Stella Insurance (NZ) Ltd (SINZ) is a subsidiary of Stella Insurance Australia Ltd (SIA). SIA has suffered heavy losses due to bush fires in Australia, and is putting pressure on the board of SINZ for the company to pay SIA a dividend before 31 December 2021.

You are the financial manager of SINZ. Anita Broom, the managing director asks you for your advice.

SINZ's assets exceed realised liabilities by $50 million, and the company has never experienced difficulties paying its creditors. A report produced by SINZ's actuaries on 1 October 2021 concludes that SINZ can meet its current contingent liabilities. (Actuaries are experts who calculate insurance risks.) On 15 October 2021, you advise Anita that the company may pay a dividend to SIA on 1 December 2021.

On 14 November 2021, a major flooding event occurs in the Auckland central business district.

On 15 November 2021, you advise Anita not to pay the dividend.

Explain, firstly, why you recommended a dividend payment on 15 October 2021 and, secondly, why advised against a dividend payment on 15 November 2021.