Dutch Insurer Delta Lloyd Still Faces Solvency II Uncertainties; Rights Issue Ahead

February 1, 2016

Dutch insurer Delta Lloyd is still discussing aspects of Europe’s new solvency regime with regulators as it prepares a 1 billion euro ($1.1 billion) rights issue to shore up its position.

Delta Lloyd’s shares, which dipped 1.5 percent to 5.36 euros on Monday, lost two-thirds of their value in 2015 after it became clear that its solvency ratio under the so-called Solvency II was worse than expected.

In a letter asking shareholders to approve the cash call, which compares with a market capitalization of around 1.3 billion euros, Delta Lloyd said it needs the money to endure stress tests “and the material uncertainties relating to the interpretation of the new Solvency II regime.”

It said it was still in talks with the Netherlands’ central bank about issues including the treatment of tax assets, and would update investors when it releases earnings on Feb. 24.

The Dutch regulator is following a relatively strict interpretation of Solvency II rules.

Delta Lloyd repeated that it expects 200-250 million euros of “net capital generation” in 2016 and intends to pay a cash dividend of 130 million euros over the year.

 ($1 = 0.9216 euros) (Reporting by Toby Sterling, editing by Louise Heavens and Alexander Smith)


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