release entitled "EIOPA outlines key financial stability risks and vulnerabilities for insurance and pension sector and recommends that any dividend distributions should not exceed thresholds of prudency", published on 18 December 2020, and the updated Recommendation 2020/15 of the ESRB, also published on 18 December 2020.

Securities

Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT)

See also: