Delta Lloyd NV said the Dutch central bank ordered it to dismiss Chief Financial Officer Emiel Roozen by 2016 and fined the insurer for allegedly using confidential information when it cut interest-rate hedges in 2012. The shares plunged the most in more than a year.
The Dutch insurer will challenge the decision at a Rotterdam court, Supervisory Board Chairman Jean Frijns told reporters. Roozen will remain on the job for now, he said.
The Dutch central bank fined Delta Lloyd 22.8 million euros ($28 million) because it cut interest-rate hedges a week before July 2, 2012, when the regulator introduced a fixed rate to be used for calculating some insurance liabilities, alleging it acted to gain advantage from confidential information, the insurer said.
“A court case against the regulator might be a bold move, but is understandable, as Delta Lloyd strongly opposes the conclusions of the Dutch central bank,” said JanWillem Knoll, an Amsterdam-based analyst at ABN Amro Bank NV. “It is up to the new management team of Delta Lloyd to improve the relationship with the regulator, which is key in the tightly regulated insurance sector.”
The announcement came weeks before Delta Lloyd Chief Executive Officer Niek Hoek, at the helm since 2001, is stepping down. Hans van der Noordaa, a former ING Groep NV executive, will take over on Jan. 1. Hoek’s departure, announced in April, is unrelated to the dispute with the central bank, Frijns said.
The shares fell as much as 6.1 percent, the most since August 2013, and were down 5.3 percent to 17.81 euros at 10:30 a.m. in Amsterdam. That compared with a 0.6 percent gain in the Bloomberg Europe 500 Insurance Index.
The insurer’s supervisory board started its own review after the central bank began an investigation and said in a statement today the measures imposed are based on incorrect assumptions and are “unjustified and disproportionate.”
Frijns said the transactions carried out at the end of June 2012 were based on public information. The reduction was “prompted solely by the fact that the solvency had risen to such an extent that hedging against the downside interest rate risk was no longer necessary,” he told analysts on a cal.
Frijns said the supervisory board did conclude that the internal decision-making procedure surrounding the sale of interest-rate instruments could have been more strictly applied and documented.
The board also agreed with the central bank that there is room to improve the company’s risk awareness, compliance and internal governance and plans to name a chief risk officer.