Dutch insurance company Aegon said yesterday its main shareholder will sell a 25 per cent stake in the group, raising about €3.85 billion in a deal to strengthen the insurer's capital by more than €2 billion.
The transaction will reinforce Aegon at a time when investors and clients have grown increasingly anxious about the industry's solvency. The deal will also help avoid a credit downgrade of the Netherlands's second biggest insurance company.
Aegon recently issued its first ever profit warning and, like other insurance companies punished by last year's economic downturn, Aegon's shares have plunged, losing more than two thirds of their value so far this year.
The group's chairman, Mr Don Shepard, told a conference call Aegon's share price should benefit from this transaction, which will raise the company's capital by more than €2 billion while helping unravel its complicated shareholder structure.
Aegon, one of the world's top 10 insurers, saw its capital fall about 11 per cent to €13.6 billion at end-June and Standard & Poor's recently warned it would cut the insurer's credit rating if it did not boost its capital.
Aegon is the latest insurer to look to its shareholders to provide it with cash. Swiss Zurich Financial and Britain's Legal & General Group have already announced plans for big capital increases.
The Dutch insurer's main shareholder, Vereniging Aegon, known as the Association, will sell 350 million of its Aegon common shares, reducing its voting interest in the insurance company to about 33 per cent from 52 per cent. - (Reuters)
