Insurance giants have axed dividends worth £1.3 billion in a fresh blow to beleaguered savers.
Aviva, Direct Line, Hiscox and RSA Group all announced they would not be handing out cash to investors just days after Legal & General said it would pay its dividend.
The flurry of cuts came after the Bank of England last week warned them to make sure they were holding enough money to support customers.
Thrown off balance: Aviva, Direct Line, Hiscox and RSA Group all announced they would not be handing out cash to investors
But despite cutting payouts to shareholders, no insurer has volunteered a reduction to their generous executive pay packages.
Bosses at Britain’s biggest banks have begun to volunteer pay cuts, after being criticised for shifting the burden of the crisis onto shareholders while making no sacrifices.
Investment manager Schroders has urged a fall in executive pay and the Investment Association, which represents UK fund managers, supports companies which cut top executives’ remuneration.
Shareholders have lost out on at least £28.2 billion of dividends so this year, says fund services firm Link which claims cuts could total more than £50 billion this year as dividends tumble 53 per cent to £46.5 billion.
The Bank of England welcomed the dividend cuts. But the decision from Aviva and its fellow insurers was in stark contrast to that of Legal & General, which last week brushed aside the Bank’s advice to promise investors it would pay out its £753m dividend.
Charles Bendit, an analyst at Redburn, said: ‘Aviva’s decision shows prudence but it could have material long-term consequences for the make-up of its shareholder register.
‘Aviva’s decision contrasts with L&G’s, and it will be interesting to see whether L&G holds its nerve between now and the company’s AGM on 21 May.’