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Do EU-Wide Stress Tests Affect Insurers´ Dividend Policies?

Author

Listed:
  • Petr Jakubik

    (European Insurance and Occupational Pensions Authority (EI-OPA), Germany & Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies, Czech Republic)

  • Saida Teleu

    (Central Bank of Malta, Malta & Charles University in Prague, Faculty of Social Sciences, Institute of Economic Studies, Czech Republic)

Abstract
The article employs panel data to investigate whether stress test results and other characteristics associated with European insurers vulnerabilities affect dividend distributions and share buybacks. We focus on the EU wide insurance stress test conducted in 2018 and 2021 as in this way we can also capture a behaviour of insurers during the COVID-19 crisis. Our empirical results suggest that two stress tests considered had no significant impact on changes in dividend distributions. However, more resilient insurers measured by assets-over-liabilities ratio seem to have higher dividend payout ratios including share buybacks. On the contrary, higher generated profit tend to be reflected in lower payout ratio.

Suggested Citation

  • Petr Jakubik & Saida Teleu, 2022. "Do EU-Wide Stress Tests Affect Insurers´ Dividend Policies?," Working Papers IES 2022/17, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2022.
    • Handle: RePEc:fau:wpaper:wp2022_17
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6656
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    More about this item

    Keywords

    dividend distributions; dividends and share buybacks; European insurers; EU-wide insurance stress test; COVID-19;
    All these keywords.

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