UK insurance companies have suspended their dividends following pressure from the Bank of England’s Prudential Regulatory Authority.

Aviva said in a release “the Board has taken this decision in the wake of the unprecedented challenges COVID-19 presents for businesses, households and customers, and the adverse and highly uncertain impact on the global economy.”

The Prudential Regulatory Authority wrote to both UK insurers and banks at the end of March advising them to cease payouts to help ensure financial stability during a coronavirus-induced recession.

RSA were due to pay a dividend 14th May which will now be cancelled.

Martin Scicluna, Chairman of RSA, said:

“This is a difficult decision, not least in terms of the initial impact it will have on shareholders. The Company has a strong capital base, but we think it is right and prudent, for the many businesses and people that we support as well as wider stakeholders, to take these steps now, and ensure that RSA is well placed to continue doing what we can to help through this crisis.

“No company exists in a vacuum and at this time we judge it to be in the best long term interests of RSA to show forbearance on dividends and maximise our capability to support customers under the terms of their respective policies and play our part in industry initiatives to support relief efforts.”

Legal & General decided against Bank of England warnings and said they were going to proceed with a £750 million dividend payment which saw their shares soar.

The news insurers were to cut dividends came as Tesco confirmed they were going to maintain their dividends despite rising costs.

Investors have suffered a raft of dividend suspensions since the spread of coronavirus caused an economically damaging lockdown.

However, many of these suspensions were precautionary and are likely to be reinstated when the economy begins the recovery.