On 2 April 2020, EIOPA , one of the EU's financial supervisory authorities, issued a press announcement urging insurance insurers and re-insurers under their supervisory control temporarily to suspend all discretionary dividend distributions and share buy-backs during the Covid-19 emergency.
In its edition of 4 April 2020, The Times reports that the insurers, Legal & General (L&G) , are still planning to go ahead with their dividend distribution of 12.64p per share, totalling some £750 million. LG's announcement to this effect stressed that the group had weighed up its need to act prudently in maintaining safety and soundness against the importance of dividend income to many institutional and retail shareholders but had come to the conclusion that proceeding with the dividend distribution was the right thing to do.
The Times comments that it is thought unlikely that L&G would have issued this announcement without the blessing of the Bank of England and the Prudential Regulatory Authority (PRA), its supervisory division.
The UK is currently in the transition period (presently due to expire on 31 December 2020) under the UK-EU Withdrawal Agreement and the UK remains subject to EU regulation during that period as the price for remaining part of the EU single market during that period. This is why the apparent clash between the perspectives of EIOPA and L&G is so significant.
Other insurers, such as RSA and Direct Line, are said to be monitoring the situation.
This story illustrates the tensions between UK localism and EU regionalism, which is at the core of the Brexit debate.
Whether the story is party of a wider trend or is more of a one-off incident may become clearer shortly, as will its implications for the new UK-EU relationship as a whole.